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Stock-based Compensation | 3 Months Ended
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Nov. 02, 2025
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation We provide compensation benefits by issuing stock options, unrestricted stock, and restricted stock units (including time-lapse restricted stock units, performance restricted stock units subject to a relative total shareholder return (TSR) modifier, performance restricted stock units and TSR performance restricted stock units. In 2026, we issued time-lapse restricted stock units, unrestricted stock, and performance restricted stock units subject to a TSR modifier. We last issued TSR performance restricted stock units and performance restricted stock units in 2025 and stock options in 2019. In connection with the Sovos Brands acquisition, in the third quarter of 2024, we issued time-lapse restricted stock units (Replacement units) in exchange for certain Sovos Brands restricted stock units and performance restricted stock units. The Replacement units were subject to the same terms and conditions of the original Sovos Brands restricted stock units and performance restricted stock units. Certain Replacement units were subject to accelerated vesting. In determining stock-based compensation expense, we estimate forfeitures expected to occur. Total pre-tax stock-based compensation expense and tax-related benefits recognized in the Consolidated Statements of Earnings were as follows:
|  |  | Three Months Ended
(Millions) |  |  |  |  | November 2, 2025 |  | October 27, 2024
Total pre-tax stock-based compensation expense |  |  |  |  | $ | 13 |  |  | $ | 19 |
Tax-related benefits (expense) |  |  |  |  | $ | (1) |  |  | $ | 6 |
The following table summarizes stock option activity:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Life |  | Aggregate Intrinsic Value
| (In thousands) |  |  |  | (In years) |  | (Millions)
Outstanding at August 3, 2025 | 779 |  |  | $ | 45.33 |  |  |  |  |
Granted | — |  |  | $ | — |  |  |  |  |
Exercised | — |  |  | $ | — |  |  |  |  |
Terminated | (71) |  |  | $ | 50.21 |  |  |  |  |
Outstanding at November 2, 2025 | 708 |  |  | $ | 44.84 |  |  | 2.1 |  | $ | — |
Exercisable at November 2, 2025 | 708 |  |  | $ | 44.84 |  |  | 2.1 |  | $ | — |
No options were exercised during the three-month period ended October 27, 2024. We measured the fair value of stock options using the Black-Scholes option pricing model. We expensed stock options on a straight-line basis over the vesting period, except for awards issued to retirement eligible participants, which we expensed on an accelerated basis. As of January 2022, compensation related to stock options was fully expensed. The following table summarizes time-lapse restricted stock units and performance restricted stock units activity:
| Units |  | Weighted-Average Grant-Date Fair Value
| (In thousands) |  |
Nonvested at August 3, 2025 | 2,935 |  |  | $ | 44.98 |
Granted | 1,805 |  |  | $ | 31.89 |
Vested | (1,011) |  |  | $ | 45.26 |
Forfeited | (213) |  |  | $ | 46.47 |
Nonvested at November 2, 2025 | 3,516 |  |  | $ | 38.08 |
We determine the fair value of time-lapse restricted stock units based on the quoted price of our stock at the date of grant. We expense time-lapse restricted stock units on a straight-line basis over the vesting period, except for awards issued to retirement-eligible participants and certain Replacement units, which we expense on an accelerated basis. In 2022 through 2025, we granted performance restricted stock units that will be earned upon the achievement of our EPS compound annual growth rate goal, measured over a three-year period. The actual number of the performance restricted stock units issued at the vesting date could range from 0% to 200% of the initial grant depending on performance achieved. The fair value of the performance restricted stock units was based upon the quoted price of our stock at the date of grant. We expense performance restricted stock units on a straight-line basis over the service period, except for awards issued to retirement-eligible participants, which we expense on an accelerated basis. We estimate expense based on the number of awards expected to vest. In the first quarter of 2026, recipients of the performance restricted stock units earned 48% of the initial grants based upon performance achieved during a three-year period ended August 3, 2025. In the first quarter of 2025, recipients of the performance restricted stock units earned 100% of the initial grants based upon performance achieved during a three-year period ended July 28, 2024. There were 549 thousand of the performance target grants outstanding at November 2, 2025, with a weighted-average grant-date fair value of $44.35. As of November 2, 2025, total remaining unearned compensation related to nonvested time-lapse restricted stock units and performance restricted stock units was $75 million, which will be amortized over the weighted-average remaining service period of 2.1 years. The fair value of time-lapse and performance restricted stock units vested during the three-month periods ended November 2, 2025, and October 27, 2024, was $31 million and $59 million, respectively. The weighted-average grant-date fair value of the time-lapse and performance restricted stock units granted during the three-month period ended October 27, 2024 was $48.36. The following table summarizes performance restricted stock units subject to a TSR modifier and TSR performance restricted stock units activity:
| Units |  | Weighted-Average Grant-Date Fair Value
| (In thousands) |  |
Nonvested at August 3, 2025 | 809 |  |  | $ | 47.20 |
Granted | 1,096 |  |  | $ | 34.12 |
Vested | (117) |  |  | $ | 53.74 |
Forfeited | (145) |  |  | $ | 52.08 |
Nonvested at November 2, 2025 | 1,643 |  |  | $ | 37.57 |
We estimated the fair value of performance restricted stock units subject to a TSR modifier and TSR performance restricted stock units at the grant date using a Monte Carlo simulation. Weighted-average assumptions used in the Monte Carlo simulation for grants were as follows:
| Three Months Ended
| November 2, 2025 |  | October 27, 2024
Risk-free interest rate | 3.68% |  | 3.52%
Expected dividend yield | 4.77% |  | 3.01%
Expected volatility | 23.70% |  | 22.46%
Expected term | 3 years |  | 3 years
In 2026, we granted performance restricted stock units that will be earned upon the achievement of our annual EPS and organic net sales growth rate goals during a three-year period subject to a relative TSR modifier. The number of units earned based upon the achievement of each growth rate goal may be further increased or reduced based upon our TSR ranking during a three-year period compared to the respective TSR of companies in a performance peer group. The actual number of performance restricted stock units subject to a TSR modifier ultimately issued at the vesting date could range from 0% to 250% of the initial grant depending on performance achieved. We expense performance restricted stock units subject to a TSR modifier and TSR performance restricted stock units on a straight-line basis over the service period, except for awards issued to retirement eligible participants, which we expense on an accelerated basis. As of November 2, 2025, total remaining unearned compensation related to performance restricted stock units subject to a TSR modifier and TSR performance restricted stock units was $36 million, which will be amortized over the weighted-average remaining service period of 2.1 years. In the first quarter of 2026, recipients of TSR performance restricted stock units earned 50% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended August 1, 2025. In the first quarter of 2025, recipients of TSR performance restricted stock units earned 175% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 26, 2024. As a result, approximately 199 thousand additional shares were awarded. The fair value of TSR performance restricted stock units vested during the three-month periods ended November 2, 2025, and October 27, 2024, was $4 million and $23 million, respectively. The grant-date fair value of the TSR performance restricted stock units granted during the three-month period ended October 27, 2024, was $47.33.

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