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Stock Based Compensation | 12 Months Ended
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Feb. 03, 2018
Share-based Compensation [Abstract] |
Stock Based Compensation | Stock Based Compensation The following disclosures present the Company’s equity plans on a combined basis. The equity plans are administered by the Compensation and Management Development Committee of the Board of Directors (the “CMD Committee”). The CMD Committee is authorized to grant options, stock appreciation rights, restricted stock and restricted stock units to officers and key employees of the Company and its subsidiaries and to non-employee directors. The equity plans are intended to help the Company attract and retain directors, officers, other key executives and employees and is also intended to provide incentives and rewards relating to the Company’s business plans to encourage such persons to devote themselves to the business of the Company. There have been no grants of stock appreciation rights under the equity plans. Stock option grants have an exercise price at least equal to the market value of the underlying Common Stock on the date of grant, have ten-year terms and typically vest ratably over four years of continued employment. Restricted stock and time-based restricted stock unit awards generally vest one to four years from the date of grant. Performance-based restricted stock units generally are earned based on the attainment of specified goals achieved over the performance period. As of February 3, 2018, approximately 13 million shares of Common Stock were available for additional grants pursuant to the Company’s equity plans. Shares awarded are generally issued from the Company's treasury stock. Stock-based compensation expense included the following components:
| 2017 |  | 2016 |  | 2015
| (millions)
Stock options | $ | 34 |  |  | $ | 43 |  |  | $ | 52 |
Restricted stock units | 24 |  |  | 18 |  |  | 13 |
| $ | 58 |  |  | $ | 61 |  |  | $ | 65 |
All stock-based compensation expense is recorded in SG&A expense in the Consolidated Statements of Income. Stock Options The fair value of stock options granted during 2017, 2016 and 2015 and the weighted average assumptions used to estimate the fair value are as follows:
| 2017 |  | 2016 |  | 2015
Weighted average grant date fair value of stock options granted during the period | $ | 5.84 |  |  | $ | 12.14 |  |  | $ | 20.78 |
Dividend yield | 6.2 | % |  | 3.8 | % |  | 2.7 | %
Expected volatility | 41.8 | % |  | 42.7 | % |  | 43.3 | %
Risk-free interest rate | 1.9 | % |  | 1.4 | % |  | 1.7 | %
Expected life | 5.7 years |  |  | 5.7 years |  |  | 5.7 years |
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the expected volatility and expected option life assumption consistent with ASC Topic 718, Compensation – Stock Compensation. The expected volatility of the Company’s Common Stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on historical stock option experience as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated dividend payouts. The risk-free interest rate assumption is based on observed interest rates consistent with the expected life of each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options. Activity related to stock options for 2017 is as follows:
| Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life |  | Aggregate Intrinsic Value
| (thousands) |  |  |  | (years) |  | (millions)
Outstanding, beginning of period | 20,478 |  |  | $ | 42.18 |  |  |  |  |
Granted | 3,801 |  |  | $ | 26.12 |  |  |  |  |
Canceled or forfeited | (3,586 | ) |  | $ | 46.46 |  |  |  |  |
Exercised | (317 | ) |  | $ | 19.09 |  |  |  |  |
Outstanding, end of period | 20,376 |  |  | $ | 38.80 |  |  |  |  |
Exercisable, end of period | 12,810 |  |  | $ | 38.38 |  |  | 4.3 |  | $ | 23 |
Options expected to vest | 6,305 |  |  | $ | 38.57 |  |  | 8.4 |  | $ | 4 |
Additional information relating to stock options is as follows:
| 2017 |  | 2016 |  | 2015
| (millions)
Intrinsic value of options exercised | $ | 3 |  |  | $ | 12 |  |  | $ | 127 |
Cash received from stock options exercised | 6 |  |  | 35 |  |  | 125 |
As of February 3, 2018, the Company had $44 million of unrecognized compensation costs related to nonvested stock options, which is expected to be recognized over a weighted average period of approximately 2.2 years. Restricted Stock Units The weighted average grant date fair values of performance-based and time-based restricted stock units granted during 2017, 2016 and 2015 are as follows:
| 2017 |  | 2016 |  | 2015
Restricted stock units (performance-based) | $ | 27.16 |  |  | $ | 43.72 |  |  | $ | 61.51 |
Restricted stock units (time-based) | 20.75 |  |  | 35.61 |  |  | 63.71 |
During 2017, 2016 and 2015, the CMD Committee approved awards of performance-based restricted stock units to certain senior executives of the Company. Each award reflects a target number of shares (“Target Shares”) that may be issued to the award recipient. These awards may be earned upon the completion of three-year performance periods ending February 1, 2020, February 2, 2019, and February 3, 2018, respectively. Whether units are earned at the end of the performance period will be determined based on the achievement of certain performance objectives over the performance period. The performance objectives include achieving a cumulative EBITDA level for the performance period, an EBITDA as a percent to sales ratio and a return on invested capital ratio. The performance-based restricted stock units also include a performance objective relating to relative total shareholder return (“TSR”). Relative TSR reflects the change in the value of the Company’s Common Stock over the performance period in relation to the change in the value of the Common Stock of a twelve-company executive compensation peer group over the performance period, assuming the reinvestment of dividends. Depending on the results achieved during the three-year performance periods, the actual number of shares that a grant recipient receives at the end of the period may range from 0% to 150% of the Target Shares granted. The fair value of the Target Shares and restricted stock awards are based on the fair value of the underlying shares on the date of grant. The fair value of the portion of the Target Shares that relate to a relative TSR performance objective was determined using a Monte Carlo simulation analysis to estimate the total shareholder return ranking of the Company among a twelve-company executive compensation peer group over the remaining performance periods. The expected volatility of the Company’s Common Stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk-free interest rate assumption was based on observed interest rates consistent with the approximate three-year performance measurement period. The fair value of a restricted stock unit award at the grant date is equal to the market price of the Company's Common Stock on the grant date. Compensation expense is recorded for all restricted stock unit awards based on the amortization of the fair market value at the date of grant over the period the restrictions lapse or over the performance period of the performance-based restricted stock units. As of February 3, 2018, the Company had $38 million of unrecognized compensation costs related to nonvested restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.2 years. Activity related to restricted stock units for 2017 is as follows:
| Shares |  | Weighted Average Grant Date Fair Value
| (thousands) |  |
Nonvested, beginning of period | 1,818 |  |  | $ | 49.04 |
Granted – performance-based | 971 |  |  | 27.16 |
Performance adjustment | (312 | ) |  | 61.51 |
Granted – time-based | 1,307 |  |  | 20.75 |
Forfeited | (431 | ) |  | 40.14 |
Vested | (196 | ) |  | 50.32 |
Nonvested, end of period | 3,157 |  |  | $ | 30.51 |
Other Information The Company adopted Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employee Share-Based Payment Accounting, effective January 29, 2017, on a prospective basis. Upon adoption, the Company began to recognize, all excess tax benefits and tax deficiencies as income tax benefit or expense, respectively, in its Consolidated Statements of Income. For awards that were exercised, vested or expired during 2017, approximately $15 million of additional income tax expense associated with net tax deficiencies was recognized. Additionally, these net tax deficiencies have been classified as an operating activity along with other income tax cash flows in the Consolidated Statements of Cash Flows.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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