EQUITY PLANS

The Company recognized total share-based compensation expense of $15.3 million for the fiscal year ended July 30, 2016, compared to $14.0 million and $14.6 million for the fiscal years ended August 1, 2015 and August 2, 2014, respectively. For the fiscal year ended July 30, 2016, the Company did not record share-based compensation expense related to performance-based share awards, including compensation expense related to performance units with vestings tied to Company's performance in fiscal 2016, as a result of performance measures not being attained at the end of the fiscal year and the resulting forfeiture of these awards. The Company recognized a benefit of $1.0 million related to performance-based share awards for the fiscal year ended August 1, 2015 due to the reversal of share-based compensation expense recorded in fiscal 2014 caused by performance measures not being attained as of the end of fiscal 2015 and the resulting forfeiture of these awards. The Company recorded $1.0 million share-based compensation expense related to performance-based share awards for the fiscal year ended August 2, 2014.

As of July 30, 2016, there was $28.7 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including stock options, restricted stock units and performance-based restricted stock units). This cost is expected to be recognized over a weighted-average period of 2.6 years.

For stock options, the fair value of each grant was estimated at the date of grant using the Black-Scholes option pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield and expected life. Expected volatilities utilized in the model are based on the historical volatility of the Company's stock price. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The model incorporates exercise and post-vesting forfeiture assumptions based on an analysis of historical data. The expected term is derived from historical information and other factors. The fair value of restricted stock awards, restricted stock units, and performance share units are determined based on the number of shares or units, as applicable, granted and the quoted price of the Company's common stock as of the grant date.

The following summary presents the weighted average assumptions used for stock options granted in fiscal 2016, 2015 and 2014:



	Fiscal year ended
	July 30, 2016		August 1, 2015		August 2, 2014
Expected volatility	27.5	%	26.2	%	28.5	%
Dividend yield	—	%	—	%	—	%
Risk free interest rate	1.3	%	1.4	%	1.2	%
Expected term (in years)	4.0		4.0		3.0

The Company has four equity incentive plans that provide for the issuance of stock options: the 1996 Stock Option Plan (the "1996 Plan"), the 2002 Stock Incentive Plan (the "2002 Plan"), the 2004 Equity Incentive Plan, as amended (the "2004 Plan"), and the 2012 Equity Incentive Plan, as amended and restated (the "2012 Plan") (collectively, the "Plans"). The Plans provide, or prior to their expiration, in the case of the 1996, 2002, and 2004 Plans, provided, for grants of stock options to employees, officers, directors and others. Since fiscal 2010, the Company has not granted stock options intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Vesting requirements for awards under the Plans are at the discretion of the Company's Board of Directors, or Compensation Committee of the Board of Directors. Typically, awards granted to employees vest ratably over 4 years. The Company did not grant options to directors in fiscal 2014, fiscal 2015 or fiscal 2016. The maximum term of all incentive and non-statutory stock options granted under the Plans is 10 years. There were 7,800,000 shares authorized for grant under the 1996 Plan and 2002 Plan and 1,250,000 under the 2012 Plan prior to December 16, 2015, when the 2012 Plan was amended to increase shares available for issuance by 2,000,000. There were 1,054,267 remaining shares authorized for grant under the 2004 Plan as of December 16, 2010, the effective date when the 2004 Plan was amended to allow for the award of stock options. Prior to the expiration of the applicable plan, these shares may be used to issue stock options, restricted stock, restricted stock units or performance based awards. As of July 30, 2016, 2,354,570 shares were available for grant under the 2012 Plan. The authorization for new grants under the 1996 Plan, 2002 Plan and 2004 Plan has expired.

The following summary presents information regarding outstanding stock options as of July 30, 2016 and changes during the fiscal year then ended with regard to options under the Plans:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at beginning of year	444,516		$	46.97
Granted	33,030		$	51.52
Exercised	(84,110	)	$	30.51
Forfeited	(27,005	)	$	64.43
Cancelled	(22,802	)	$	61.01
Outstanding at end of year	343,629		$	49.13	5.8 years	$	2,586,141
Exercisable at end of year	223,711		$	42.99	4.7 years	$	2,586,141

The weighted average grant-date fair value of options granted during the fiscal years ended July 30, 2016, August 1, 2015, and August 2, 2014 was $15.59, $14.82 and $16.48, respectively. The aggregate intrinsic value of options exercised during the fiscal years ended July 30, 2016, August 1, 2015, and August 2, 2014, was $2.6 million, $3.1 million and $2.5 million, respectively.

Vesting requirements for awards under the Plans are at the discretion of the Company's Board of Directors, or the Compensation Committee thereof, and for time vesting awards are typically four equal annual installments for employees and two equal installments for non-employee directors with the first installment on the date of grant and the second installment on the six month anniversary of the grant date.

The following summary presents information regarding restricted stock awards, restricted stock units, performance shares and performance units under the Plans as of July 30, 2016 and changes during the fiscal year then ended:



	Number of Shares		Weighted Average Grant-Date Fair Value
Outstanding at August 1, 2015	621,232		$	61.60
Granted	571,638		$	50.44
Vested	(256,210	)	$	56.72
Forfeited	(202,863	)	$	58.19
Outstanding at July 30, 2016	733,797		$	55.55

The total intrinsic value of restricted stock awards and restricted stock units vested was $12.3 million, $17.3 million and $16.9 million during the fiscal years ended July 30, 2016, August 1, 2015 and August 2, 2014, respectively. The total intrinsic value of performance share awards and performance units vested was $1.3 million during the fiscal year ended August 2, 2014, respectively. No performance share awards or performance units vested during the fiscal years ended July 30, 2016 or August 1, 2015.

During the fiscal year ended July 30, 2016, 29,115 performance units were granted (subject to the issuance of an additional 29,115 shares if the Company's performance exceeded specified targeted levels) to the Company's President and CEO, the vesting of which was contingent on the attainment of specific levels of earnings before interest and taxes and return on invested capital for fiscal 2016. The per share grant-date fair value of these awards was $51.52. Effective July 30, 2016, all of these performance units were forfeited as the underlying performance criteria that were required to be achieved in order for the units to vest were not achieved.

During the fiscal year ended August 1, 2015, 23,238 performance units were granted (subject to the issuance of an additional 23,238 shares if the Company's performance exceeded specified targeted levels), to the Company's President and CEO, the vesting of which was contingent on the attainment of specific levels of earnings before interest and taxes and return on invested capital. The per share grant-date fair value of these awards was $64.55. Effective August 1, 2015, all of these performance units were forfeited as the underlying performance criteria that were required to be achieved in order for the units to vest were not achieved.

During the fiscal year ended August 2, 2014, 22,229 performance shares were granted (subject to the issuance of an additional 22,229 shares if the Company's performance exceeded specified targeted levels) to the Company's President and CEO, the vesting of which was contingent on the attainment of specific levels of earnings before interest and taxes and return on invested capital. The per share grant-date fair value of these grants was $67.48. Effective August 2, 2014, a total of 19,396 performance shares for fiscal 2014 vested with a corresponding intrinsic value and fair value of $1.3 million and $1.1 million, respectively. The remainder of the performance shares were forfeited.

The Company has a performance-based equity compensation arrangement with a 2-year performance-based vesting component that was established for members of the Company's executive leadership team. Under this arrangement, for the 2-year performance periods ended July 30, 2016, August 1, 2015 and August 2, 2014, the executives were awarded performance-based stock units with a grant-date fair value equal to approximately 30% of the sum of 125% of their annual base salary and 50% of their cash-based performance award earned in the prior fiscal year. Similar to the performance awards granted to the Company's President and CEO, if the Company's performance exceeded specified targeted levels, the grants could be increased up to an additional 100%. For the 2-year performance periods ended July 30, 2016, August 1, 2015, and August 2, 2014, it was determined that targeted levels of performance were not met and therefore, the Company did not issue shares to the executive leadership team in settlement of the performance units and all the units were forfeited.