Share-Based Compensation | 6 Months Ended |
Aug. 02, 2014 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Share-Based Compensation | ' |
10. Share-Based Compensation |
|
On June 19, 2014, the Foot Locker 2007 Stock Incentive Plan was amended to increase the number of shares of the Company’s common stock reserved for all awards to 14 million shares. |
|
Total compensation expense related to the Company’s share-based compensation plans was $6 million for the thirteen weeks ended August 2, 2014, $5 million for the thirteen weeks ended August 3, 2013, and was $12 million and $13 million for the twenty-six weeks ended August 2, 2014 and August 3, 2013, respectively. The associated tax benefits recognized for the thirteen weeks ended August 2, 2014 and August 3, 2013 were $2 million and $3 million, respectively. The associated tax benefit recognized was $4 million for both the twenty-six weeks ended August 2, 2014 and August 3, 2013. |
|
Tax deductions in excess of the cumulative compensation cost recognized for share-based compensation arrangements were $9 million for the twenty-six weeks ended August 2, 2014 and $7 million for the twenty-six weeks ended August 3, 2013 and are classified as a financing activity within the Condensed Consolidated Statements of Cash Flows. |
|
Valuation Model and Assumptions |
|
The Company uses a Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. |
|
The following table shows the Company’s assumptions used to compute the share-based compensation expense: |
|
| | Stock Option Plans | | | Stock Purchase Plan | |
Twenty-six weeks ended | Twenty-six weeks ended |
| | August 2, | | | August 3, | | | August 2, | | | August 3, | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Weighted-average risk free rate of interest | | | 2.11 | % | | | 1.02 | % | | | 0.15 | % | | | 0.17 | % |
Expected volatility | | | 39 | % | | | 42 | % | | | 24 | % | | | 40 | % |
Weighted-average expected award life | | | 6.1 years | | | | 6.0 years | | | | 1.0 year | | | | 1.0 year | |
Dividend yield | | | 2 | % | | | 2.3 | % | | | 2.2 | % | | | 2.3 | % |
Weighted-average fair value | | $ | 14.88 | | | $ | 10.99 | | | $ | 6.6 | | | $ | 5.79 | |
|
Compensation expense related to the Company’s stock option and stock purchase plans was $3 million and $6 million for both the thirteen and twenty-six weeks ended August 2, 2014 and August 3, 2013, respectively. As of August 2, 2014, there was $13 million of total unrecognized compensation cost, related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.27 years. |
|
The information in the following table covers options granted under the Company’s stock option plans for the twenty-six weeks ended August 2, 2014. |
|
(in thousands, except price per share and | | Shares | | Weighted- | | Weighted- | | | | | | | |
weighted-average term) | Average Term | Average | | | | | | |
| | Exercise | | | | | | |
| | Price | | | | | | |
Options outstanding at the beginning of the year | | | 5,668 | | | | | $ | 22.66 | | | | | | | |
Granted | | | 767 | | | | | | 45.11 | | | | | | | |
Exercised | | | -611 | | | | | | 21.46 | | | | | | | |
Expired or cancelled | | | -34 | | | | | | 38.35 | | | | | | | |
Options outstanding at August 2, 2014 | | | 5,790 | | | 6.7 | | $ | 25.67 | | | | | | | |
Options exercisable at August 2, 2014 | | | 3,950 | | | 5.68 | | $ | 19.87 | | | | | | | |
Options available for future grant at August 2, 2014 | | | 13,970 | | | | | | | | | | | | | |
|
The total intrinsic value of options exercised (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below: |
|
| | Thirteen weeks ended | | Twenty-six weeks ended | | | | |
| | August 2, | | August 3, | | August 2, | | August 3, | | | | |
| | 2014 | | 2013 | | 2014 | | 2013 | | | | |
Exercised | | $ | 4 | | $ | 8 | | $ | 15 | | $ | 13 | | | | |
|
The aggregate intrinsic value for stock options outstanding and for stock options exercisable (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options) is presented below: |
|
| | Twenty-six weeks ended | | | | | | | | | | |
| | August 2, | | August 3, | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | |
Outstanding | | $ | 130 | | $ | 91 | | | | | | | | | | |
Outstanding and exercisable | | $ | 112 | | $ | 75 | | | | | | | | | | |
|
The cash received from option exercises for the thirteen and twenty-six weeks ended August 2, 2014 was $3 million and $13 million, respectively. The cash received from option exercises for the thirteen and twenty-six weeks ended August 3, 2013 was $9 million and $15 million, respectively. The total tax benefit realized from option exercises was $1 million and $5 million for the thirteen and twenty-six weeks ended August 2, 2014, respectively, and was $2 million and $4 million for the corresponding prior-year periods. |
|
The following table summarizes information about stock options outstanding and exercisable at August 2, 2014: |
|
| | Options Outstanding | | Options Exercisable | | | | |
Range of Exercise Prices | | Number | | Weighted- | | Weighted- | | Number | | Weighted- | | | | |
Outstanding | Average | Average | Exercisable | Average | | | |
| Remaining | Exercise | | Exercise | | | |
| Contractual | Price | | Price | | | |
| Life | | | | | | |
| | | | | | | | | | | | | | | | |
| | (in thousands, except prices per share and contractual life) | | | | |
$9.85 to $15.10 | | 1,520 | | 5.13 | | $ | 12.46 | | 1,520 | | $ | 12.46 | | | | |
$18.80 to $23.92 | | 1,454 | | 5.38 | | $ | 19.95 | | 1,450 | | $ | 19.95 | | | | |
$24.04 to $34.24 | | 2,029 | | 7.72 | | $ | 32.29 | | 962 | | $ | 31.09 | | | | |
$34.27 to $50.71 | | 787 | | 9.56 | | $ | 44.64 | | 18 | | $ | 38.31 | | | | |
| | 5,790 | | 6.7 | | $ | 25.67 | | 3,950 | | $ | 19.87 | | | | |
|
Changes in the Company’s nonvested options for the twenty-six weeks ended August 2, 2014 are summarized as follows: |
|
(in thousands, except price per share) | | Number of | | Weighted- | | | | | | | | | | |
Shares | Average Grant | | | | | | | | | |
| Date Fair Value | | | | | | | | | |
| per Share | | | | | | | | | |
Nonvested at the beginning of the year | | | 2,173 | | $ | 30.1 | | | | | | | | | | |
Granted | | | 767 | | | 45.11 | | | | | | | | | | |
Vested | | | -1,066 | | | 26.82 | | | | | | | | | | |
Expired or cancelled | | | -34 | | | 38.35 | | | | | | | | | | |
Nonvested at August 2, 2014 | | | 1,840 | | $ | 38.11 | | | | | | | | | | |
|
Restricted Stock and Units |
|
Restricted shares of the Company’s common stock and restricted stock units may be awarded to certain officers and key employees of the Company. Awards made to executives outside of the United States and to nonemployee directors are made in the form of restricted stock units. Each restricted stock unit represents the right to receive one share of the Company’s common stock provided that the vesting conditions are satisfied. There were 742,514 and 1,008,542 restricted stock units outstanding as of August 2, 2014 and August 3, 2013 respectively. |
|
Generally, awards fully vest after the passage of time, typically three years. However, restricted stock unit grants made in connection with the Company’s long-term incentive program vest after the attainment of certain performance metrics and the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vest with the passage of time; for performance-based restricted stock, dividends will be accumulated and paid after the performance criteria are met. No dividends are paid on restricted stock units. |
|
Compensation expense is recognized using the fair market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company. The Company recorded compensation expense related to restricted stock awards, net of forfeitures, of $3 million and $2 million for the thirteen weeks ended August 2, 2014 and August 3, 2013, and $6 million and $7 million for the twenty-six weeks ended August 2, 2014 and August 3, 2013, respectively. As of August 2, 2014, there was $16 million of total unrecognized compensation cost related to nonvested restricted awards. |
|
Restricted shares and units activity for the twenty-six weeks ended August 2, 2014 and August 3, 2013 is summarized as follows: |
|
| | Number of Shares and Units | | | | | | | | | | |
(in thousands) | | August 2, 2014 | | August 3, 2013 | | | | | | | | | | |
Outstanding at beginning of period | | | 1,369 | | | 1,564 | | | | | | | | | | |
Granted | | | 320 | | | 440 | | | | | | | | | | |
Vested | | | -649 | | | -639 | | | | | | | | | | |
Cancelled or forfeited | | | -33 | | | -12 | | | | | | | | | | |
Outstanding at end of period | | | 1,007 | | | 1,353 | | | | | | | | | | |
Aggregate value (in millions) | | $ | 37 | | $ | 36 | | | | | | | | | | |
Weighted-average remaining contractual life | | | 1.57 years | | | 1.33 years | | | | | | | | | | |
|
The weighted-average grant-date fair value per share was $45.24 and $34.59 for the twenty-six weeks ended August 2, 2014 and August 3, 2013, respectively. The total value of awards for which restrictions lapsed during the twenty-six weeks ended August 2, 2014 and August 3, 2013 was $14 million and $9 million, respectively. |
| | | | | | | | | | | | | | | | |