Share-Based Compensation

6 Months Ended

Aug. 03, 2019

Share-based Payment Arrangement [Abstract]

Financial statement impact

The following table details share-based compensation expense for the thirteen and twenty-six weeks ended August 3, 2019 and August 4, 2018:



	Thirteen Weeks Ended				Twenty-six Weeks Ended
(in thousands)	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018
Share-based compensation expense	$	36	$	6,156	$	2,668	$	10,939

The Company recognized tax expense associated with share-based compensation of $0.2 million and tax benefits of $0.4 million for the thirteen and twenty-six weeks ended August 3, 2019, respectively, and tax benefits of $1.3 million and $2.2 million for the thirteen and twenty-six weeks ended August 4, 2018, respectively.

Restricted stock units

The following table summarizes activity for restricted stock units for the twenty-six weeks ended August 3, 2019:



	Service-based Restricted Stock Units				Performance-based Restricted Stock Units				Market-based Restricted Stock Units
	Number of Underlying Shares ⁽¹⁾		Weighted- Average Grant Date Fair Value		Number of Underlying Shares		Weighted- Average Grant Date Fair Value		Number of Underlying Shares		Weighted- Average Grant Date Fair Value
Unvested at February 2, 2019	2,020,030		$	16.76	801,527		$	13.65	435,970		$	21.24
Granted	724,363		22.16		234,984		22.89		115,238		36.24
Adjustments for performance achievement	—		—		(90,616	)	24.06		(72,497	)	28.20
Vested	(701,802	)	17.92		—		—		(18,125	)	28.20
Forfeited	(261,851	)	16.22		(195,162	)	12.93		(38,802	)	29.90
Unvested at August 3, 2019	1,780,740		$	18.58	750,733		$	15.44	421,784		$	23.05

⁽¹⁾

Includes 271,420 unvested restricted stock units as of August 3, 2019, subject to vesting requirements related to the achievement of certain performance metrics, such as operating income and net income, for the fiscal year immediately preceding the vesting date. Holders of these restricted stock units have the opportunity to earn back one or more installments of the award if the cumulative performance requirements are met in a subsequent year. Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at 100% of their target vesting amount in the table above.

Fair value of both service-based and performance-based restricted stock units is calculated using the market price of the underlying Common Stock on the date of grant reduced for anticipated dividend payments on unvested shares. In determining fair value, the Company does not take into account performance-based vesting requirements. Performance-based vesting requirements are taken into account in determining the number of awards expected to vest. For market-based restricted stock units, fair value is calculated using a Monte Carlo simulation with the number of shares that ultimately vest dependent on the Company’s total stockholder return measured against the total stockholder return of a select group of peer companies over a three-year period. For awards with performance-based or market-based vesting requirements, the number of shares that ultimately vest can vary from 0% to 200% of target depending on the level of achievement of performance criteria.

Service-based restricted stock units are expensed on a straight-line basis over the award’s requisite service period. Performance-based restricted stock units subject to graded vesting are expensed on an accelerated attribution basis. Performance share award expense is primarily recognized in the performance period of the award’s requisite service period. Market-based restricted stock units without graded vesting features are expensed on a straight-line basis over the award’s requisite service period. Compensation expense for stock appreciation rights is recognized on a straight-line basis over the award’s requisite service period. The Company adjusts share-based compensation expense on a quarterly basis for actual forfeitures. Unrecognized compensation expense presented excludes the effect of potential forfeitures, and will be adjusted for actual forfeitures as they occur.

As of August 3, 2019, there was $27.6 million, $4.3 million and $5.4 million of total unrecognized compensation cost, related to service-based, performance-based and market-based restricted stock units, respectively. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 16 months, 16 months and 14 months for service-based, performance-based and market-based restricted stock units, respectively.

The actual tax benefit realized for tax deductions related to the issuance of shares associated with restricted stock units vesting was $0.3 million and $4.4 million for the thirteen and twenty-six weeks ended August 3, 2019, respectively, and $1.5 million and $4.9 million for the thirteen and twenty-six weeks ended August 4, 2018, respectively.

The amount of employee tax withheld by the Company upon the issuance of shares associated with restricted stock units vesting and the exercise of stock appreciation rights was $0.2 million and $6.4 million for the thirteen and twenty-six weeks ended August 3, 2019, respectively, and $0.9 million and $5.9 million for the thirteen and twenty-six weeks ended August 4, 2018, respectively, and is classified within other financing activities on the Condensed Consolidated Statements of Cash Flows.

Additional information pertaining to restricted stock units for the twenty-six weeks ended August 3, 2019 and August 4, 2018 follows:



(in thousands)	August 3, 2019		August 4, 2018
Service-based restricted stock units:
Total grant date fair value of awards granted	$	16,052	$	16,161
Total grant date fair value of awards vested	12,576		14,608

Performance-based restricted stock units:
Total grant date fair value of awards granted	$	5,379	$	4,310
Total grant date fair value of awards vested	—		—

Market-based restricted stock units:
Total grant date fair value of awards granted	$	4,176	$	4,784
Total grant date fair value of awards vested	511		137

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the twenty-six weeks ended August 3, 2019 and August 4, 2018 were as follows:



	August 3, 2019			August 4, 2018
Grant date market price	$	25.34		$	23.59
Fair value	$	36.24		$	33.69
Assumptions:
Price volatility	57		%	54		%
Expected term (years)	2.9			2.9
Risk-free interest rate	2.2		%	2.4		%
Dividend yield	3.2		%	3.4		%
Average volatility of peer companies	40.0		%	37.4		%
Average correlation coefficient of peer companies	0.2407			0.2709

Stock appreciation rights

The following table summarizes stock appreciation rights activity for the twenty-six weeks ended August 3, 2019:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life (years)
Outstanding at February 2, 2019	1,041,867		$	37.81
Granted	—		—
Exercised	(43,463	)	22.41
Forfeited or expired	(52,725	)	33.96
Outstanding at August 3, 2019	945,679		$	38.75	$	—	2.4
Stock appreciation rights exercisable at August 3, 2019	940,054		$	38.86	$	—	2.4
Stock appreciation rights expected to become exercisable in the future as of August 3, 2019	5,526		$	19.90	$	—	6.1

As of August 3, 2019, total unrecognized compensation cost related to stock appreciation rights was insignificant and is expected to be recognized over a weighted-average period of 2 months.

The grant date fair value of stock appreciation rights that vested during the twenty-six weeks ended August 3, 2019 was $0.6 million. The grant date fair value of stock appreciation rights that were exercised during the twenty-six weeks ended August 4, 2018 was $1.2 million.