Stock-Based Compensation

12 Months Ended

Feb. 01, 2020

Share-based Payment Arrangement [Abstract]

The Company has the ability to grant restricted shares of common stock, restricted stock units and options to purchase common stock under the 2012 Plan. As of February 1, 2020, there were 5,230,233 shares of common stock available for the future issuance of awards pursuant to the 2012 Plan.

The following table provides total stock-based compensation recognized in the Consolidated Statements of Income for the fiscal years presented (in thousands):


	2019		2018		2017
Stock option expense	$	6,286	$	7,147	$	8,686
Restricted stock expense	37,207		34,794		27,553
Total stock-based compensation expense	$	43,493	$	41,941	$	36,239
Total related tax benefit	$	9,620	$	9,104	$	12,130

Stock Options

Stock options are generally granted on an annual basis, vest 25% per year over four years and have a seven-year contractual life. When options are exercised, the Company issues new shares of common stock.

The fair value of each stock option granted is estimated on the grant date using the Black-Scholes option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience. Stock options are expensed on a straight-line basis over the vesting period, which is considered to be the requisite service period. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations.

The following assumptions were used in the Black-Scholes option valuation model for awards granted in the fiscal years presented:


	Employee Stock Option Plans
Black-Scholes Valuation Assumptions	2019			2018			2017
Expected term (years)⁽¹⁾	5.39			5.20			5.47
Expected volatility⁽²⁾	35.15% - 38.40%			33.15% - 37.41%			29.24% - 33.86%
Weighted average volatility	35.75		%	34.61		%	30.52		%
Risk-free interest rate⁽³⁾	1.39% - 2.43%			2.55% - 3.04%			1.70% - 2.25%
Expected dividend yield	2.31% - 3.25%			2.40% - 2.82%			1.30% - 2.78%
Weighted average grant date fair value	$	10.59		$	9.02		$	11.98

⁽¹⁾Represents the estimated period of time until exercise and is based on historical experience of similar awards giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior.

⁽²⁾Based on the historical volatility of the Company’s common stock over a time frame consistent with the expected life of the stock options.

⁽³⁾Based on the implied yield available on U.S. Treasury constant maturity interest rates whose term is consistent with the expected life of the stock options.

The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and experience.

Stock option activity for the last three fiscal years is presented in the following table:


	Shares Subject to Options	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding, January 28, 2017	3,561,085	$	46.71	3.88	$	22,638
Granted	786,246	45.28
Exercised	(582,022)	28.43
Forfeited / Expired	(635,360)	50.60
Outstanding, February 3, 2018	3,129,949	$	48.97	4.08	$	389
Granted	881,334	34.18

Forfeited / Expired	(880,856)	45.96
Outstanding, February 2, 2019	3,130,427	$	45.65	4.07	$	1,783
Granted	605,574	38.58
Exercised	(144,275)	38.59
Forfeited / Expired	(528,352)	43.97
Outstanding, February 1, 2020	3,063,374	$	44.87	3.88	$	10,254
Exercisable, February 1, 2020	1,630,803	$	49.79	2.65	$	1,594
Vested and expected to vest, February 1, 2020	2,907,149	$	45.25	3.78	$	9,159

The aggregate intrinsic value reported in the table above is based on the Company’s closing stock prices for the last business day of the period indicated. The intrinsic value for stock options exercised during fiscal 2019 and fiscal 2017 totaled $1.0 million and $10.7 million, respectively. No stock options were exercised in fiscal 2018.

The fair value of options that vested during 2019, 2018 and 2017 totaled $7.0 million, $8.1 million and $9.6 million, respectively.

Nonvested stock option activity for the year ended February 1, 2020 is presented in the following table:


	Shares Subject to Options	Weighted Average Grant Date Fair Value
Nonvested, February 2, 2019	1,618,847	$	11.09
Granted	605,574	10.59
Vested	(567,585)	12.33
Forfeited	(224,265)	9.34
Nonvested, February 1, 2020	1,432,571	$	10.66

As of February 1, 2020, unrecognized stock-based compensation expense from nonvested stock options was approximately $8.9 million, net of estimated forfeitures, which is expected to be recognized over a weighted average period of approximately 2.3 years.

Additional information regarding stock options outstanding as of February 1, 2020 is as follows:


	Options Outstanding							Options Exercisable
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
$24.48 - $34.05	646,237	5.24	$	33.52	141,071	$	33.34
$35.22 - $45.67	631,453	5.88	39.02		60,213	43.47
$46.29 - $47.09	711,627	2.52	46.93		572,479	46.89
$47.64 - $55.29	682,696	3.11	51.12		471,438	51.97
$55.49 - $58.86	391,361	2.24	58.43		385,602	58.42





$24.48 - $58.86	3,063,374	3.88	$	44.87	1,630,803	$	49.79

Restricted Stock

The Company issues shares of restricted stock to eligible employees, which are subject to forfeiture until the end of an applicable vesting period. The awards generally vest on the third anniversary of the date of grant, subject to the employee’s continuing employment as of that date.

Restricted stock activity for the last three fiscal years is presented in the following table:


	Shares	Weighted Average Grant Date Fair Value
Nonvested, January 28, 2017	2,360,040	$	50.64
Granted	2,228,573	41.47
Vested	(359,956)	54.13
Forfeited	(624,420)	49.38
Nonvested, February 3, 2018	3,604,237	$	44.84
Granted	1,616,600	33.96
Vested	(549,293)	49.88
Forfeited	(1,213,927)	45.05
Nonvested, February 2, 2019	3,457,617	$	38.88
Granted	1,578,677	37.37
Vested	(852,549)	38.96
Forfeited	(796,795)	39.84
Nonvested, February 1, 2020	3,386,950	$	37.94

From time-to-time, the Company may issue a special grant of performance-based restricted stock in support of strategic initiatives. In fiscal 2017, the Company issued such a grant under the 2017 Long-Term Incentive Plan of 674,209 shares. As of February 1, 2020, nonvested restricted stock included 56,945 shares outstanding under the 2017 Long-Term Incentive Plan. These shares are scheduled to vest in April 2020, subject to the employees’ continuing employment on the vesting date. In fiscal 2019, the Company issued a special grant under the 2019 Long-Term Incentive Plan of 710,053 shares. As of February 1, 2020, nonvested restricted stock included 611,738 shares outstanding under the 2019 Long-Term Incentive Plan. The Company expects 305,869 shares to vest under this plan in April 2022, subject to the employees’ continued employment through that date.

As of February 1, 2020, total unrecognized stock-based compensation expense, net of estimated forfeitures, from nonvested shares of restricted stock was approximately $42.6 million, which the Company expects to recognize over a weighted average period of approximately 1.4 years.