Common Stock Options

12 Months Ended

Jan. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]


	Share-Based Compensation

Equity Incentive Plan

Effective July 26, 2002, the Company adopted the 2002 Equity Incentive Plan (the “Plan”) pursuant to which the Company’s board of directors may grant stock options, restricted shares and restricted stock units to officers, directors, key employees and professional service providers. The Plan, as amended, allows for the issuance of up to a total of 7,600,000 shares under the Plan. As of January 31, 2015, 4,031,938 stock options, restricted shares, or restricted stock units were available for grant.

On May 23, 2012, the Company’s board of directors, in accordance with the Plan’s documents, approved an equitable adjustment to all options outstanding on the date of the Company’s dividend declaration to reflect the dividend value received by the Company’s common and preferred shareholders. The exercise price of each outstanding option was reduced by $2.02. The adjustment did not result in additional compensation expense given the adjustment was required under the Plan’s documents and there was no increase in the fair value of the awards before and after payment of the dividend and adjustment of the awards.

Stock option activity under the Plan was as follows:



	Options outstanding		Weighted average exercise price		Weighted average remaining contractual term
Balance as of January 28, 2012	2,627,955		6.47		9.0
Granted	687,416		14.96
Forfeited	(98,048	)	9.14
Cancelled (see note 5)	(2,020,620	)	6.30
Exercised	(8,886	)	4.12
Balance as of February 2, 2013 ⁽¹⁾	1,187,817		10.43		9.3
Granted	554,500		38.92
Forfeited	(205,456	)	20.23
Cancelled	(35,300	)	30.19
Exercised	(196,941	)	7.55
Balance as of February 1, 2014 ⁽¹⁾	1,304,620		20.90		8.5
Granted	253,973		36.18
Forfeited	(169,850	)	31.75
Cancelled	(20,000	)	39.41
Exercised	(207,809	)	7.11
Balance as of January 31, 2015 ⁽¹⁾	1,160,934		$	24.80	8.0
Exercisable as of January 31, 2015	387,586		$	10.74	7.0

(1) The weighted-average exercise price as of January 31, 2015, February 1, 2014 and February 2, 2013, respectively, reflects the adjustment of $2.02 per share resulting from the dividend declared on May 15, 2012 as described above.

Included in the options outstanding as of January 28, 2012 were options to purchase 1,010,310 shares of common stock, which vested incrementally only upon the achievement of certain performance targets including achieving targeted internal rates of return for the Company’s preferred shareholders or the Company achieving certain market capitalization levels subsequent to an initial public offering. In March 2012, options to purchase 2,020,620 shares of common stock granted during fiscal 2010, including the options that were to vest upon the achievement of performance targets, were cancelled and an equal number of restricted shares were granted (see note 5).

The fair value of each option award granted to employees including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:



	Fiscal Year
	2014		2013		2012
Expected volatility	47.9	%	50.0	%	50.0	%
Risk-free interest rate	1.9	%	1.4	%	1.3	%
Expected life of options	6.4 years		6.3 years		6.3 years
Expected dividend yield	—	%	—	%	—	%

The Company uses the simplified method to estimate the expected term of the option. The expected volatility incorporates historical and implied volatility of similar entities whose share prices are publicly available. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The per-share weighted average grant-date fair value of stock options granted to employees in fiscal 2014, fiscal 2013 and fiscal 2012 was $17.59, $18.90 and $7.42 respectively. The total intrinsic value of stock options exercised during fiscal 2014, fiscal 2013 and fiscal 2012 was $7.0 million, $7.2 million and $0.2 million, respectively. The aggregate intrinsic value of stock options exercisable and stock options outstanding as of January 31, 2015 was $8.8 million and $12.7 million, respectively. In fiscal 2014, fiscal 2013 and fiscal 2012, the Company received cash from the exercise of options of $1.5 million, $1.5 million, $36.0 thousand, respectively, and excess tax benefits from option exercises and restricted stock of $2.0 million, $2.3 million and $1.6 million, respectively. Upon option exercise, we issued new shares of common stock.

Restricted Stock Units and Performance-Based Restricted Stock Units

All restricted stock units ("RSU") and performance-based restricted stock units ("PSU") vest in accordance with vesting conditions set by the compensation committee of the Company’s board of directors. RSU's granted to date have vesting periods ranging from less than one year to five years from the date of grant. PSU's granted to date vest 100% at the end of a cumulative three year performance period, subject to satisfaction of the applicable performance goals established for the respective grant. The Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly. Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria.

RSU and PSU activity under the plan was as follows:



	Restricted Stock Units				Performance-Based Restricted Stock Units
	Number		Weighted-Average Grant Date Fair Value		Number		Weighted-Average Grant Date Fair Value
Non-vested balance as of February 1, 2014	—		$	—	—		$	—
Granted	175,772		35.84		396,055		38.20
Vested	(22,286	)	34.40		—		—
Forfeited	(5,716	)	38.52		(3,874	)	38.71
Non-vested balance as of January 31, 2015	147,770		$	35.95	392,181		$	38.20

In connection with the vesting of RSU's during the year ended January 31, 2015, we purchased and immediately retired 9,173 shares with an aggregate value of $0.3 million in satisfaction of minimum tax withholding obligations.

As of January 31, 2015, there was $27.9 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements (including stock options, restricted stock units and performance-based restricted stock units) granted under the Plan. That cost is expected to be recognized over a weighted average vesting period of 3.3 years.