Stockholders' Equity

12 Months Ended

Feb. 02, 2013

Stockholders' Equity.

Stockholders' Equity

(10) Stockholders’ Equity

Stock-Based Compensation

On April 6, 2012, the Company adopted the Citi Trends, Inc. 2012 Incentive Plan (the “2012 Plan”), which became effective upon approval by the Company’s stockholders on May 23, 2012.  The 2012 Plan is a successor plan to the 2005 Citi Trends, Inc. Long-Term Incentive Plan (the “2005 Plan”), which became effective upon the consummation of the Company’s initial public offering in May 2005.   The 2005 Plan superseded and replaced the 1999 Allied Fashion Stock Option Plan (the “1999 Plan”).

The 1999 Plan provided for the grant of incentive and nonqualified options to key employees and directors, while the 2005 Plan provided for the grant of incentive and nonqualified options, nonvested restricted stock and other forms of stock-based compensation to key employees and directors.  The 2012 Plan provides for the grant of incentive and nonqualified options, nonvested restricted stock and other forms of stock-based and cash-based compensation to key employees and directors.

Shares of nonvested restricted stock granted to employees vest in either equal installments over four years from the date of grant, or over three years at 25% on the first and second anniversaries and 50% on the third anniversary.  Shares issued to directors vest one or two years from the date of grant.  The Company records compensation expense on a straight line basis over the requisite service period of the stock recipients which is equal to the vesting period of the stock.  Total compensation cost is calculated based on the closing market price on the date of grant times the number of shares granted.  Using an estimated forfeiture rate equal to 11.0%, the Company expects to recognize $4.9 million in future compensation expense from the grants of nonvested restricted stock over the requisite service period of up to four years.  During fiscal 2012, 2011 and 2010, compensation expense arising from nonvested restricted stock grants totaled $2.7 million, $2.6 million and $3.0 million, respectively.

A summary of activity related to nonvested restricted stock grants during fiscal year 2012 is as follows:

	Nonvested Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding as of January 28, 2012	285,609		$	22.87
Granted	334,564		13.57
Vested	(137,362	)	21.09
Forfeited	(56,865	)	20.10
Outstanding as of February 2, 2013	425,946		$	16.51

Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised and vesting of restricted shares (“excess tax benefits”) are classified as financing cash flows. (Decrease) increase in such excess tax benefits was $(0.4) million, $(0.3) million and $0.4 million in fiscal 2012, 2011 and 2010, respectively.

Compensation expense associated with stock options is based on an estimate of the fair value of each option award on the date of grant using the Black-Scholes Merton option pricing model.  Expected volatility is based on estimated future volatility of the Company’s common stock price. No compensation expense for stock options was recorded during fiscal 2012 or 2011 as the last grant vested prior to the beginning of fiscal 2011.  The Company recognized $0.1 million in compensation expense for option grants during fiscal 2010.

As of February 2, 2013, there remained outstanding 3,900 and 47,125 options, respectively, issued under the 1999 Plan and the 2005 Plan. No options have been issued under the 2012 Plan. The Board of Directors determined the exercise prices of the option grants.  Option grants generally vested in equal installments over four years from the date of grant for employees and over one to three years for directors and were generally exercisable up to ten years from the date of grant.  The exercise price of stock options may be satisfied through net share settlements. A summary of the status of stock options under the Company’s stock option plans and changes during fiscal 2012 is presented in the table below:

	2012
					Weighted Average
			Weighted Average		Remaining	Aggregate
			Exercise		Contractual	Intrinsic
	Options		Price		Term (Years)	Value
Outstanding as of January 28, 2012	54,875		$	32.22	3.9	$	18,750
Granted	—		—		—	—
Exercised	—		—		—	—
Net shares settled	—		—		—	—
Forfeited	(3,850	)	39.29		3.2	—
Outstanding as of February 2, 2013	51,025		$	31.69	2.8	$	32,871
Vested as of February 2, 2013	51,025		$	31.69	2.8	$	32,871
Exercisable as of February 2, 2013	51,025		$	31.69	2.8	$	32,871

As of February 2, 2013 and January 28, 2012, the range of exercise prices was $4.46 to $44.03.  As of January 29, 2011, the range of exercise prices was $0.38 to $44.03.

Cash received from options exercised totaled $0.0 million, $0.0 million and $0.3 million in fiscal 2012, 2011 and 2010, respectively.  The intrinsic value of options exercised was $0.0 million, $0.2 million and $0.7 million in fiscal 2012, 2011 and 2010, respectively.