(8) Stockholders’ Equity

Repurchases of common stock

In November 2018, the Company’s board of directors approved a program that authorized the repurchase of up to $25.0 million in shares of the Company’s common stock. Under this program in fiscal 2018, the Company repurchased 768,558 shares of its common stock in the open market at an aggregate cost of $15.4 million. During the first three quarters of fiscal 2019, the Company repurchased 562,813 shares of its common stock in the open market at an aggregate cost of $9.6 million.

In November 2019, the Company’s board of directors approved a new program that authorized the purchase of up to $25.0 million in shares of the Company’s common stock. During the thirteen weeks ended February 1, 2020, the Company repurchased 841,243 shares of its common stock in the open market at an aggregate cost of $18.8 million. At February 1, 2020, $6.2 million of shares remained available for purchase under this program.

Dividends

In fiscal 2019, the Company paid four quarterly dividends of $0.08 per common share on March 19, 2019, June 18, 2019, September 17, 2019 and December 24, 2019. On February 18, 2020, the Company’s board of directors declared a dividend of $0.08 per common share, which was paid on March 17, 2020 to stockholders of record as of March 3, 2020. Any determination to declare and pay cash dividends for future quarters will be made by the Company’s board of directors. The Company announced on April 28, 2020, the suspension of future cash dividends.

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 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 time-based nonvested restricted stock granted to employees vest in equal installments over three years from the date of grant. Shares issued to directors vest one year from the date of grant. The Company records compensation expense for grants of time-based nonvested restricted stock 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 for such stock is calculated based on the closing market price on the date of grant multiplied by the number of shares granted. The Company expects to recognize $1.8 million in future compensation expense from the grants of time-based restricted stock over the requisite service period of up to three years. Compensation costs for grants of stock price performance-based restricted stock units (“RSUs”) are recorded in full on the date of grant using a lattice model to estimate fair market value. In March 2019, the Company granted 51,490 RSUs to 19 employees. The RSUs had performance vesting criteria which were based upon the Company achieving adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $63.0 million for the Company’s fiscal year ending January 29, 2022. The number of units earned and vested will be increased by 20% if the Company’s EBITDA for the same period equals or exceeds $69.0 million. The award will be forfeited upon the termination of employment by the recipient prior to January 29, 2022. During 2019, no expense was attributable to the grants.

During fiscal 2019, 2018 and 2017, compensation expense arising from nonvested restricted stock grants and performance-based RSUs totaled $2.1 million, $2.2 million and $1.6 million, respectively.

A summary of activity related to time-based nonvested restricted stock grants during fiscal 2019 is as follows:


	Nonvested	Weighted Average
	Restricted	Grant Date
	Shares	Fair Value
Outstanding as of February 2, 2019	163,220	$	24.09
Granted	122,816		18.60
Vested	(89,698)		23.11
Forfeited	(24,359)		21.42
Outstanding as of February 1, 2020	171,979	$	21.06

In March 2018, the Company granted 8,400 RSUs to one employee. The RSUs had performance vesting criteria which were based upon the closing price of the Company’s stock achieving certain thresholds. The shares vest one-third upon achieving an average closing stock price for a 20 consecutive day period of $30.44; $35.01; and $40.26, respectively. The awards expire three years from the date of grant or upon the termination of employment of the recipient. On the date of grant, the Company expensed $137,000 which was the estimated fair market value. One of these thresholds was achieved in 2018. No vesting targets were achieved in 2019 and the grant expired January 31, 2020, the date the recipient left the Company.

In March 2018, the Company granted 8,401 RSUs to one employee. The RSUs had performance vesting criteria which were based upon the Company achieving certain thresholds of adjusted EBITDA. The shares vest one-third upon achieving trailing 12-month adjusted EBITDA levels of $51.4 million, $59.1 million, and $67.9 million, respectively. The awards expire three years from the date of grant or upon the termination of employment of the recipient. During 2018, the Company expensed $78,000 which was the estimated fair market value. None of these thresholds were achieved in 2018 or in 2019 and the grant expired January 31, 2020, the date the recipient left the Company. No expense was incurred in 2019 related to this grant.

In March 2017, the Company granted 23,551 RSUs to two employees. The RSUs had performance vesting criteria which were based upon the closing price of the Company’s stock achieving certain thresholds. The shares vest one-fourth upon achieving a closing stock price for a 20 consecutive day period of $19.10; $21.70; $24.30; and $26.90, respectively. The awards expire three years from the date of grant or upon the termination of employment of the recipient. On the date of grant, the Company expensed $306,000 which was the estimated fair market value. One of the two employees resigned after the date of grant and forfeited his shares prior to vesting. For one recipient, three of these thresholds were achieved in 2017 and the final threshold was achieved in 2018.

Income tax benefits or deficiencies arising from the fair market value of restricted stock shares at vesting versus the cumulative compensation cost of such shares are recorded as a component of income tax expense in the Company’s consolidated statement of operations. Such income tax expense (benefits) totaled $83,000, ($140,000) and (70,000) in fiscal 2019, 2018 and 2017, respectively.