Stock-based Compensation

6 Months Ended

Jul. 30, 2016

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

Stock-based Compensation

STOCK-BASED COMPENSATION

The DSW Inc. 2014 Long-Term Incentive Plan ("the 2014 Plan") provides for the issuance of equity awards to purchase up to 8.5 million DSW Inc. Common Shares. The Company began issuing shares under the 2014 Plan after the DSW Inc. 2005 Equity Incentive Plan expired in the second quarter of fiscal 2015. The 2014 Plan covers stock options, RSUs, PSUs, director stock units ("DSUs") and stock appreciation rights ("SARs"). Eligible recipients include key employees of DSW Inc. and affiliates, as well as directors. Options generally vest 20% per year on a cumulative basis. Options granted under the 2014 Plan generally remain exercisable for a period of ten years from the date of grant.

Stock-Based Compensation Expense- The following table summarizes stock-based compensation expense:

	Six months ended
	July 30, 2016		August 1, 2015
	(in thousands)
Stock options	$	3,224	$	3,626
Restricted stock units	1,870		1,401
Performance-based restricted stock units	1,232		1,702
Director stock units	990		926
Total	$	7,316	$	7,655

Stock Options, RSUs, PSUs and DSUs- The following table summarizes all stock-based compensation activity:

	Six months ended
	July 30, 2016
	Stock Options		RSUs		PSUs		DSUs
	(in thousands)
Outstanding, beginning of period	3,849		372		293		305
Granted	835		181		112		52
Exercised/units vested	(37	)	(83	)	(133	)	(58	)
Forfeited	(251	)	(51	)	(27	)	—
Outstanding, end of period	4,396		419		245		299
Exercisable, end of period	2,388		—		—		—

The following table summarizes the total compensation cost related to nonvested shares not yet recognized and the weighted average expense recognition period remaining (amounts in thousands):

	Six months ended
	July 30, 2016
	Stock Options		RSUs		PSUs
Unrecognized compensation cost	$	14,781	$	8,201	$	4,952
Weighted average expense recognition period	2.2 years		2.0 years		2.1 years

The following table illustrates the weighted average assumptions used in the Black-Scholes pricing model for options granted in each of the periods presented:    

	Six months ended
Assumptions:	July 30, 2016	August 1, 2015
Risk-free interest rate	1.5%	1.4%
Expected volatility of DSW Inc. Common Shares	36.0%	37.9%
Expected option term	5.4 years	5.1 years
Dividend yield	3.0%	2.1%
Other Data:
Weighted average grant date fair value	$6.59	$10.22

Stock Appreciation Rights- DSW Inc. entered into a SARs agreement with a non-employee on June 16, 2014, wherein DSW Inc. granted a total of 0.5 million SARs in two equal tranches with respect to DSW Class A Common Shares. During the three and six months ended August 1, 2015, DSW Inc. recorded a benefit of $1.9 million and expense of $1.6 million, respectively. During the three months ended April 30, 2016 DSW Inc. recorded a benefit of $0.3 million. The unexercised SARs expired in June 2016, and the Company reversed the remaining liability of $0.3 million.