Stock-based Compensation

12 Months Ended

Feb. 01, 2020

Share-based Payment Arrangement [Abstract]

The DSW Inc. 2014 Long-Term Incentive Plan (the "Plan") provides for the issuance of stock-based compensation awards for eligible recipients. The Plan replaced the DSW Inc. 2005 Equity Incentive Plan but did not affect awards granted under that plan, some of which remain outstanding. Eligible recipients include key employees as well as directors. The maximum number of shares of Class A common shares underlying awards which may be issued over the term of the Plan cannot exceed 8.5 million shares. As of February 1, 2020, 2.9 million shares of Class A common shares remain available for future stock-based compensation grants under the Plan.

Stock-based compensation expense consisted of the following:



	Fiscal
(in thousands)	2019		2018		2017
Stock options	$	2,079	$	4,900	$	6,420
Restricted and director stock units	14,980		12,493		8,284
	$	17,059	$	17,393	$	14,704

Stock Options- Stock options were granted with an exercise price per share equal to the fair market value of our common stock on the grant date. Stock options generally vest 20% per year on a cumulative basis and remain exercisable for a period of 10 years from the date of grant.

Stock-based compensation expense is recognized only for those awards that are expected to vest, with forfeitures estimated based on our historical experience and future expectations. As of February 1, 2020, the total compensation cost related to unvested options not yet recognized was approximately $2.0 million, with a weighted average expense recognition period remaining of 1.8 years.

The following table summarizes the stock-based compensation award activity for outstanding stock options for fiscal 2019:



(in thousands, except per share amounts and years)	Shares Subject to Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding - beginning of period	4,001		$	24.36
Exercised	(169	)	$	12.46
Forfeited	(71	)	$	24.87
Outstanding - end of period	3,761		$	24.90	5.5 years	$	176
Vested and expected to vest - end of period	3,669		$	24.96	5.4 years	$	176
Exercisable - end of period	2,618		$	25.94	4.9 years	$	176

The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the option exercise price. The total intrinsic value of options exercised during fiscal 2019, 2018 and 2017 was $1.2 million, $2.1 million and $2.0 million, respectively. The total fair value of options that vested during fiscal 2019, 2018 and 2017 was $1.1 million, $0.8 million and $0.6 million, respectively.

Restricted Stock Units- Grants of time-based RSUs generally cliff vest over three years and performance-based RSUs generally cliff vest over three years based upon the achievement of pre-established goals as of the end of the first year of the term. RSUs receive dividend equivalents in the form of additional restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of RSUs is based on the closing market price of the Class A common shares on the date of the grant.

The following table summarizes the stock-based compensation award activity for unvested stock units for fiscal 2019:



	Time-Based RSUs				Performance-Based RSUs
(shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Outstanding - beginning of period	989		$	22.45	596		$	21.87
Granted	970		$	21.05	519		$	21.90
Vested	(162	)	$	25.88	(179	)	$	24.66
Forfeited	(110	)	$	21.92	(168	)	$	21.94
Outstanding - end of period	1,687		$	21.37	768		$	21.24

The total fair value of time-based RSUs that vested during fiscal 2019, 2018 and 2017 was $3.8 million, $1.7 million and $2.9 million, respectively. As of February 1, 2020, the total compensation cost related to unvested time-based RSUs not yet recognized was $15.3 million, with a weighted average expense recognition period remaining of 1.9 years.

The total fair value of performance-based RSUs that vested during fiscal 2019, 2018 and 2017 was $3.9 million, $3.2 million and $1.8 million, respectively. As of February 1, 2020, the total compensation cost related to unvested performance-based RSUs not yet recognized was approximately $4.4 million, with a weighted average expense recognition period remaining of 1.7 years.

Director Stock Units- We issue stock units to directors who are not employees. Stock units are automatically granted to each director on the date of each annual meeting of shareholders based on the closing market price of the Class A common shares. In addition, each director eligible to receive compensation for board service may elect to have the cash portion of such compensation paid in the form of stock units. Stock units granted to directors vest immediately and directors are given the option to settle their units 30 days after the grant date, at a specified date more than 30 days following the grant date, or upon completion of service. Stock units granted to directors not yet settled, which are not subject to forfeiture, are considered to be outstanding for the purposes of computing basic earnings (loss) per share. As of February 1, 2020, we had 0.5 million director stock units not yet settled.