STOCK-BASED COMPENSATION

Stock-based compensation plans

The Company's employees participate in various stock-based compensation plans which are provided by the Company directly.

In July 2007, the Company's Board of Directors adopted, and the Company's stockholders approved the 2007 Equity Incentive Plan ("2007 Plan"). The 2007 Plan provides for the grants of stock options, stock appreciation rights, performance-based restricted stock unitss, restricted stock or restricted stock units to employees (including officers and directors who are also employees) of the Company. The majority of stock options granted to date have a four-year vesting period and vest at a rate of 25% each year on the anniversary date of the grant. Performance-based restricted stock units issued under the 2007 Plan generally vest three years from the grant date and restricted stock issued under the 2007 Plan vest one year from the grant date. To date, 165 shares of restricted stock have been issued under the 2007 Plan to certain directors and consultants of the Company.

The Company's policy is to issue shares upon the exercise of Company options or vesting of performance-based restricted stock units from treasury.

Stock-based compensation expense charged to income for the plans was $10,087, $15,637 and $10,340 for the years ended February 2, 2014, February 3, 2013, and January 29, 2012, respectively.

Total unrecognized compensation cost for all stock-based compensation plans was $17,065 as at February 2, 2014, which is expected to be recognized over a weighted-average period of 2.2 years, and was $20,871 as at February 3, 2013 over a weighted-average period of 2.0 years.

Employee stock purchase plan

The Company's Board of Directors and stockholders approved the Company's Employee Share Purchase Plan ("ESPP") in September 2007. The ESPP allows for the purchase of common stock of the Company by all eligible employees at a 25% discount from fair market value subject to certain limits as defined in the ESPP. The maximum number of shares available under the ESPP is 6,000 shares. During the year ended February 2, 2014, 98 shares were purchased under the ESPP, which were funded by the Company through open market purchases.

Company stock options, performance-based restricted stock units and restricted shares

A summary of the Company's stock options, performance-based restricted stock units and restricted shares activity as of February 2, 2014, February 3, 2013, and January 29, 2012, and changes during the years then ended is presented below:



	Number of Stock Options	Weighted- Average Exercise Price		Number of Performance-Based Restricted Stock Units	Weighted- Average Grant Fair Value		Number of Restricted Shares	Weighted- Average Grant Fair Value
Balance at January 30, 2011	3,270	$	10.83	174	$	20.96	8	$	21.22
Granted	183	45.47		231	40.99		9	47.74
Exercised	1,150	8.36		—	—		8	23.41
Forfeited	50	16.62		21	41.00		1	60.54
Balance at January 29, 2012	2,253	$	14.77	384	$	31.90	8	$	46.10
Granted	84	75.52		156	74.46		16	63.97
Exercised	874	12.60		—	—		8	46.10
Forfeited	86	20.43		49	31.81		—	—
Balance at February 3, 2013	1,377	$	19.51	491	$	45.47	16	$	63.97
Granted	118	64.86		290	52.41		59	52.35
Exercised	686	11.90		208	21.72		16	63.97
Forfeited	140	41.33		147	59.32		2	64.30
Balance at February 2, 2014	669	$	30.76	426	$	56.97	57	$	51.99

The Company's performance-based restricted stock units are awarded to eligible employees and entitle the grantee to receive a maximum of 1.5 shares of common stock per performance share unit if the Company achieves specified performance goals and the grantee remains employed during the vesting period. The fair value of performance-based restricted stock units is based on the closing price of the Company's common stock on the award date. Expense for performance-based restricted stock units is recognized when it is probable the performance goal will be achieved.

The following table summarizes information about stock options outstanding and exercisable at February 2, 2014:



	Outstanding					Exercisable
Range of Exercise Prices	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Life (Years)	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Life (Years)
$0.25 – $6.92	136		$	2.83	2.6	136		$	2.83	2.6
$9.00 – $14.51	136		12.84		4.5	122		12.69		4.6
$17.27 – $33.50	116		22.25		3.4	79		23.24		3.4
$34.94 – $57.88	148		43.77		4.5	57		41.27		4.2
$64.30 – $75.23	133		70.59		6.0	19		75.17		5.4
	669		$	30.76	4.2	413		$	18.34	3.7
Intrinsic value	$	13,845				$	11,981

As of February 2, 2014, the unrecognized compensation cost related to these options was $4,761, which is expected to be recognized over a weighted-average period of 2.7 years; and the total aggregate intrinsic value for stock options outstanding and exercisable was $11,981. The intrinsic value of stock options exercised during the years ended February 2, 2014, February 3, 2013, and January 29, 2012 was $37,591, $53,605, and $42,783. The weighted-average grant date fair value of options granted during the years ended February 2, 2014, February 3, 2013, and January 29, 2012 was $31.96, $37.20, and $22.51, respectively.

The fair value of options with service conditions was determined at the date of grant using the Black-Scholes model. Expected volatilities are based on a review of a peer group of publicly traded apparel retailers. The expected term of options with service conditions is the simple average of the term and the requisite service period as stated in the respective option contracts. The risk-free interest rate is the Federal Reserve federal funds rate. The following assumptions were used in calculating the fair value of stock options issued in fiscal 2013:



	lululemon athletica inc.
Dividend yield	—	%
Expected volatility	64.65	%
Risk-free interest rate	0.72	%
Weighted-average life	4.06 years