7. Stock‑based compensation

On October 16, 2013, the Board approved the 2013 Incentive Award Plan (“2013 Equity Plan”). The 2013 Equity Plan provides for grants of nonqualified stock options, incentive stock options, restricted stock, restricted stock units, deferred stock awards, deferred stock units, stock appreciation rights, dividends equivalents, performance awards, and stock payments.

On September 12, 2017, the Company's shareholders approved The Container Store Group Inc. Amended and Restated 2013 Incentive Award Plan (the “Amended and Restated Plan”). The Amended and Restated Plan (i) increased the number of shares of common stock available for issuance under such plan from 3,616,570 shares to 11,116,570 shares; (ii) was intended to allow awards under the Amended and Restated Plan to continue to qualify as tax-deductible performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended, subject to anticipated changes resulting from the Tax Act as described below; and (iii) made certain minor technical changes to the terms of the Amended and Restated Plan.

Pursuant to the Tax Act, the exception for performance-based compensation has been repealed, effective for tax years beginning after December 31, 2017, and, therefore, compensation previously intended to be performance-based may not be deductible unless it qualifies for limited transition relief applicable to certain amounts payable pursuant to a written binding contract that was in effect on November 2, 2017.

As of March 28, 2020, there are 11,116,570 shares authorized and 7,277,884 shares available for grant under the Amended and Restated Plan. Awards that are surrendered or terminated without issuance of shares are available for future grants.

Restricted Stock Awards

The Company periodically grants time-based and performance-based restricted stock awards under the Company’s Amended and Restated Plan to certain Directors and employees. The following table summarizes the Company's restricted stock award grants during fiscal 2019, 2018, and 2017.


											Number of
											Performance-
							Number of				Based
	Total			Number of			Performance-		Performance-		Awards
	Number of			Time-Based	Time-Based		Based		Based		that Met
	Awards	Grant Date		Awards	Vesting		Awards		Vesting		Performance
Grant Date	Granted	Fair Value		Granted	Period		Granted		Period		Condition
December 12, 2017	22,191	$	5.52	4,528	3	years	17,663	(1)	3	years	9,011
June 1, 2018	551,453	$	7.68	112,553	3	years	438,900	(2)	3	years	205,616
September 12, 2018	73,264	$	10.92	73,264	3	years	—		—	years	—
June 1, 2019	605,927	$	7.03	123,667	3	years	482,260	(3)	3	years	182,520
August 28, 2019	172,792	$	4.63	172,792	3	years	—		—	years	—

(1)

These performance-based restricted stock awards vest based on achievement of fiscal 2017 performance targets and are also subject to time-based vesting requirements.

(2)

These performance-based restricted stock awards vest based on achievement of fiscal 2018 performance targets and are also subject to time-based vesting requirements.

(3)

These performance-based restricted stock awards vest based on achievement of fiscal 2019 performance targets and are also subject to time-based vesting requirements.

Stock-based compensation cost related to restricted stock awards was $2,162, $1,527 and $506 for fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Unrecognized compensation expense related to outstanding restricted stock awards to employees as of March 28, 2020 is expected to be $2,786 (net of estimated forfeitures) to be recognized on a straight-line basis over a weighted average period of 1.3 years.

The following table summarizes the Company’s restricted stock awards activity during fiscal 2018 and fiscal 2019:


	Restricted Stock	Weighted Average
	Awards	Grant Date Fair Value
Nonvested at March 31, 2018	243,235	$	5.39
Granted	624,717		8.06
Vested	(70,132)		5.38
Forfeited	(4,372)		5.29
Withheld related to net settlement	(23,590)		5.38
Nonvested at March 30, 2019	769,858	$	7.56
Granted	778,719		6.50
Vested	(174,239)		7.13
Forfeited	(277,597)		7.75
Withheld related to net settlement	(55,477)		6.73
Nonvested at March 28, 2020	1,041,264	$	6.84

Stock Options

In fiscal 2017, the Company granted nonqualified stock options under the Amended and Restated Plan annually to non-employee directors of the Company. The stock options granted vest in equal annual installments over 3 years. The stock options granted were approved by the Board and consisted of nonqualified stock options as defined by the IRS for corporate and individual tax reporting purposes. There were no stock option grants in fiscal 2019 and fiscal 2018. The following table summarizes the Company's annual stock option grants during fiscal 2017:


		Number of Stock
Grant Date		Options Granted
September 12, 2017		343,352

In connection with our stock‑based compensation plans, the Board considers the estimated fair value of the Company’s stock when setting the stock option exercise price as of the date of each grant. The Board determines the exercise price of stock options based on the closing price of the Company’s common stock as reported on The New York Stock Exchange on the grant date. Stock‑based compensation cost is measured at the grant date fair value and is recognized as an expense in the consolidated statements of operations, on a straight‑line basis, over the employee’s requisite service period (generally the vesting period of the equity grant). The Company estimates forfeitures for option grants that are not expected to vest. The Company issues new shares of common stock upon stock option exercise.

Stock‑based compensation cost related to stock options was $949, $1,319, and $1,520 during fiscal 2019, 2018, and 2017, respectively. As of March 28, 2020, there was a remaining unrecognized compensation cost of $448 (net of estimated forfeitures) that the Company expects to be recognized on a straight‑line basis over a weighted‑average remaining service period of approximately 0.6 years. The intrinsic value of shares exercised was $0, during each of fiscal 2019, 2018, and fiscal 2017, respectively. The fair value of shares vested was $1,167, $1,507, and $1,613, during fiscal 2019, fiscal 2018, and fiscal 2017, respectively.

The following table summarizes the Company’s stock option activity during fiscal 2019, fiscal 2018, and fiscal 2017:


	Fiscal Year
	2019						2018						2017
				Weighted-						Weighted-						Weighted-
		Weighted-		average				Weighted-		average				Weighted-		average
		average		contractual	Aggregate			average		contractual	Aggregate			average		contractual	Aggregate
		exercise		term	intrinsic			exercise		term	intrinsic			exercise		term	intrinsic
		price		remaining	value			price		remaining	value			price		remaining	value
	Shares	(per share)		(years)	(thousands)		Shares	(per share)		(years)	(thousands)		Shares	(per share)		(years)	(thousands)
Beginning balance	2,895,539	$	15.27				3,040,206	$	15.40				2,946,028	$	16.81
Granted	—	$	—				—	$	—				343,352	$	4.10
Exercised	—	$	—				—	$	—				—	$	—
Forfeited	(42,864)	$	8.83				(27,793)	$	18.00				(90,881)	$	15.13
Expired	(293,443)	$	15.98				(116,874)	$	17.89				(158,293)	$	17.31
Ending balance	2,559,232	$	15.30	4.27	$	—	2,895,539	$	15.27	5.27	$	2,460,384	3,040,206	$	15.40	6.23	$	482
Vested and exercisable at end of year	2,389,873	$	15.69	4.16	$	—	2,428,274	$	16.49	4.95	$	1,102,326	2,241,283	$	17.53	5.65	$	7

The fair value of stock options is estimated on the date of the grant using the Black‑Scholes option pricing model with the following weighted‑average assumptions:

Expected Term — The expected term of the options represents the period of time between the grant date of the options and the date the options are either exercised or canceled, including an estimate of options still outstanding. The Company utilized the simplified method for calculating the expected term for stock options as we do not have sufficient historical data to calculate based on actual exercise and forfeiture activity.

Expected Volatility — The expected volatility incorporates historical and implied volatility of comparable public companies for a period approximating the expected term.

Expected Dividend Yield — The expected dividend yield is based on the Company’s expectation of not paying dividends on its common stock for the foreseeable future.

Risk‑Free Interest Rate — The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximates the expected term.

Stock options granted during fiscal 2017 were granted at a weighted-average grant date fair value of $2.33. Such amounts were estimated using the Black Scholes option pricing model with the following weighted-average assumptions:



	Fiscal 2017
Expected term	6.0	years
Expected volatility	60.6	%
Risk-free interest rate	1.9	%
Dividend yield	0.0	%