Note 9

Shareholders’ Equity and Share-Based Compensation

The following tables set forth the changes in Brown Shoe Company, Inc. shareholders’ equity and noncontrolling interests for the thirteen weeks ended May 4, 2013:



($ thousands)	Brown Shoe Company, Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
Equity at February 2, 2013	$	425,129	$	772	$	425,901
Net loss		(10,762)		(70)		(10,832)
Other comprehensive (loss) income		(659)		42		(617)
Dividends declared		(3,027)		–		(3,027)
Issuance of common stock under share-based plans, net		(2,070)		–		(2,070)
Tax benefit related to share-based plans		1,962		–		1,962
Share-based compensation expense		1,617		–		1,617
Equity at May 4, 2013	$	412,190	$	744	$	412,934

Accumulated Other Comprehensive Income (Loss)

The following table sets forth the changes in accumulated other comprehensive income (loss) by component:



							Accumulated
	Accumulated		Accumulated		Accumulated		Other
	Currency		Derivative		Postretirement		Comprehensive
($ thousands)	Translation		Transactions		Transactions		Income (Loss)
Balance February 2, 2013	$	6,912	$	(81)	$	(5,947)	$	884
Other comprehensive loss before reclassifications		(690)		(27)		–		(717)
Amounts reclassified from accumulated other comprehensive income		–		(87)		145		58
Other comprehensive (loss) income		(690)		(114)		145		(659)
Balance May 4, 2013	$	6,222	$	(195)	$	(5,802)	$	225

The following table sets forth the reclassifications out of accumulated other comprehensive income (loss) and the related tax effect by component:



	Derivative		Postretirement		Tax Benefit
($ thousands)	Transactions		Transactions		(Provision)		Total
Selling and administrative expenses:
Net gains from derivative financial instruments	$	(132)	$	–	$	45	$	(87)
Pension and other postretirement benefits actuarial loss		–		228		(85)		143
Pension benefits prior service expense		–		2		–		2
	$	(132)	$	230	$	(40)	$	58

Share-Based Compensation

During the first quarter of 2013, the Company granted 4,000 stock options to certain employees with a weighted-average exercise price and grant date fair value of $17.00 and $9.46, respectively. These options vest in four equal increments, 25% vesting over each of the next four years, with a term of ten years. Share-based compensation expense is recognized on a straight-line basis separately for each vesting portion of the stock option award.

The Company granted 367,785 restricted shares to certain employees with a weighted-average grant date fair value of $16.99 during the first quarter of 2013. The restricted shares vest in four years and share-based compensation expense will be recognized on a straight-line basis over the four-year period.

The Company granted 70,225 performance share units during the first quarter of 2013 with a weighted-average grant date fair value of $17.00. Vesting of performance-based units is dependent upon the financial performance of the Company and the attainment of certain financial goals over the next three years and during the cumulative three year period. Performance share units are payable in cash based on the Company’s stock price upon payout. The performance share units may pay out at a maximum of 200% of the target number of units. Share-based compensation expense is being recognized based on the fair value of the award on the date of grant and the anticipated number of units to be awarded in accordance with the vesting schedule of the units over the three-year service period. The performance share units are settled in cash, and as a result, marked to market each period.

The Company recognized share-based compensation expense of $1.6 million and $1.4 million during the first quarter of 2013 and first quarter of 2012, respectively. The Company issued 521,736 shares of common stock during the first quarter of 2013 for restricted stock, 2010 stock performance awards, stock options exercised and directors’ fees. During the first quarter of 2013, the Company cancelled restricted stock awards of 28,000 shares as a result of forfeitures.

The Company also granted 1,307 restricted stock units to non-employee directors with a weighted-average grant date fair value of $15.93 during the first quarter of 2013. All restricted stock units granted during the first quarter of 2013 immediately vested and compensation expense was fully recognized.