SHARE-BASED COMPENSATION

The Company has share-based incentive compensation plans under which certain officers, employees and members of the Board of Directors are participants and may be granted restricted stock, stock performance awards and stock options.

ASC 718, Compensation – Stock Compensation, and ASC 505, Equity, require companies to recognize compensation expense in an amount equal to the fair value of all share-based payments granted to employees over the requisite service period for each award. In certain limited circumstances, the Company’s incentive compensation plan provides for accelerated vesting of the awards, such as in the event of a change in control, qualified retirement, death or disability. The Company has a policy of issuing treasury shares in satisfaction of share-based awards.

Share-based compensation expense of $7.7 million, $7.5 million and $6.2 million was recognized in 2016, 2015 and 2014, respectively, as a component of selling and administrative expenses. The following table details the share-based compensation expense by plan and the total related income tax benefit for 2016, 2015 and 2014:



($ thousands)	2016		2015		2014
Expense (income) for share-based compensation plans, net of forfeitures:
Restricted stock grants	$	5,858	$	6,027	$	6,236
Stock performance awards	1,829		1,398		—
Stock options	38		66		(46		)
Total share-based compensation expense	$	7,725	$	7,491	$	6,190

In addition to the share-based compensation expense above, the Company recognized cash-based expense related to performance share units and cash awards granted under the performance share plans. In 2016, 2015 and 2014, the Company recognized $2.9 million, $5.1 million and $6.6 million, respectively, in expense for cash-based awards under the performance share plans.

The Company issued 203,066, 59,682 and 373,752 shares of common stock in 2016, 2015 and 2014, respectively, for restricted stock grants, stock performance awards issued to employees, stock options exercised and common and restricted stock grants issued to directors, net of forfeitures and shares withheld to satisfy the minimum tax withholding requirement. There were no significant modifications to any share-based awards in 2016, 2015 or 2014.

Restricted Stock

Under the Company’s incentive compensation plans, restricted stock of the Company may be granted at no cost to certain officers, key employees and directors. Plan participants are entitled to cash dividends and voting rights for their respective shares. The restricted stock generally cliff vests after four years and restrictions limit the sale or transfer of these shares during the requisite service period. Expense for restricted stock grants is recognized on a straight-line basis separately for each vesting portion of the stock award based upon fair value of the award on the date of grant. The fair value of the restricted stock grants is the quoted market price for the Company’s common stock on the date of grant.

The following table summarizes restricted stock activity for 2016, 2015 and 2014:



	Number of Nonvested Restricted Shares		Weighted-Average Grant Date Fair Value
Nonvested at February 1, 2014	1,700,098		$13.25
Granted	281,710		28.17
Vested	(364,238	)	14.21
Forfeited	(55,100	)	15.89
Nonvested at January 31, 2015	1,562,470		15.61
Granted	318,921		30.02
Vested	(492,092	)	14.10
Forfeited	(126,850	)	18.74
Nonvested at January 30, 2016	1,262,449		19.55
Granted	402,100		27.55
Vested	(428,750	)	9.29
Forfeited	(107,750	)	24.24
Nonvested at January 28, 2017	1,128,049		$25.85

All of the 402,100 restricted shares granted during 2016 have a vesting term of four years. Of the 318,921 restricted shares granted during 2015, 306,421 have a vesting term of four years and 12,500 of the shares have a vesting term of five years. Of the 281,710 restricted shares granted during 2014, 279,910 have a vesting term of four years and 1,800 had a vesting term of one year.

The total grant date fair value of restricted stock awards vested during the years ended January 28, 2017, January 30, 2016 and January 31, 2015, was $4.0 million, $6.9 million and $5.2 million, respectively. As of January 28, 2017, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $14.1 million, which will be amortized over the weighted-average remaining requisite service period of 2.6 years.

The Company recognized excess tax benefits related to restricted stock vesting and dividends of $2.3 million, $2.6 million and $0.8 million in 2016, 2015 and 2014, respectively, which were reflected as an increase to additional paid-in capital.

Performance Share Awards

Under the Company’s incentive compensation plans, common stock or cash may be awarded at the end of the performance period at no cost to certain officers and key employees if certain financial goals are met. Under the plan, employees are granted performance share awards at a target number of shares or units, which vest over a three-year service period. At the end of the vesting period, the employee will have earned an amount of shares between 0% and 200% of the targeted award, depending on the achievement of specified financial goals for the service period. If the awards are granted in units, the employee will be given an amount of cash ranging from 0% to 200% of the equivalent market value of the targeted award.

Expense for performance share awards is recognized based upon the fair value of the awards on the date of grant and the anticipated number of shares or cash to be awarded on a straight-line basis for each vesting portion of the share award. The fair value of the performance share awards granted in units is the unadjusted quoted market price for the Company’s common stock on the date of grant, as further discussed in Note 13 to the consolidated financial statements.

The following table summarizes performance share award activity for 2016, 2015 and 2014:



	Number of Performance Share Awards at Target Level		Number of Nonvested Performance Share Awards at Maximum Level		Weighted-Average Grant Date Fair Value
Nonvested at February 1, 2014	164,525		329,050		$12.69
Granted (award of units payable in cash)	88,185		176,370		28.18
Vested	(84,275	)	(168,550	)	9.27
Expired	—		—		—
Forfeited	(19,900	)	(39,800	)	15.96
Nonvested at January 31, 2015	148,535		297,070		23.39
Granted (award payable in shares)	177,921		355,842		30.12
Vested	(15,182	)	(30,364	)	24.71
Expired	—		—		—
Forfeited	(3,750	)	(7,500	)	29.47
Nonvested at January 30, 2016	307,524		615,048		27.14
Granted (award payable in shares)	159,000		318,000		26.64
Vested	(56,175	)	(112,350	)	17.00
Expired	—		—		—
Forfeited	(7,850	)	(15,700	)	27.14
Nonvested at January 28, 2017	402,499		804,998		$28.36

As of January 28, 2017, the remaining unrecognized compensation cost related to nonvested performance share awards was $5.8 million, which will be recognized over the weighted-average remaining service period of 1.5 years.

Stock Options

Stock options are granted to employees at exercise prices equal to the quoted market price of the Company’s stock at the date of grant. Stock options generally vest over four years and have a term of 10 years. Compensation cost for all stock options is recognized over the requisite service period for each award. No dividends are paid on unexercised options. Expense for stock options is recognized on a straight-line basis separately for each vesting portion of the stock option award.

The Company granted 16,667 stock options during 2015. No stock options were granted during 2016 or 2014. Fair values of options granted were estimated using the Black-Scholes option-pricing model based on the following assumptions:



	2015
Dividend yield	1.0	%
Expected volatility	45.5	%
Risk-free interest rate	1.8	%
Expected term (in years)	7

Dividend yields are based on historical dividend yields. Expected volatilities are based on historical volatilities of the Company’s common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the options. The expected term of options represents the weighted-average period of time that options granted are expected to be outstanding, giving consideration to vesting schedules and the Company’s historical exercise patterns.

Summarized information about stock options outstanding and exercisable at January 28, 2017 is as follows:



	Outstanding			Exercisable
Exercise Price Range	Number of Options	Weighted- Average Remaining Life (Years)	Weighted- Average Exercise Price	Number of Options	Weighted- Average Remaining Life (Years)	Weighted- Average Exercise Price
$3.33 - $8.07	28,250	2.8	$4.63	18,250	3.2	$5.35
$8.08 - $14.60	33,875	4.0	10.99	33,875	4.0	10.99
$14.61 - $24.82	24,500	2.4	16.08	24,500	2.4	16.08
$24.83 - $32.22	16,667	8.0	29.18	—	—	—
$32.23 - $35.25	47,248	0.1	35.25	47,248	0.1	35.25
	150,540	2.8	$20.25	123,873	2.1	$20.42

The aggregate intrinsic value of stock options outstanding and currently exercisable at January 28, 2017 was $1.7 million and $1.4 million, respectively. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards as compared to the quoted price of the Company’s common stock as of the reporting date.

The following table summarizes stock option activity for 2016 under the current and prior plans:



	Number of Options		Weighted-Average Exercise Price
Outstanding at January 30, 2016	301,295		$18.93
Exercised	(111,381	)	14.86
Forfeited	(9,749	)	35.25
Canceled or expired	(29,625	)	22.17
Outstanding at January 28, 2017	150,540		$20.25
Exercisable at January 28, 2017	123,873		$20.42

The intrinsic value of stock options exercised was $1.4 million, $1.3 million and $3.8 million for 2016, 2015 and 2014, respectively. The amount of cash received from the exercise of stock options was $0.6 million in 2016, $0.4 million in 2015 and $3.2 million in 2014. In addition, 39,402, 32,139 and 60,624 shares were tendered by employees in satisfaction of the exercise price of stock options during 2016, 2015 and 2014, respectively.

The Company recognized an immaterial amount of excess tax benefits related to stock option exercises in 2016. The Company recognized $0.1 million in excess tax benefits related to stock option exercises in 2015 and 2014, respectively, which were reflected as an increase to additional paid-in capital.

The following table summarizes nonvested stock option activity for 2016 under the current and prior plans:



	Number of Nonvested Options		Weighted-Average Grant Date Fair Value
Nonvested at January 30, 2016	33,667		$	7.16
Granted	—		—
Vested	(7,000	)	2.36
Forfeited	—		—
Nonvested at January 28, 2017	26,667		$	8.42

The weighted-average grant date fair value of stock options granted for 2015 was $12.81. The total grant date fair value of stock options vested during 2015 and 2014 was $0.1 million and $0.3 million, respectively, and immaterial in 2016. As of January 28, 2017, the total remaining unrecognized compensation cost related to nonvested stock options was $0.1 million, which will be amortized over the weighted-average remaining requisite service period of 2.6 years.

Restricted Stock Units for Non-Employee Directors

Equity-based grants may be made to non-employee directors in the form of cash-equivalent restricted stock units (“RSUs”) at no cost to the non-employee director. The RSUs are subject to a vesting requirement (usually one year), earn dividend equivalent units and are payable in cash on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock. Dividend equivalents are paid on outstanding RSUs at the same rate as dividends on the Company’s common stock, are automatically re-invested in additional RSUs and vest immediately as of the payment date for the dividend. Expense related to the initial grant of RSUs is recognized ratably over the vesting period based upon the fair value of the RSUs, as remeasured at the end of each period. Expense for the dividend equivalents is recognized at fair value immediately. Gains and losses resulting from changes in the fair value of the RSUs subsequent to the vesting period and through the settlement date are reported in the Company’s consolidated statements of earnings. Refer to Note 5 and Note 13 to the consolidated financial statements for information regarding the deferred compensation plan for non-employee directors.

The following table summarizes restricted stock unit activity for the year ended January 28, 2017:



		Outstanding						Accrued ⁽¹⁾		Nonvested RSUs
		Number of Vested RSUs		Number of Nonvested RSUs		Total Number of RSUs		Total Number of RSUs		Weighted-Average Grant Date Fair Value
January 30, 2016		312,437		36,000		348,437		336,437		$31.67
Granted ⁽²⁾		3,360		52,697		56,057		38,657		21.61
Vested		36,497		(36,497	)	—		12,000		31.35
Settled		(52,524	)	—		(52,524	)	(52,524	)	32.94
January 28, 2017		299,770		52,200		351,970		334,570		$21.74
(1)	Accrued RSUs include all fully vested awards and a pro-rata portion of nonvested awards based on the elapsed portion of the vesting period.
(2)	Granted RSUs include 3,857 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 3,360 related to outstanding vested RSUs and 497 to outstanding nonvested RSUs.

The following table summarizes RSUs granted, vested and settled during 2016, 2015 and 2014:



($ thousands, except per unit amounts)		2016		2015		2014
Weighted-average grant date fair value of RSUs granted ⁽¹⁾		$	21.95	$	31.54	$	28.69
Fair value of RSUs vested		$	1,086	$	1,049	$	1,558
RSUs settled		52,524		21,698		57,260
(1)	Includes dividend equivalents granted on outstanding RSUs, which vest immediately.

The following table details the RSU compensation expense and the related income tax benefit for 2016, 2015 and 2014:



($ thousands)	2016			2015			2014
Compensation expense	$	2,459		$	704		$	2,707
Income tax benefit	(956		)	(276		)	(1,053		)
Compensation expense, net of income tax benefit	$	1,503		$	428		$	1,654

The aggregate intrinsic value of RSUs outstanding and currently vested at January 28, 2017 is $10.5 million and $8.9 million, respectively. The liabilities associated with the accrued RSUs totaled $9.4 million and $8.9 million as of January 28, 2017 and January 30, 2016, respectively.