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, restricted stock units 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 $11.3 million, $7.7 million and $7.5 million was recognized in 2017, 2016 and 2015, respectively, as a component of selling and administrative expenses. The following table details the share-based compensation expense by plan for 2017, 2016 and 2015:



($ thousands)	2017		2016		2015
Expense for share-based compensation plans, net of forfeitures:
Restricted stock	$	7,657	$	5,858	$	6,027
Stock performance awards	3,508		1,829		1,398
Restricted stock units	66		—		—
Stock options	67		38		66
Total share-based compensation expense	$	11,298	$	7,725	$	7,491

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 2017, 2016 and 2015, the Company recognized $0.1 million, $2.9 million and $5.1 million, respectively, in expense for cash-based awards under the performance share plans. During the first quarter of 2017, the Company's remaining performance share awards granted in units vested and were settled in cash at fair value.

The Company issued 293,470, 203,066 and 59,682 shares of common stock in 2017, 2016 and 2015, respectively, for restricted stock grants, stock performance awards issued to employees, stock options exercised and common and restricted stock grants issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement.

The Company recognized excess tax benefits related to restricted stock vestings and dividends, performance share award vestings and stock options exercised of $1.3 million, $2.3 million and $2.7 million in 2017, 2016 and 2015, respectively. In accordance with ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which the Company adopted during the first quarter of 2017, the Company recognized these excess tax benefits within the income tax provision in 2017, as further discussed in Note 1 to the consolidated financial statements. The excess tax benefits recognized in 2016 and 2015 were reflected as an increase to additional paid-in capital.

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 awards 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 2017, 2016 and 2015:



	Number of Nonvested Restricted Shares		Weighted-Average Grant Date Fair Value
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
Granted	392,812		27.07
Vested	(267,585	)	17.55
Forfeited	(78,475	)	29.26
Nonvested at February 3, 2018	1,174,801		$27.92

Of the 392,812 restricted shares granted during 2017, 4,492 shares have a cliff-vesting term of one year, 12,000 shares have a graded-vesting term of four years, and 376,320 shares have a cliff-vesting term of four years. Of the 402,100 restricted shares granted during 2016, 45,000 shares have a graded-vesting term of four years and 357,100 shares have a cliff-vesting term of four years. Of the 318,921 restricted shares granted during 2015, 306,421 have a cliff-vesting term of four years and 12,500 had a cliff-vesting term of five years.

The total grant date fair value of restricted stock awards vested during the years ended February 3, 2018, January 28, 2017 and January 30, 2016, was $4.7 million, $4.0 million and $6.9 million, respectively. As of February 3, 2018, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $15.1 million, which will be amortized over the weighted-average remaining requisite service period of 2.5 years.

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 14 to the consolidated financial statements. During the first quarter of 2017, the Company's remaining performance share awards granted in units vested and were settled in cash at fair value.

The following table summarizes performance share award activity for 2017, 2016 and 2015:



	Number of Nonvested Performance Share Awards at Target Level		Number of Nonvested Performance Share Awards at Maximum Level		Weighted-Average Grant Date Fair Value
Nonvested at January 31, 2015	148,535		297,070		$23.39
Granted	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	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
Granted	169,500		339,000		26.90
Vested	(160,372	)	(320,744	)	29.16
Expired	—		—		—
Forfeited	(12,000	)	(24,000	)	27.46
Nonvested at February 3, 2018	399,627		799,254		$27.45

As of February 3, 2018, the remaining unrecognized compensation cost related to nonvested performance share awards was $4.5 million, which will be recognized over the weighted-average remaining service period of 1.8 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 2017 or 2016. The fair value of options granted was 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 February 3, 2018 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 - $5.99	17,000	1.1	$3.49	12,000	1.1	$3.56
$6.00 - $9.17	14,875	3.4	8.05	14,875	3.4	8.05
$9.18 - $14.60	16,000	3.1	11.22	16,000	3.1	11.22
$14.61 - $22.34	16,500	1.4	15.23	16,500	1.4	15.23
$22.35 - $29.18	16,667	7.0	29.18	—	—	—
	81,042	3.2	$13.53	59,375	2.3	$9.99

The aggregate intrinsic value of stock options outstanding and currently exercisable at February 3, 2018 was $1.2 million and $1.1 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 2017 under the current and prior plans:



	Number of Options		Weighted-Average Exercise Price
Outstanding at January 28, 2017	150,540		$20.25
Exercised	(21,250	)	12.55
Forfeited	—		—
Canceled or expired	(48,248	)	34.94
Outstanding at February 3, 2018	81,042		$13.53
Exercisable at February 3, 2018	59,375		$9.99

The intrinsic value of stock options exercised was $0.3 million, $1.4 million and $1.3 million for 2017, 2016 and 2015, respectively. The amount of cash received from the exercise of stock options was an immaterial amount in 2017, $0.6 million in 2016 and $0.4 million in 2015. In addition, 9,622, 39,402 and 32,139 shares were tendered by employees in satisfaction of the exercise price of stock options during 2017, 2016 and 2015, respectively.

The following table summarizes nonvested stock option activity for 2017 under the current and prior plans:



	Number of Nonvested Options		Weighted-Average Grant Date Fair Value
Nonvested at January 28, 2017	26,667		$8.42
Granted	—		—
Vested	(5,000	)	1.12
Forfeited	—		—
Nonvested at February 3, 2018	21,667		$10.11

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 was $0.1 million and immaterial in 2017 and 2016. As of February 3, 2018, 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 1.6 years.

Restricted Stock Units for Non-Employee Directors

Equity-based grants may be made to non-employee directors in the form of restricted stock units (“RSUs”) payable in cash or common stock 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 or common stock 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 payable in cash subsequent to the vesting period and through the settlement date are reported in the Company’s consolidated statements of earnings. During the fourth quarter of 2017, the Company converted 210,302 of its director RSUs payable in cash with a value of $6.3 million to RSUs payable in common stock. Refer to Note 5 and Note 14 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 February 3, 2018:



		Outstanding						Accrued ⁽¹⁾		Nonvested RSUs
		Number of Vested RSUs		Number of Nonvested RSUs		Total Number of RSUs ⁽²⁾		Total Number of RSUs		Weighted-Average Grant Date Fair Value
January 28, 2017		299,770		52,200		351,970		334,570		$21.74
Granted ⁽³⁾		2,980		45,371		48,351		33,378		27.84
Vested		46,851		(46,851	)	—		15,467		24.89
Settled		(10,356	)	—		(10,356	)	(10,356	)	26.68
February 3, 2018		339,245		50,720		389,965		373,059		$24.29
(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)	Total number of RSUs as of February 3, 2018 includes 210,759 RSUs payable in shares and 179,206 RSUs payable in cash.
(3)	Granted RSUs include 3,431 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 2,980 related to outstanding vested RSUs and 451 to outstanding nonvested RSUs.

The following table summarizes RSUs granted, vested and settled during 2017, 2016 and 2015:



($ thousands, except per unit amounts)		2017		2016		2015
Weighted-average grant date fair value of RSUs granted ⁽¹⁾		$	27.93	$	21.95	$	31.54
Fair value of RSUs vested		$	1,349	$	1,086	$	1,049
RSUs settled		10,356		52,524		21,698
(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 2017, 2016 and 2015:



($ thousands)	2017			2016			2015
Compensation expense	$	1,645		$	2,459		$	704
Income tax benefit	(620		)	(956		)	(276		)
Compensation expense, net of income tax benefit	$	1,025		$	1,503		$	428

The aggregate fair value of RSUs outstanding and currently vested at February 3, 2018 is $11.2 million and $9.8 million, respectively. The liabilities associated with the accrued RSUs totaled $4.3 million and $9.4 million as of February 3, 2018 and January 28, 2017, respectively. As discussed above, director RSUs payable in cash totaling $6.3 million were converted to RSUs payable in common stock during 2017.