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Note 17 - Share-based Compensation

12 Months Ended

Feb. 01, 2020

Share-based Payment Arrangement [Text Block]

17. 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 $10.2 million, $13.8 million and $11.3 million was recognized in 2019, 2018 and 2017, respectively, as a component of selling and administrative expenses. The following table details the share-based compensation expense by plan for 2019, 2018 and 2017:

($ thousands)	*2019*			2018		2017
Expense for share-based compensation plans, net of forfeitures:
Restricted stock	$	9,597		$	10,925	$	7,657
Stock performance awards		(502	)		1,741		3,508
Restricted stock units		1,129			1,091		66
Stock options		22			48		67
Total share-based compensation expense	$	10,246		$	13,805	$	11,298

The Company issued 214,435, 350,522 and 293,470 shares of common stock in 2019, 2018 and 2017, 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 an excess tax provision of $0.1 million in 2019 related to restricted stock vestings and dividends, performance share award vestings and stock options exercised. Excess tax benefits of $0.3 million and $1.3 million were recognized in 2018 and 2017, respectively. The excess tax provision or benefit for the respective periods were recorded in income tax (provision) benefit.

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 2019, 2018 and 2017:

	Number of Nonvested Restricted Shares			Weighted-Average Grant Date Fair Value
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
Granted		427,083			31.88
Vested		(291,061	)		28.18
Forfeited		(61,600	)		28.77
Nonvested at February 2, 2019		1,249,223			29.17
Granted		463,234			22.93
Vested		(222,562	)		30.26
Forfeited		(218,100	)		28.83
Nonvested at February 1, 2020		1,271,795		$	26.77

Of the 463,234 restricted shares granted during 2019, 12,914 shares have a cliff-vesting term of one year and 450,320 shares have a graded-vesting term of three years. Of the 427,083 restricted shares granted during 2018, 3,642 shares have a cliff-vesting term of one year, 413,941 shares have a graded-vesting term of three years, and 9,500 shares have a cliff-vesting term of four years. 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.

The total grant date fair value of restricted stock awards vested during the years ended February 1, 2020, February 2, 2019 and February 3, 2018, was $6.7 million, $8.2 million and $4.7 million, respectively. As of February 1, 2020, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $11.1 million, which will be amortized over the weighted-average remaining requisite service period of 1.4 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 following table summarizes performance share award activity for 2019, 2018 and 2017:

	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 28, 2017		402,499			804,998			28.36
Granted		169,500			339,000			26.90
Vested		(160,372	)		(320,744	)		29.16
Forfeited		(12,000	)		(24,000	)		27.46
Nonvested at February 3, 2018		399,627			799,254			27.45
Granted		155,000			310,000			31.84
Vested		(80,627	)		(161,254	)		30.12
Forfeited		(16,167	)		(32,334	)		26.83
Nonvested at February 2, 2019		457,833			915,666			28.49
Granted		180,000			360,000			23.42
Vested		(149,833	)		(299,666	)		26.64
Forfeited		(12,000	)		(24,000	)		28.33
Nonvested at February 1, 2020		476,000			952,000		$	27.16

As of February 1, 2020, there is an immaterial amount of remaining unrecognized compensation cost related to nonvested performance share awards.

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 no stock options during 2019, 2018 and 2017.

The following table summarizes stock option activity for 2019:

Number of Options Weighted-Average Exercise Price

Outstanding at February 2, 2019
42,667 $ 18.01

Exercised
(5,000 ) 9.63

Forfeited
— —

Canceled or expired
(2,000 ) 8.85

Outstanding at February 1, 2020
35,667 $ 19.70

Exercisable at February 1, 2020
27,333 $ 16.81

As of February 1, 2020, there are 8,334 of nonvested options with a weighted-average grant date fair value of $12.81 per share.

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. The RSUs payable in cash are 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 (loss). 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 6 and Note 15 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 1, 2020:

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

February 2, 2019
381,479 38,578 420,057 407,198 $ 28.70

Granted⁽³⁾
4,686 71,815 76,501 52,825 19.39

Vested
33,566 (33,566 ) — 10,926 34.05

Settled
(4,574 ) — (4,574 ) (4,574 ) 19.02

February 1, 2020
415,157 76,827 491,984 466,375 $ 17.66

⁽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 1, 2020 includes 272,836 RSUs payable in shares and 219,148 RSUs payable in cash.

⁽³⁾

Granted RSUs include 5,474 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 4,686 related to outstanding vested RSUs and 788 to outstanding nonvested RSUs.

The following table summarizes RSUs granted, vested and settled during 2019, 2018 and 2017:

($ thousands, except per unit amounts)

2019

2018

2017

Weighted-average grant date fair value of RSUs granted ⁽¹⁾
$ 19.59 $ 34.23 $ 27.93

Fair value of RSUs vested
$ 589 $ 1,340 $ 1,349

RSUs settled
4,574 5,914 10,356

⁽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 2019, 2018 and 2017:

($ thousands)

2019

2018

2017

Compensation (income) expense
$ (1,756 ) $ 287 $ 1,645

Income tax provision (benefit)
452 (74 ) (620 )

Compensation (income) expense, net of income tax provision (benefit)
$ (1,304 ) $ 213 $ 1,025

The aggregate fair value of RSUs outstanding and currently vested at February 1, 2020 is $8.6 million and $7.3 million, respectively. The liabilities associated with the accrued RSUs totaled $2.6 million and $4.4 million as of February 1, 2020 and February 2, 2019, respectively.