Share-Based Compensation

The Company records the fair value of share-based payments to employees in the Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period.

Share-Based Compensation Plans

In 2010, the Board approved, and the Company implemented, the Express, Inc. 2010 Incentive Compensation Plan (as amended, the "2010 Plan"). The 2010 Plan authorizes the Compensation Committee (the "Committee") of the Board and its designees to offer eligible employees and directors cash and stock-based incentives as deemed appropriate in order to attract, retain, and reward such individuals. Effective April 3, 2012, the Board amended the 2010 Plan to, among other things, reduce the number of shares available for issuance under the 2010 Plan. As of January 30, 2016, 15.2 million shares were authorized to be granted under the 2010 Plan and 7.2 million remained available for future issuance.

The following summarizes share-based compensation expense:



	2015		2014		2013
	(in thousands)
Stock options	$	3,399	$	7,556	$	8,883
Restricted stock units and restricted stock	15,039		11,770		12,291
Total share-based compensation	$	18,438	$	19,326	$	21,174

The stock compensation related income tax benefit recognized by the Company in 2015, 2014, and 2013 was $4.7 million, $3.9 million, and $3.5 million, respectively.

Stock Options

During 2015, the Company granted stock options under the 2010 Plan. The fair value of the stock options is determined using the Black-Scholes-Merton option-pricing model as described later in this note. Stock options granted in 2015 under the 2010 Plan vest 25% per year over four years or upon reaching retirement eligibility, defined as providing 10 years of service and being at least 55 years old. These options have a ten year contractual life. The expense for stock options is recognized using the straight-line attribution method.

The Company's activity with respect to stock options during 2015 was as follows:



	Number of Shares		Grant Date Weighted Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Outstanding, January 31, 2015	3,470		$	18.45
Granted	249		$	16.37
Exercised	(74	)	$	17.16
Forfeited or expired	(199	)	$	18.86
Outstanding, January 30, 2016	3,446		$	18.31	5.9	$	893
Expected to vest at January 30, 2016	764		$	17.19	8.0	$	488
Exercisable at January 30, 2016	2,663		$	18.64	5.3	$	392

The following provides additional information regarding the Company's stock options:



	2015		2014		2013
	(in thousands, except per share amounts)
Weighted average grant date fair value of options granted	$	7.79	$	8.49	$	9.50
Total intrinsic value of options exercised	$	176	$	—	$	1,001

As of January 30, 2016, there was approximately $3.0 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of approximately 1.4 years.

The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees and directors. The Company's determination of the fair value of stock options is affected by the Company's stock price as well as a number of subjective and complex assumptions. These assumptions include the risk-free interest rate, the Company's expected stock price volatility over the term of the awards, expected term of the award, and dividend yield.

The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:



	2015		2014		2013
Risk-free interest rate ⁽¹⁾	1.60	%	1.86	%	1.14	%
Price Volatility ⁽²⁾	47.81	%	53.73	%	55.93	%
Expected term (years) ⁽³⁾	6.25		6.25		6.20
Dividend yield ⁽⁴⁾	—		—		—


(1)	Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.

(2)

For the first two years following the initial public offering of the Company's common stock, this was based on the historical volatility of selected comparable companies over a period consistent with the expected term of the stock options because the Company had a limited history of being publicly traded. Comparable companies were selected primarily based on industry, stage of life cycle, and size. Beginning in May 2012, the Company began using its own volatility as an additional input in the determination of expected volatility.


(3)	Calculated utilizing the “simplified” methodology prescribed by SAB No. 107 due to the lack of historical exercise data necessary to provide a reasonable basis upon which to estimate the term.


(4)	The Company does not currently plan on paying regular dividends.

Restricted Stock Units and Restricted Stock

During 2015, the Company granted restricted stock units ("RSUs") under the 2010 Plan, including 0.4 million RSUs with performance conditions. The fair value of the RSUs is determined based on the Company's closing stock price on the day prior to the grant date in accordance with the 2010 Plan. The expense for RSUs without performance conditions is recognized using the straight-line attribution method. The expense for RSUs with performance conditions is recognized using the graded vesting method based on the expected achievement of the performance conditions. The RSUs with performance conditions are also subject to time-based vesting. All of the RSUs granted during 2015 that are earned based on the achievement of performance criteria will vest on April 15, 2018. RSUs without performance conditions vest ratably over four years.

The Company's activity with respect to RSUs and restricted stock, including awards with performance conditions, for 2015 was as follows:



	Number of Shares		Grant Date Weighted Average Fair Value
	(in thousands, except per share amounts)
Unvested, January 31, 2015	1,435		$	17.75
Granted ⁽¹⁾	1,292		$	16.39
Performance Shares Adjustment ⁽²⁾	366		$	15.88
Vested	(623	)	$	18.07
Forfeited	(258	)	$	16.94
Unvested, January 30, 2016	2,212		$	16.66


(1)	Approximately 0.5 million RSUs with three-year performance conditions are included in this amount which represents 125% of the number of shares granted. This is based on current estimates against predefined financial performance targets.


(2)	Represents a change in the number of 2014 RSUs with performance conditions expected to vest. The change was due to an updated estimate of the Company's achievement against predefined financial targets. This amount represents approximately 77% of the number of RSUs with performance conditions granted in 2014.

The total fair value/intrinsic value of RSUs and restricted stock that vested was $11.2 million, $13.4 million, and $8.5 million, during 2015, 2014, and 2013, respectively. As of January 30, 2016, there was approximately $20.4 million of total unrecognized compensation expense related to unvested RSUs and restricted stock, which is expected to be recognized over a weighted-average period of approximately 1.8 years.