Stockholders' Equity

12 Months Ended

Jan. 30, 2022

Equity [Abstract]

Stockholders' Equity

Note 8: Stockholders’ Equity

Shareholder rights plan

Effective March 18, 2020, the Board of Directors of the Company adopted a 364-day duration Shareholder Rights Plan (the “Rights Plan”) and declared a dividend of one preferred share purchase right for each outstanding share of common stock to shareholders of record on March 30, 2020 to purchase from the Company one one-ten thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company for an exercise price of $45.00, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. The Rights Plan expired on March 17, 2021.

Sale of common stock

During fiscal 2020, the Company sold 16,743,352 shares of its common stock at an average price of $11.08 per share, for proceeds of $182,207, net of offering costs.

Share repurchases and cash dividends

On December 6, 2021, our Board of Directors approved a share repurchase program, under which the Company may repurchase shares on the private market, through privately negotiated transactions and through trading plans. The share repurchase program may be modified, suspended, or discontinued at any time. The share repurchase authorization limit is $100,000 and the authorization expires at the end of fiscal 2022. As a result of the impacts to our business arising from the COVID-19 pandemic, share purchases and dividend payments were indefinitely suspended during fiscal 2021 and fiscal 2020, and the previous share repurchase program expired at the end of fiscal 2020. During fiscal 2019, the Company purchased 7,116,585 shares of stock for $297,317. Our Board of Directors authorized and declared quarterly cash dividends totaling $0.62 per share of common stock during fiscal 2019. The fiscal 2019 fourth quarter dividend was paid in the first quarter of fiscal 2020.    

The Company treats shares withheld for tax purposes on behalf of our employees in connection with the vesting of restricted stock units as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. These withheld shares of common stock were not considered common stock repurchases under the share repurchase plan. During the fiscal year ended 2021, 2020 and 2019, we withheld 231,451, 58,715, and 11,536 shares of common stock to satisfy $9,465, $929, and $595 of employees’ tax obligations, respectively. The share activity in fiscal 2020 includes the settlements of $2,517 cash obligations through the issuance of 160,540 shares of common stock.

Share-based compensation

The Company maintains an equity incentive plan under which it may grant awards denominated in the Company’s common stock or units of the Company’s common stock, as well as cash variable compensation awards. The Company’s long-term incentive compensation provides awards to executive and management personnel as well as directors. Prior to October 2014, we issued share-based awards under our 2010 Stock Incentive Plan, and all outstanding grants under this plan are fully vested. Share-based awards granted after October 2014 were issued pursuant to the terms of our 2014 Stock Incentive Plan. We may grant stock option or restricted stock units to executive and management personnel as well as directors. Options granted to employees generally become exercisable ratably over a three-year period from the grant date. Performance-based restricted stock units and market stock units (“MSU’s) awarded to employees generally either vest ratably over three years or fully vest after three years, subject to the achievement of specified performance or market conditions, as applicable. Time-based restricted stock units have various service periods not exceeding five years.

Options granted under both plans terminate on the ten-year anniversary of the grants. Stock option awards generally provide continued vesting, in the event of termination, for employees that reach age 60 or greater and have at least ten years of service or for employees that reach age 65 (“retired employees”). Unvested stock options, and restricted stock units are generally forfeited by employees who terminate prior to vesting and prorated for retired employees.

Each share granted subject to a stock option award or time-based restricted stock unit award reduces the number of shares available under our stock incentive plans by one share. Each share granted subject to a performance restricted stock unit or market stock unit award reduces the number of shares available under our stock incentive plans by a range of one share if the target performance or market condition is achieved, up to a maximum of two shares for performance or market condition achieved above target and a minimum of no shares if performance or market condition achieved is below a minimum threshold target. On June 23, 2020, shareholders approved a proposal to amend the 2014 Stock Incentive Plan to increase the number of shares available for awards to 6,100,000 shares. The number of unissued common shares reserved for future grants under the 2014 Stock Incentive Plan is approximately 3,600,000 as of January 30, 2022. The Company satisfies stock option exercises and vesting of restricted stock units with newly issued shares.

The grant date fair value of our stock option awards has been determined using the Black-Scholes option valuation model. The Black-Scholes option valuation model uses assumptions of expected volatility, the expected dividend yield of our stock, the expected term of the awards and the risk-free interest rate, as well as an

estimated fair value of our common stock. Fair value valuation analyses were prepared by an independent third-party valuation firm, utilizing the market-determined share price. Since our stock had not been publicly traded prior to our IPO, the expected volatility was based on an average of the historical volatility of certain of our competitors’ stocks over the expected term of the share-based awards with the calculation placing more weight on company-specific volatilities each year thereafter. The dividend yield assumption was based on our history. The simplified method was used to estimate the expected term of share-based awards. This method was used because the Company does not have enough historical option activity to derive an expected life. The risk-free interest rate was based on the implied yield on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term. No options were granted during fiscal 2021 or fiscal 2020. The significant assumptions used in determining the underlying fair value of the weighted-average options granted in fiscal 2019 were as follows:

	Fiscal 2019
Volatility		34.2	%
Risk free interest rate		2.34	%
Expected dividend yield		1.15	%
Expected term—in years		6.0
Weighted average grant-date fair value	$	16.93

Based on the terms and conditions of our MSU awards, the grant date fair value of the MSU’s was determined using a Monte-Carlo simulation model, which simulated the Company’s stock price over the performance period. During fiscal 2021, the average volatility assumption was 76.9% and the risk-free interest rate used to discount the value of the award was 0.24%. During fiscal 2020, the average volatility assumption was 126.2% and the risk-free interest rate used to discount the value of the award was 0.16%. The dividend yield was zero as the Company has suspended dividends as a result of the COVID-19 pandemic.

Compensation expense related to stock options with only service conditions (time-based) is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award or to the date on which retirement eligibility is achieved, if shorter. Compensation expense related to stock option plans was $431, $1,318, and $3,010 during the fiscal years ended January 30, 2022, January 31, 2021, and February 2, 2020, respectively.

Compensation expense for time-based restricted stock units is based on the market price of the shares underlying the awards on the grant date. Compensation expense for performance-based restricted stock units reflects the estimated probability that performance conditions at target or above will be met. Restricted stock units are expensed ratably over the service period. The effect of market conditions is considered in determining the grant date fair value of MSU awards, which is not subsequently revised based on actual performance. We recorded compensation expense related to our restricted stock unit awards of $12,041, $5,667, and $3,847 during the fiscal years ended January 30, 2022, January 31, 2021, and February 2, 2020, respectively.

Compensation expense related to stock options and restricted stock units is included in “General and administrative expenses” in the Consolidated Statements of Comprehensive Income (Loss). Forfeitures are recorded as they occur.

Transactions related to stock option awards during fiscal 2021 were as follows:

	2014 Stock Incentive Plan					2010 Stock Incentive Plan
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding at January 31, 2021		1,231,601		$	36.77		173,563		$	7.51
Exercised		(270,976	)		16.36		(100,009	)		6.90
Forfeited		(27,246	)		43.78		—			—
Outstanding at January 30, 2022		933,379			42.50		73,554			8.33
Exercisable at January 30, 2022		872,895		$	41.86		73,554		$	8.33

The total intrinsic value of options exercised during fiscal 2021, 2020, and 2019 was $10,358, $963, and $3,968, respectively. The unrecognized expense related to our stock option plan totaled approximately $64 as of January 30, 2022 and will be expensed over a weighted average of 0.2 years. For options outstanding as of January 30, 2022, the weighted average remaining contractual life was 4.8 years and the aggregate intrinsic value was $3,800. For options exercisable as of January 30, 2022, the weighted average remaining contractual life was 4.6 years and the aggregate intrinsic value was $3,800.

Transactions related to restricted stock unit awards during fiscal 2021 were as follows:

	Shares			Weighted Avg Grant Date Fair Value
Outstanding at January 31, 2021		1,116,341		$	17.32
Granted		311,759			47.42
Change in units based on performance		362,491			15.30
Vested		(703,795	)		16.23
Forfeited		(163,997	)		32.24
Outstanding at January 30, 2022		922,799		$	24.88

The weighted average grant-date fair values of restricted stock units granted during fiscal 2021, 2020 and 2019 were $47.42, $12.75, and $51.44, respectively. The total fair value of restricted stock units vested during fiscal 2021, 2020, and 2019 was approximately $29,260, $1,518, and $5,259, respectively. The unrecognized expense related to our restricted stock units was approximately $7,976 as of January 30, 2022, which will be expensed over a weighted average of 1.6 years.