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Equity-Based Compensation
 12 Months Ended
Jan. 30, 2022
Share-based Payment Arrangement [Abstract]  
Equity-Based Compensation EQUITY-BASED COMPENSATION
Equity-Based Compensation Plan
Prior to the IPO, the board of Holdings approved the Core & Main Holdings, LP Equity Incentive Plan. Employees and independent directors of the Company previously received profits units and unit appreciation rights in Holdings indirectly through Management Feeder. These awards were issued from Management Feeder, which in turn received grants from Holdings in the amounts and terms that were identical to those that were issued to employees and independent directors.
Treatment of Profit Units in Reorganization Transactions
In connection with the Reorganization Transactions, Holdings was recapitalized and its common units and profits units were converted to a single class of Partnership Interests. Partnership Interests in the recapitalized Holdings, which correspond to prior profits units of Holdings, which were held by Management Feeder (which relate to profits units in Management Feeder held by the Company's employees and directors), remain subject to the same time-based vesting requirements that existed prior to the Reorganization Transactions. As part of the recapitalization of Holdings, the quantity of Partnership Interests issued in the recapitalization contemplated the settlement of the historical benchmark prices and the public offering price of Class A common stock in the IPO.
A summary of the Partnership Interests is presented below (shares in thousands):
Number of SharesWeighted Average Benchmark Price
Outstanding on January 31, 20216,322 $6.92 
Granted406 18.00 
Forfeitures(58)8.46 
Repurchases(15)8.46 
Outstanding prior to Reorganization Transactions6,655 7.58 
Conversion4,690 
Outstanding on January 30, 2022
11,345 $— 
Number of SharesWeighted Average Benchmark Price
Non-vested at January 31, 20212,785 $7.01 
Granted406 18.00 
Forfeitures(58)8.46 
Repurchases(15)8.46 
Vested(114)7.25 
Non-vested prior to Reorganization Transactions3,004 8.44 
Conversion of non-vested awards2,018 — 
Non-vested following the Reorganization Transactions5,022 — 
Vested(1,966)— 
Non-vested at January 30, 2022
3,056 $— 
The estimated fair value of the profits units when granted was amortized to expense over the vesting period. The fair value for these profits units was estimated by management, after considering a third-party valuation specialist’s assessment, at the date of grant based on the expected life of the profits units, using a Black-Scholes pricing model with the following weighted-average assumptions:
January 30, 2022January 31, 2021February 2, 2020
Risk-free interest rate0.78 %0.63 %2.13 %
Dividend yield— %— %— %
Expected volatility factor50 %50 %50 %
Discount for lack of marketability20 %26 %30 %
Expected life in years5.05.04.5
The risk free interest rate was determined based on an analysis of U.S. Treasury zero-coupon market yields as of the date of the profits units grant for issues having expiration lives similar to the expected life of the profits units. The expected volatility was based on an analysis of the historical volatility of a peer group over the expected life of the profits units. As insufficient data exists to determine the historical life of the profits units, the expected life was determined based on the Company’s estimate of when a liquidity event may occur based on market conditions and prior investments of CD&R. The weighted-average fair value of each profit unit granted was $6.27 during fiscal 2021, $2.99 during fiscal 2020 and $2.98 during fiscal 2019.
Treatment of Unit Appreciation Rights in Reorganization Transactions
In connection with the Reorganization Transactions, unit appreciation rights of Holdings were converted to stock appreciation rights denominated in shares of Class A common stock with adjustments to the number of awards and benchmark prices.
A summary of the stock appreciation rights is presented below (shares in thousands):
Number of SharesWeighted Average Benchmark Price
Outstanding on January 31, 2021
200 $10.00 
Granted100 18.00 
Outstanding prior to Reorganization Transactions300 12.66 
Conversion334 
Outstanding following the Reorganization Transactions634 5.00 
Forfeitures(53)8.52 
Outstanding on January 30, 2022
581 $4.67 
Number of SharesWeighted Average Benchmark Price
Non-vested at January 31, 2021105 $10.00 
Granted100 18.00 
Vested(20)10.00 
Non-vested prior to the Reorganization Transactions185 14.32 
Conversion of non-vested awards206 
Non-vested following the Reorganization Transactions391 6.09 
Vested(42)3.24 
Forfeitures(53)8.52 
Non-vested at January 30, 2022
296 $6.07 
The estimated fair value of the stock appreciation rights when granted was amortized to expense over the vesting or required service period. The fair value for these stock appreciation rights was estimated by management, after considering a third-party valuation specialist’s assessment, at the date of grant based on the expected life of the unit appreciation rights, using a Black-Scholes pricing model with the following weighted-average assumptions:
January 30, 2022February 2, 2020
Risk-free interest rate0.78 %2.13 %
Dividend yield— %— %
Expected volatility factor50 %50 %
Discount for lack of marketability20 %30 %
Expected life in years5.04.5
The risk free interest rate was determined based on an analysis of U.S. Treasury zero-coupon market yields as of the date of the unit appreciation rights grant for issues having expiration lives similar to the expected life of the unit appreciation rights. The expected volatility was based on an analysis of the historical volatility of a peer group over the expected life of the unit appreciation rights. As insufficient data exists to determine the historical life of the unit appreciation rights, the expected life was determined based on the Company’s estimate of when a liquidity event may occur based on market conditions and prior investments of CD&R. The weighted-average fair value of each unit appreciation right granted was $6.27 during fiscal 2021 and $2.98 during fiscal 2019.
Omnibus Incentive Plan
In July 2021, in connection with the IPO, Core & Main’s sole stockholder approved and Core & Main’s board of directors adopted the 2021 Omnibus Equity Incentive Plan (the “Omnibus Incentive Plan”). Under the Omnibus Incentive Plan, 12,600,000 shares of Class A common stock, plus 633,683 shares of Class A common stock in respect of stock appreciation rights that were converted from unit appreciation rights of Holdings outstanding prior to the IPO, are reserved and available for future issuance.
A summary of the restricted stock units granted under the Omnibus Incentive Plan is presented below (shares in thousands):
Number of SharesWeighted Average Grant Date Fair Value
Outstanding on January 30, 2021— $— 
Granted20 27.43 
Outstanding on January 30, 2022
20 $27.43 
The restricted stock units vest over a three-year period. As of January 30, 2022, none of the restricted stock units granted under the Omnibus Incentive Plan had vested. The estimated fair value of the restricted stock units when granted was amortized to expense over the vesting or required service period.
Compensation Expense
The Company evaluated the conversions of the profits units and unit appreciation rights as part of the Reorganization Transactions and concluded that each represented an accounting modification of the original awards. As such, the Company is required to recognize the incremental fair value immediately after each modification compared with immediately before as additional compensation expense. Incremental compensation expense for awards that were vested as of the Reorganization Transactions were recognized immediately and expense for unvested awards will be recognized over the remaining service period. The Company recognized compensation expense of $25 million, $4 million and $4 million during fiscal 2021, fiscal 2020 and fiscal 2019, respectively. As of January 30, 2022, the unrecognized share based compensation was $9 million which is expected to be recognized over a weighted average period of 1.2 years.
Employee Benefit Plans
The Company offers a comprehensive Health & Welfare Benefits Program (the “Program”) which allows employees who satisfy certain eligibility requirements to choose among different levels and types of coverage. The Program provides employees healthcare coverage in which the employer and employee share costs. In addition, the Program offers employees the opportunity to participate in various voluntary coverages, including flexible spending accounts and health savings accounts. The Company maintains a 401(k) defined contribution plan that is qualified under Sections 401(a) and 501(a) of the Internal Revenue Code. Employees of the Company who satisfy the plan’s eligibility requirements may elect to contribute a portion of their compensation to the plan on a pre-tax basis. The Company may match a percentage of the employees’ contributions to the plan based on eligible compensation deferred. Matching contributions are generally made shortly after the end of each pay period. The Company recorded expenses of $9 million, $7 million and $7 million related to matching contributions during fiscal 2021, fiscal 2020 and fiscal 2019, respectively.