Management Incentive Plan and Stock-Based Compensation

3 Months Ended

Apr. 30, 2022

Share-based Payment Arrangement, Noncash Expense [Abstract]

Management Incentive Plan and Stock-Based Compensation

The Company has incentive compensation programs which provide cash incentive bonuses and performance share awards to key management and employees based on Company and individual performance.

For fiscal 2022, the Compensation Committee of the Board of Directors established the performance measures for determining cash incentive bonuses and performance share awards based on profitability-based performance goals. As of April 30, 2022, the Company has established an accrual for this incentive compensation based on its forecasted attainment of the profitability-based performance goals.

For fiscal 2021, the Compensation Committee of the Board of Directors established the performance measures for determining cash incentive bonuses and performance share awards based on profitability-based performance goals and the attainment of specific management priorities related to business challenges from the COVID-19 pandemic, as measured and approved by the Compensation Committee.

Stock-based compensation. For the three month periods ended April 30, 2022 and May 1, 2021, the Company recognized stock-based compensation expense as follows:


	Three Months Ended
($000)	April 30, 2022		May 1, 2021
Restricted stock	$	20,213	$	18,589
Performance awards	14,813		9,014
Employee stock purchase plan	1,045		1,071
Total	$	36,071	$	28,674

Total stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Earnings for the three month periods ended April 30, 2022 and May 1, 2021, is as follows:


	Three Months Ended
Statements of Earnings Classification ($000)	April 30, 2022		May 1, 2021
Cost of goods sold	$	18,546	$	14,672
Selling, general and administrative	17,525		14,002
Total	$	36,071	$	28,674

The tax benefits related to stock-based compensation expense for the three month periods ended April 30, 2022 and May 1, 2021 were $7.4 million and $5.3 million, respectively.

Restricted stock awards. The Company grants shares of restricted stock or restricted stock units to directors, officers, and key employees. The market value of shares of restricted stock and restricted stock units at the date of grant is amortized to expense over the vesting period of generally three to five years.

During the three month periods ended April 30, 2022 and May 1, 2021, shares purchased by the Company for tax withholding totaled 408,465 and 386,966 respectively, and are considered treasury shares which are available for reissuance.

Performance share awards. The Company has a performance share award program for senior executives. A performance share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s attainment of performance goals during the performance period, which is the Company’s fiscal year. If attained, the restricted stock then vests over a service period, generally two to three years from the date the performance award was granted.

As of April 30, 2022, shares related to unvested restricted stock, restricted stock units, and performance share awards totaled 4.6 million shares. A summary of restricted stock, restricted stock units, and performance share award activity for the three month period ended April 30, 2022, is presented below:


(000, except per share data)	Number of shares	Weighted-average grant date fair value
Unvested at January 29, 2022	4,378	$	99.58
Awarded	1,335	89.00
Released	(1,072)	89.63
Forfeited	(25)	102.89
Unvested at April 30, 2022	4,616	98.82

The unamortized compensation expense at April 30, 2022 was $261.6 million, which is expected to be recognized over a weighted-average remaining period of 2.4 years. The unamortized compensation expense at May 1, 2021, was $223.1 million, which was expected to be recognized over a weighted-average remaining period of 2.4 years.

Employee stock purchase plan. Under the Employee Stock Purchase Plan (“ESPP”), eligible employees participating in the quarterly offering period can choose to have up to the lesser of 10% of their annual base earnings or the IRS annual share purchase limit of $25,000 in aggregate market value to purchase the Company’s common stock. The purchase price of the stock is 85% of the closing market price on the date of purchase. Purchases occur on a quarterly basis (on the last trading day of each calendar quarter). The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.