Stock-Based Compensation

6 Months Ended

Aug. 01, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments

STOCK-BASED COMPENSATION

Accounting standards require, among other things, that (i) the fair value of all stock awards be expensed over their respective vesting periods; (ii) the amount of cumulative compensation cost recognized at any date must at least be equal to the portion of the grant-date value of the award that is vested at that date and (iii) compensation expense include a forfeiture estimate for those shares not expected to vest. Also in accordance with these provisions, for awards that only have a service requirement with multiple vest dates, the Company is required to recognize compensation cost on a straight-line basis over the requisite service period for the entire award.

The Company has granted time vesting stock awards ("Deferred Awards") and performance-based stock awards ("Performance Awards") to employees at management levels and above. Deferred Awards were granted in the form of restricted stock units that only require each recipient to complete a service period. Deferred Awards generally vest ratably over three years. Performance Awards were granted in the form of restricted stock units which have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. Performance Awards have annual vesting, but due to the performance criteria, are not eligible for straight-line expensing. Therefore, Performance Awards are amortized using a graded expense process. The fair value of all awards is based on the closing price of the Company’s common stock on the grant date. Compensation expense is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover.

The following table summarizes the Company’s stock-based compensation expense, which is primarily included in Selling and administrative expense in the Condensed Consolidated and Combined Statements of Comprehensive Income:

	13 Weeks Ended				26 Weeks Ended
(in thousands)	August 1, 2014		August 2, 2013		August 1, 2014		August 2, 2013
Performance Awards	$	718	$	—	$	718	$	—
Deferred Awards	64		—		64		—
Total stock-based compensation expense	$	782	$	—	$	782	$	—

Awards Granted Year to Date August 1, 2014

The Company granted Deferred Awards and Performance Awards to various employees during the 13 weeks ended August 1, 2014. Generally, the Deferred Awards have a three year vesting period with 25% of the award vesting in both the first and second years and 50% vesting in the third year. In general, the Performance Awards granted to executives vest over a 3 years service period and have a performance measure at the end of the first year of service. If earned, 25% of the awards vest in the first and second years and 50% vests in the third year.

Changes in the Company’s Unvested Stock Awards Year to Date August 1, 2014

Deferred Awards

	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested Deferred Awards, beginning of period	—		$	—
Granted	45		26.80
Forfeited	(1	)	26.73
Unvested Deferred Awards, end of period	44		26.80

Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $1.1 million as of August 1, 2014, which will be recognized over a weighted average period of approximately 2.8 years.

Performance Awards

	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested Performance Awards, beginning of period	—		$	—
Granted	284		26.83
Forfeited	(17	)	26.73
Unvested Performance Awards, end of period	267		26.84

Total unrecognized stock-based compensation expense related to unvested Performance Awards approximated $6.4 million as of August 1, 2014, which will be recognized over a weighted average period of approximately 2.8 years.