STOCK-BASED COMPENSATION

The Company expenses the fair value of all stock awards over their respective vesting periods, ensuring that, the amount of cumulative compensation cost recognized at any date is at least equal to the portion of the grant-date value of the award that is vested at that date. The Company has elected to adjust compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize compensation cost on a straight-line basis for awards that only have a service requirement with multiple vest dates.

The Company has granted the following types of stock awards to employees at management levels and above:

Time vesting stock awards ("Deferred Awards") are in the form of restricted stock units and only require each recipient to complete a service period for the awards to be earned. Deferred Awards generally vest over three years. The fair value of Deferred Awards is based on the closing price of the Company's common stock on the grant date and is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover.


ii.	Stock option awards ("Option Awards") provide the recipient with the option to purchase a set number of shares at a stated exercise price over the term of the contract, which is ten years for all Option Awards currently outstanding.

iii.

Performance-based stock awards ("Performance Awards") are in the form of restricted stock units and have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. Performance Awards granted prior to First Quarter 2018 had annual vesting, but due to the performance criteria, were not eligible for straight-line expensing. All Performance Awards granted prior to First Quarter 2018 were forfeited during the period. For Performance Awards granted in First Quarter 2018, the Target Shares earned can range from 0% to 200% and depend on the achievement of Adjusted EBITDA and revenue performance measures for the cumulative three-fiscal year performance period from Fiscal 2018 to Fiscal 2020. The applicable percentage of the Target Shares, as determined by performance, vest after the completion of the applicable three year performance period, and unearned Target Shares are forfeited. The fair value of the 2018 Performance Awards granted is based on the closing price of the Company’s common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover and adjusted based on the Company's estimate of the percentage of the aggregate Target Shares expected to be earned.

The following table provides a summary of the Company's stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations:



	13 Weeks Ended
(in thousands)	May 4, 2018		April 28, 2017
Deferred Awards	$	709	$	421
Option Awards	187		91
Performance Awards	71		67
Total stock-based compensation expense	$	967	$	579

The following table provides a summary of the activities for stock awards for First Quarter 2018:



	Deferred Awards				Option Awards				Performance Awards
(in thousands, except per share amounts)	Number of Shares		Weighted Average Grant Date Fair Value per Share		Number of Shares		Weighted Average Grant Date Fair Value per Share		Number of Shares⁽¹⁾		Weighted Average Grant Date Fair Value per Share
Unvested as of February 2, 2018	497		$	22.07	343		$	8.73	15		$	21.94
Granted	285		21.90		—		—		195		21.90
Vested	(131	)	22.88		(74	)	8.49		—		—
Exercised	—		—		—		—		—		—
Forfeited or expired	(3	)	20.42		—		—		(15	)	21.94
Unvested as of May 4, 2018	648		21.79		269		8.80		195		21.90

⁽¹⁾ For those awards with respect to which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100%; however, the cumulative expense recognized reflects changes in estimated achievement of the performance measures as they occur.

Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $11.1 million as of May 4, 2018, which is expected to be recognized ratably over a weighted average period of 2.5 years. Deferred Awards granted to various employees during First Quarter 2018 generally vest ratably over a period of three years.

Total unrecognized stock-based compensation expense related to unvested Option Awards was approximately $2.2 million as of May 4, 2018, which is expected to be recognized ratably over a weighted average period of 2.9 years . The Option Awards vest ratably over a period of four years and have a ten year term. The fair value of each Option Award was estimated on the grant date using the Black-Scholes option pricing model. As of May 4, 2018, 73,530 shares related to Option Awards were exercisable.

Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $3.6 million as of May 4, 2018, which is expected to be recognized ratably over a weighted average period of 2.9 years. Performance Awards granted to various employees during First Quarter 2018 vest, if earned, after completion of the applicable three year performance period.