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 fair 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 award 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. Options are granted with a strike price equal to the stock price on the date of grant and vest ratably over a four year period.

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 Fiscal 2018 had annual vesting, but due to the performance criteria, were not eligible for straight-line expensing. All Performance Awards granted prior to Fiscal 2018 were forfeited during the First Quarter 2018. For Performance Awards granted in Fiscal 2018 and after, 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 beginning in the fiscal year of the grant date. 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 Performance Awards granted in Fiscal 2018 and after are 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. Based on performance to date, the Company is currently accruing for performance shares based on a 100% payout, which is reflected in the financial information below.

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 3, 2019		May 4, 2018
Deferred Awards	$	1,365	$	709
Option Awards	187		187
Performance Awards	422		71
Total stock-based compensation expense	$	1,974	$	967

The following table provides a summary of the Deferred Awards activity for First Quarter 2019:



	Deferred Awards
(in thousands, except per share amounts)	Number of Shares		Weighted Average Grant Date Fair Value per Share
Unvested as of February 1, 2019	594		$	21.96
Granted	410		15.73
Vested	(184	)	22.41
Forfeited or expired	(23	)	18.40
Unvested as of May 3, 2019	797		18.61

Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $11.8 million as of May 3, 2019, which is expected to be recognized ratably over a weighted average period of 2.2 years. Deferred Awards granted to employees during Fiscal 2019 generally vest ratably over a period of three years.

The following table provides a summary of the Performance Awards activity for First Quarter 2019:



	Performance Awards
(in thousands, except per share amounts)	Number of Shares		Weighted Average Grant Date Fair Value per Share
Unvested as of February 1, 2019	176		$	21.93
Granted	265		15.73
Vested	—		—
Forfeited or expired	(5	)	21.90
Unvested as of May 3, 2019	436		18.17

Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $5.8 million as of May 3, 2019, which is expected to be recognized ratably over a weighted average period of 2.5 years. Performance Awards granted to employees during Fiscal 2019 vest, if earned, after completion of the applicable three-year performance period.

The following table provides a summary of the Options Award activity for First Quarter 2019:



	Option Awards
(in thousands, except per share amounts)	Number of Shares		Weighted Average Grant Date Fair Value per Share
Unvested as of February 1, 2019	257		$	8.73
Granted	—		—
Vested	(74	)	8.49
Forfeited or expired	—		—
Unvested as of May 3, 2019	183		8.85

Total unrecognized stock-based compensation expense related to unvested Option Awards was approximately $1.4 million as of May 3, 2019, which is expected to be recognized ratably over a weighted average period of 1.9 years. The Option Awards have a life of ten years and vest ratably over the first four years. The fair value of each Option Award was estimated on the grant date using the Black-Scholes option pricing model. As of May 3, 2019, 159,314 shares related to Option Awards were exercisable. No options have been exercised as of May 3, 2019.