NOTE 6 - SHARE-BASED COMPENSATION

The Company has a share-based compensation plan (the "Plan"), under which options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance units, and other awards based on, or related to, shares of the Company's common stock may be granted from shares authorized but unissued or shares previously issued and reacquired by the Company. The maximum number of shares of common stock approved by the Company’s shareholders to be issued under the Plan was increased from six million to nine million shares during fiscal 2014. Awards may be granted to officers, employees, directors, consultants, advisors, and independent contractors of the Company or its subsidiaries. In the event of a change in control (as defined in the Plan), the vesting of awards may be accelerated. The Plan, aspects of which are more fully described below, prohibits further awards from being issued under prior plans. The Company incurred total share-based compensation expenses of $0.9 million in each of the three month periods ended January 31, 2016 and February 1, 2015, respectively, and the Company received cash from option exercises of $2.0 million and $0.7 million during those respective periods. No share-based compensation cost was capitalized as part of an asset and no related income tax benefits were recorded during the fiscal years presented.

Stock Options

Option awards generally vest in one to four years, and have a ten-year contractual term. All incentive and non-qualified stock option grants have an exercise price no less than the market value of the underlying common stock on the date of grant. The grant date fair values of options are based on closing prices of the Company’s common stock on the dates of grant using the Black-Scholes option pricing model. Expected volatility is based on the historical volatility of the Company's stock. The Company uses historical option exercise behavior and employee termination data to estimate expected term, which represents the period of time that the options granted are expected to remain outstanding. The risk-free rate of return for the estimated term of the option is based on the U.S. Treasury yield curve in effect at the date of grant.

The weighted-average inputs and risk-free rate of return ranges used to calculate the grant date fair value of options issued during the three month periods ended January 31, 2016 and February 1, 2015, are presented in the following table.

	Three Months Ended
	January 31, 2016			February 1, 2015

Volatility		49.9	%		55.1	%

Risk free rate of return		1.7	%		1.6	%

Dividend yield		0.0	%		0.0	%

Expected term	5.1		years	4.7		years

Information on outstanding and exercisable option awards as of January 31, 2016, is presented below.

Options	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value

Outstanding at January 31, 2016		4,013,635		$	8.17	6.4 years		$	16,900

Exercisable at January 31, 2016		2,460,810		$	7.26	4.9 years		$	13,172

There were 579,250 share options granted during the three month period ended January 31, 2016, with a weighted-average grant date fair value of $4.66 per share, and there were 302,000 share options granted during the three month period ended February 1, 2015, with a weighted-average grant date fair value of $3.88 per share. As of January 31, 2016, the total unrecognized compensation cost related to unvested option awards was approximately $5.9 million. That cost is expected to be recognized over a weighted-average amortization period of 2.9 years.

Restricted Stock

The Company periodically grants restricted stock awards. The restrictions on these awards typically lapse over a service period of one to four years. There were 115,225 restricted stock awards issued during the three month period ended January 31, 2016, with a weighted-average grant date fair value of $12.13 per share, and there were 111,334 restricted stock awards issued during the three month period ended February 1, 2015, with a weighted-average grant date fair value of $8.23 per share. As of January 31, 2016, the total compensation cost not yet recognized related to unvested restricted stock awards was approximately $2.0 million. That cost is expected to be recognized over a weighted-average amortization period of 2.3 years. As of January 31, 2016, there were 209,875 shares of restricted stock outstanding.