Share-based compensation

Signet operates several share-based compensation plans which can be categorized as the “Omnibus Plan,” “Share Saving Plans” and the “Executive Plans.”

Impact on results

Share-based compensation expense and the associated tax benefits recognized in the consolidated income statements are as follows:



(in millions)	Fiscal 2017			Fiscal 2016			Fiscal 2015
Share-based compensation expense	$	8.0		$	16.4		$	12.1
Income tax benefit	$	(2.8	)	$	(5.9	)	$	(4.3	)

As of January 28, 2017, unrecognized compensation cost related to unvested awards granted under share-based compensation plans is as follows:



	Unrecognized Compensation Cost		Weighted average period
	(in millions)
Omnibus Plan	$	10.3	1.8 years
Share Saving Plans	5.0		1.8 years
Total	$	15.3

As of April 2012, the Company opted to satisfy share option exercises and the vesting of restricted stock and restricted stock units (“RSUs”) under its plans with the issuance of treasury shares.

Omnibus Plan

In June 2009, Signet adopted the Signet Jewelers Limited Omnibus Incentive Plan (the “Omnibus Plan”). Awards that may be granted under the Omnibus Plan include restricted stock, RSUs, stock options and stock appreciation rights. The Fiscal 2017, Fiscal 2016 and Fiscal 2015 awards granted under the Omnibus Plan have two elements, time-based restricted stock and performance-based RSUs. The time-based restricted stock has a three year vesting period, subject to continued employment, and has the same voting rights and dividend rights as common shares (which are payable once the shares have vested). Performance-based RSUs granted include two performance measures, operating income (subject to certain adjustments) and return on capital employed (“ROCE”), with ROCE measure only applicable to senior executives. For both performance measures, cumulative results achieved during the relevant three year performance period are compared to target metrics established in the underlying grant agreements. The relevant performance is measured over a three year vesting period from the start of the fiscal year in which the award is granted. The Omnibus Plan permits the grant of awards to employees for up to 7,000,000 common shares.

In Fiscal 2015, the Company issued a grant of performance-based RSUs under the Omnibus Plan. This grant occurred as part of the Signet Integration Incentive Plan (“IIP”), a transaction-related special incentive program that was designed to facilitate the integration of the Zale Acquisition and to reward the anticipated efforts of key management personnel on both sides of the transaction. The RSUs vested, subject to continued employment, based upon gross synergies realized during the one year performance period compared to targeted gross synergy metrics established in the underlying grant agreement.

The significant assumptions utilized to estimate the weighted-average fair value of awards granted under the Omnibus Plan are as follows:



	Omnibus Plan
	Fiscal 2017			Fiscal 2016			Fiscal 2015
Share price	$	109.03		$	136.37		$	104.57
Risk free interest rate	1.0		%	0.8		%	0.8		%
Expected term	2.8 years			2.9 years			2.7 years
Expected volatility	28.5		%	25.4		%	32.1		%
Dividend yield	1.1		%	0.7		%	0.9		%
Fair value	$	106.48		$	134.46		$	103.12

The risk-free interest rate is based on the US Treasury (for US-based award recipients in all fiscal years and UK-based award recipients in Fiscal 2017) or UK Gilt (for UK-based award recipients in Fiscal 2016 and Fiscal 2015) yield curve in effect at the grant date with remaining terms equal to the expected term of the awards. The expected term utilized is based on the contractual vesting period of the awards. The expected volatility is determined by calculating the historical volatility of Signet’s share price over the expected term of the award.

The Fiscal 2017 activity for awards granted under the Omnibus Plan is as follows:



	Omnibus Plans
(in millions, except per share amounts)	No. of shares		Weighted average grant date fair value		Weighted average remaining contractual life	Intrinsic value⁽¹⁾
Outstanding at January 30, 2016	0.6		$	101.88	1.1 years	$	69.8
Fiscal 2017 activity:
Granted	0.3		106.48
Vested	(0.1	)	84.55
Lapsed	(0.1	)	73.56
Outstanding at January 28, 2017	0.7		$	111.98	1.3 years	$	53.0


⁽¹⁾	Intrinsic value for outstanding restricted stock and RSUs is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.

The following table summarizes additional information about awards granted under the Omnibus Plan:



(in millions)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Total intrinsic value of awards vested	$	13.6	$	22.2	$	43.9

Share Saving Plans

Signet has three share option savings plans (collectively, the “Share Saving Plans”) available to employees as follows:


•	Employee Share Savings Plan, for US employees


•	Sharesave Plan, for UK employees


•	Irish Sharesave Plan for Republic of Ireland employees

The Share Saving Plans are compensatory and compensation expense is recognized over the requisite service period. In any 10 year period not more than 10% of the issued common shares of the Company from time to time may, in aggregate, be issued or be issuable pursuant to options granted under the Share Saving Plans or any other employees share plans adopted by Signet.

The Employee Share Savings Plan is a savings plan intended to qualify under US Section 423 of the US Internal Revenue Code and allows employees to purchase common shares at a discount of approximately 15% to the closing price of the New York Stock Exchange on the date of grant. Options granted under the Employee Share Savings Plan vest after 24 months and are generally only exercisable between 24 and 27 months of the grant date.

The Sharesave Plan and Irish Sharesave Plan allow eligible employees to purchase common shares at a discount of approximately 20% below a determined market price based on the New York Stock Exchange. The market price is determined as the average middle market price for the three trading days prior to the invitation date, or the market price on the day immediately preceding the participation date or other market price agreed in writing, whichever is the higher value. Options granted under the Sharesave Plan and the Irish Sharesave Plan vest after 36 months and are generally only exercisable between 36 and 42 months from commencement of the related savings contract.

The significant assumptions utilized to estimate the weighted-average fair value of awards granted under the Share Saving Plans are as follows:



	Share Saving Plans
	Fiscal 2017			Fiscal 2016			Fiscal 2015
Share price	$	84.37		$	139.18		$	114.93
Exercise price	$	67.24		$	114.67		$	96.67
Risk free interest rate	0.6		%	0.7		%	0.9		%
Expected term	2.7 years			2.6 years			2.8 years
Expected volatility	31.3		%	27.1		%	27.6		%
Dividend yield	1.7		%	0.8		%	0.8		%
Fair value	$	22.82		$	34.76		$	28.76

The risk-free interest rate is based on the US Treasury (for US-based award recipients) or UK Gilt (for UK-based award recipients) yield curve in effect at the grant date with remaining terms equal to the expected term of the awards. The expected term utilized is based on the contractual vesting period of the awards, inclusive of any exercise period available to award recipients after vesting. The expected volatility is determined by calculating the historical volatility of Signet’s share price over the expected term of the awards.

The Fiscal 2017 activity for awards granted under the Share Saving Plans is as follows:



	Share Saving Plans
(in millions, except per share amounts)	No. of shares		Weighted average exercise price		Weighted average remaining contractual life	Intrinsic value⁽¹⁾
Outstanding at January 30, 2016	0.2		$	94.07	1.9 years	$	4.9
Fiscal 2017 activity:
Granted	0.2		67.24
Exercised	—		48.78
Lapsed	(0.1	)	101.34
Outstanding at January 28, 2017	0.3		$	74.30	2.0 years	$	3.0
Exercisable at January 30, 2016	—		$	—		$	—
Exercisable at January 28, 2017	—		$	—		$	—

⁽¹⁾Intrinsic value for outstanding awards is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.

The following table summarizes additional information about awards granted under the Share Saving Plans:



(in millions, except per share amounts)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Weighted average grant date fair value per share of awards granted	$	22.82	$	34.76	$	28.76
Total intrinsic value of options exercised	$	1.5	$	6.4	$	11.0
Cash received from share options exercised	$	1.4	$	4.0	$	4.3

Executive Plans

Signet operates three 2003 executive share plans (the “2003 Plans”), together referred to as the “Executive Plans.” Option awards under the Executive Plans were generally granted with an exercise price equal to the market price of the Company’s shares at the date of grant. No awards have been granted under the Executive Plans since the adoption of the Omnibus Plan in Fiscal 2010. During Fiscal 2014, the plan periods for the Executive Plans expired. As a result, no additional awards may be granted under the Executive Plans.

The following table summarizes additional information about awards granted under the Executive Plans:



(in millions)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Total intrinsic value of options exercised	$	0.6	$	3.4	$	2.9
Cash received from share options exercised	$	0.7	$	1.0	$	1.8

As of January 28, 2017 and January 30, 2016, the intrinsic value of unexercised awards outstanding under the Executive Plans was $0.3 million and $1.5 million, respectively. The outstanding awards, which are all exercisable, expire prior to the end of 2018.