Stock Option and Stock Award Plans

12 Months Ended

Mar. 04, 2023

Stock Options and Stock Awards

Stock Options and Stock Awards

18. Stock Option and Stock Award Plans

The Company recognizes share-based compensation expense in accordance with ASC 718, “Compensation—Stock Compensation.” Expense is recognized over the requisite service period of the award, net of an estimate for the impact of forfeitures. Operating results for fiscal 2023, 2022 and 2021 include $11,537, $13,050 and $13,003 of compensation costs related to the Company’s stock-based compensation arrangements.

In June 2010, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2010 Omnibus Equity Plan. Under the plan, 1,750 shares of Rite Aid common stock are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2010 Omnibus Equity Plan became effective on June 23, 2010.

In June 2012, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2012 Omnibus Equity Plan. Under the plan, 1,425 shares of Rite Aid common stock are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2012 Omnibus Equity Plan became effective on June 21, 2012.

In June 2014, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2014 Omnibus Equity Plan. Under the plan, 2,900 shares of Rite Aid common stock plus any shares of common stock remaining available for grant under the Rite Aid Corporation 2010 Omnibus Equity Plan and the Rite Aid Corporation 2012 Omnibus Equity Plan as of the effective date of the 2014 Plan (provided that no more than 1,250 shares may be granted as incentive stock options) are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2014 Omnibus Equity Plan became effective on June 19, 2014.

In July 2020, the stockholders of Rite Aid Corporation approved the adoption of the Rite Aid Corporation 2020 Omnibus Equity Plan. Under the plan, 3,350 shares of Rite Aid common stock plus any shares of common stock remaining available for grant under the Rite Aid Corporation 2010 Omnibus Equity Plan, the Rite Aid Corporation 2012 Omnibus Equity Plan and the Rite Aid Corporation 2014 Omnibus Equity Plan (collectively, the “Prior Plans”) are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the 2020 Omnibus Equity Plan became effective on July 8, 2020. Upon the adoption date, shares of common stock may no longer be issued pursuant to the Prior Plans.

In July 2021, the stockholders of Rite Aid Corporation approved the adoption of an amended and restated Rite Aid Corporation 2020 Omnibus Equity Plan. Under the plan, 4,562 shares of Rite Aid common stock plus any shares of common stock remaining available for grant under the Prior Plans are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the Amended and Restated 2020 Omnibus Equity Plan became effective on July 7, 2021.

In July 2022, the stockholders of Rite Aid Corporation approved the adoption of an amended and restated Rite Aid Corporation 2020 Omnibus Equity Plan. Under the plan, 3,250 shares of Rite Aid common stock plus any shares of common stock remaining available for grant under the Prior Plans are available for granting of restricted stock, stock options, phantom stock, stock bonus awards and other equity based awards at the discretion of the Board of Directors. The adoption of the Amended and Restated 2020 Omnibus Equity Plan became effective on July 27, 2022.

All of the plans provide for the Board of Directors (or at its election, the Compensation Committee) to determine both when and in what manner options may be exercised; however, it may not be more than 10 years from the date of grant. All of the plans provide that stock options may be granted at prices that are not less than the fair market value of a share of common stock on the date of grant. The aggregate number of remaining shares authorized for issuance for all plans is 3,628 as of March 4, 2023.

Stock Options

The Company determines the fair value of stock options issued on the date of grant using the Black-Scholes-Merton option-pricing model. The Company did not grant any options in fiscal 2023, 2022 and 2021

The weighted average fair value of options granted during fiscal 2023, 2022 and 2021 was $0.00. Following is a summary of stock option transactions for the fiscal years ended March 4, 2023, February 26, 2022 and February 27, 2021:

		Weighted		Weighted
		Average		Average
		Exercise		Remaining	Aggregate
		Price		Contractual	Intrinsic
	Shares	Per Share		Term	Value
Outstanding as of February 29, 2020	1,295	$	30.29
Granted	—		N/A
Exercised	(2)		25.08
Canceled	(513)		48.16
Outstanding as of February 27, 2021	780	$	18.56
Granted	—		N/A
Exercised	—		N/A
Canceled	(79)		45.78
Outstanding as of February 26, 2022	701	$	15.50
Granted	—		N/A
Exercised	—		N/A
Canceled	(169)		23.85
Outstanding as of March 4, 2023	532	$	12.85	0.15	$	0.00
Vested or expected to vest as of March 4, 2023	532	$	12.85	0.15	$	0.00
Exercisable as of March 4, 2023	532	$	12.85	0.15	$	0.00

As of March 4, 2023, there was $0 of total unrecognized pre-tax compensation costs related to unvested stock options, net of forfeitures. These costs are expected to be recognized over a weighted average period of zero years.

Cash received from stock option exercises for fiscal 2023, 2022 and 2021 was $0, $0 and $53, respectively. The income tax benefit from stock options for fiscal 2023, 2022 and 2021 was $0, $0 and $1, respectively. The total intrinsic value of stock options exercised for fiscal 2023, 2022 and 2021 was $0, $0 and $10, respectively.

Typically, stock options granted vest, and are subsequently exercisable in equal annual installments over a four-year period for employees.

Restricted Stock

The Company provides restricted stock grants to associates under plans approved by the stockholders. Shares awarded under the plans typically vest in equal annual installments over a three-year period. Unvested shares are forfeited upon termination of employment. Following is a summary of restricted stock transactions for the fiscal years ended March 4, 2023, February 26, 2022 and February 27, 2021:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Balance as of February 29, 2020	1,253	$	10.32
Granted	780		17.79
Vested	(574)		13.37
Canceled	(166)		12.23
Balance as of February 27, 2021	1,293	$	13.23
Granted	973		15.00
Vested	(546)		12.25
Canceled	(187)		15.51
Balance as of February 26, 2022	1,533	$	14.42
Granted	1,662		6.50
Vested	(1,349)		12.40
Canceled	(370)		10.83
Balance as of March 4, 2023	1,476	$	8.25

As of March 4, 2023, there was $9,719 of total unrecognized pre-tax compensation costs related to unvested restricted stock grants, net of forfeitures. These costs are expected to be recognized over a weighted average period of 1.7 years.

The total fair value of restricted stock vested during fiscal years 2023, 2022 and 2021 was $16,746, $6,677 and $7,670, respectively.

Performance Based Incentive Plan

The Company provides certain of its associates with performance based incentive awards under its equity incentive plans, pursuant to which the associates will receive a certain number of shares of the Company’s common stock based on the Company meeting certain financial and performance goals. If such goals are not met, no stock-based compensation expense is recognized and any recognized stock-based compensation expense is reversed. The Company recorded a benefit of $3,080 and expense of $2,143 and $3,278 related to these performance based incentive awards under the Company’s equity incentive plans for fiscal 2023, 2022 and 2021, respectively, which is recorded as a component of stock-based compensation expense.