Equity and Incentive Compensation Plans

Stock Incentive Plans

During the quarters ended May 2, 2015 and May 3, 2014, the Company recognized approximately $3.1 million and $3.9 million, respectively, in stock-based compensation expense. As of May 2, 2015, there was $1.9 million and $17.4 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock awards, respectively, which is expected to be recognized over a remaining weighted average vesting period of 2.1 years and 2.6 years, respectively. Restricted stock award grants and shares underlying the exercise of stock options during the three months ended May 2, 2015 were issued out of treasury stock. In addition, restricted stock awards forfeited, as well as shares returned to cover employee tax withholding obligations related to the exercise of stock options and the vesting of restricted stock, were returned to treasury stock.


5.	Equity and Incentive Compensation Plans (Continued)

Stock Options

The following table summarizes stock option activity for the quarter ended May 2, 2015:



	Shares		Weighted Average Exercise Price
Options outstanding at January 31, 2015	1,697,223		$	26.17
Granted (1)	59,200		41.31
Exercised	(102,941	)	17.45
Forfeited or expired	(3,600	)	33.84
Options outstanding at May 2, 2015	1,649,882		27.24
Vested and exercisable at May 2, 2015	1,511,080		$	26.29
Options expected to vest in the future as of May 2, 2015	138,802		$	37.58


(1)	Awards vest annually over a three-year period and expire ten years after the grant date.

The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted as of the grant date. For the quarters ended May 2, 2015 and May 3, 2014, the fair value of options granted was estimated using the following weighted average assumptions:



	Quarter Ended
	May 2, 2015		May 3, 2014
Expected volatility	36.6	%	47.5	%
Risk-free interest rate	1.7	%	1.7	%
Expected life (years)	5.6		5.4
Dividend yield	—	%	—	%

The weighted average fair value of options granted during the quarters ended May 2, 2015 and May 3, 2014 was $15.11 and $16.79 per share, respectively. The Company estimates the volatility of its common stock on the date of grant based on the average of its historical common stock volatility and the implied volatility of publicly traded options on its common stock.

Restricted Stock

The following table summarizes restricted stock activity for the quarter ended May 2, 2015:



	Time - Based					Performance - Based
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock awards at January 31, 2015	647,630			$	34.47	222,063			$	34.08
Granted	125,000		⁽¹⁾	41.26		124,800		⁽²⁾	41.31
Vested	(125,265	)		31.82		(84,317	)		32.49
Forfeited	—			—		(15,075	)		32.49
Restricted stock awards at May 2, 2015	647,365			36.29		247,471			38.36


(1)	These shares vest in equal installments in each of March 2016, 2017 and 2018.


(2)	These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 200% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.


5.	Equity and Incentive Compensation Plans (Continued)

Long-Term Performance Compensation

The Company maintains a long-term cash incentive program, the Restricted Cash Program (“RCP”), for vice-presidents and above. Compensation expense under the RCP is charged to the same income statement line item as the base salary earned by participating associates. During the quarter ended May 2, 2015, the Company recognized $2.4 million in compensation expense under the RCP, inclusive of the effect of changes in estimates. During the quarter ended May 3, 2014, compensation expense recognized under the RCP was immaterial, since the expense related to amounts banked under the program was substantially offset by the benefit associated with changes in forfeiture rate estimates, due, in part, to the Company’s 2014 Restructuring. As of May 2, 2015, there was $21.2 million of unrecognized compensation expense under the RCP, which is expected to be recognized over a remaining weighted average deferral period of 2.9 years.