Shareholders' Equity

12 Months Ended

Feb. 01, 2020

Shareholders’ Equity

Dividends

In 2019 and 2018, there were no cash dividends declared.

Stock Repurchase Plan

During 2019 and 2018, we repurchased 130,044 shares and 121,801 shares, respectively, of our common stock in the open market at a total cost of $0.1 million in each period, respectively. Stock repurchases on the open market, under a Board of Directors authorized plan, were for taxes due on the vesting of employee stock awards. As of February 1, 2020, there are 366,889 shares that can be repurchased pursuant to the Board of Directors’ current authorization.

Employee Stock Purchase Plan

In December 2017, our Board of Directors (the “Board”) adopted a new Employee Stock Purchase Plan (the “Stock Purchase Plan”), which was approved by our shareholders at our June 19, 2018 annual meeting. Under our Stock Purchase Plan, all employees who complete six months of employment and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible to participate in the Stock Purchase Plan. Participants in the Stock Purchase Plan may purchase shares of our common stock at 85 percent of the lower of the fair market value of our stock determined at either the beginning or the end of each semi-annual option period. Shares eligible under the Stock Purchase Plan, which is effective for the years 2017 through 2027, are limited to 2.0 million shares in the aggregate. In 2019, the participants acquired 275,927 shares of common stock at a weighted-average per share price of $0.66. In 2018, the participants acquired 214,621 shares of common stock at a weighted-average per share price of $0.94. The fair value of Stock Purchase Plan shares was estimated using the Black-Scholes-Merton call option value model with the following weighted-average assumptions for 2019: expected volatility of 78.14 percent, a risk-free interest rate of 2.33 percent, a present-value discount factor of 1.0 and an expected term of six months. Share-based compensation expense for the Stock Purchase Plan was $0.1 million in 2019 and $0.2 million in 2018. We had 1.5 million shares authorized and available for grant under the Stock Purchase Plan at February 1, 2020. On January 31, 2020, we ceased employee withholdings related to the Stock Purchase Plan in anticipation of the Merger transaction as discussed in further detail in Note 14. "Merger Agreement". Subsequent to year-end, the Merger Agreement was terminated. We intend to commence withholdings during the second half of 2020.

Omnibus Plans

On January 23, 2018, our Board adopted the 2018 Omnibus Incentive Plan (the “2018 Plan”). The 2018 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance share awards and other equity-based awards to employees, directors and consultants of Stein Mart and our affiliates. The 2018 Plan replaced our 2001 Omnibus Plan (as amended and restated, the “2001 Plan”, and, together with the 2018 Plan, the “Omnibus Plans”). The 2018 Plan was approved at our 2018 annual meeting of shareholders. No further awards will be granted under the 2001 Plan. The Board, or a committee to which it delegates authority, determines the terms of all grants. The shares will be issued from authorized and unissued shares of our common stock. Expired and forfeited awards become available for re-issuance. Vesting and exercise are contingent on continued employment.

The following table sets forth the number of awards authorized and available for grant under the 2018 Plan at February 1, 2020 (shares in thousands):


			2018 Plan
Total awards authorized			4,100
Awards available for grant			2,920

Stock Options

Under both Omnibus Plans, the exercise price of an option cannot be less than the fair value on the grant date. In general, for awards granted prior to 2014, one-third of the awards vest on each of the third, fourth and fifth-anniversary dates of grant. Awards under the 2001 Plan granted after 2013 generally vest monthly in equal amounts over a five-year period. The awards expire seven to ten years after the date of grant. Future grants under the 2018 Plan have a minimum vesting period of one year, subject to certain exceptions.

The following table sets forth the summary of stock option information for the year ended February 1, 2020 (shares in thousands):


	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on February 2, 2019	2,034	$	5.81
Canceled or forfeited	(595)	6.27
Outstanding on February 1, 2020	1,439	$	5.62	4.21 years	$	—
Exercisable stock options at February 1, 2020	796	$	5.60	3.46 years	$	—

The aggregate intrinsic value in the table above represents the excess of our closing stock price on February 1, 2020, the last business day of our 2019 fiscal year ($0.88 per share), over the exercise price, multiplied by the applicable number of in-the-money options, this amount changes based on the fair market value of our common stock. Because there were no in-the-money options outstanding and exercisable on February 1, 2020, the aggregate intrinsic value is zero.

As of February 1, 2020, there was $0.2 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 0.7 years using the mid-point method. There were no options granted during 2019 nor 2018. There were no options exercised in 2019 nor 2018.

Restricted Stock and Performance Share Awards

We have issued restricted stock, restricted stock units and performance share awards to eligible participants under the Omnibus Plans. All restricted stock and restricted stock unit awards have restriction periods tied primarily to employment, and all performance share awards have vesting tied to market-based performance and service. Restricted Stock Awards and Restricted Stock Units under the Omnibus Plans entitle the recipient to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. Vesting for most restricted stock and restricted stock unit awards is based on the service period and vesting generally occurs between three and five years following the date of grant. Unvested awards are forfeited upon termination of employment unless the award agreement provides otherwise. The total value of share-based compensation expense for restricted stock is based on the closing price of our common stock on the date of grant. The fair value of the market-based performance share awards was determined using a Monte-Carlo simulation model. Performance share awards provide the right to receive a share award at the end of a specified period in which a performance goal based on total shareholder return has been established.

The following table sets forth non-vested stock activity for the year ended February 1, 2020 (shares in thousands):


	Restricted Stock Awards						Restricted Stock Units						Performance Share Awards
	Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value
Non-vested on February 2, 2019	800		$	2.84	1,355		$	1.81	484		$	0.80
Vested	(116)		5.32		(418)		2		—		—
Canceled or forfeited	(99)		3.03		(175)		1.85		(484)		0.80
Non-vested on February 1, 2020	585		$	2.30	762		$	1.80	—		$	—
Total unrecognized compensation cost	$	247			$	442			$	—
Weighted-average expected life remaining	0.9 years				0.6 years				N/A

The total fair value of restricted stock vested was $0.6 million and $4.2 million during 2019 and 2018, respectively. No performance awards vested in 2019 or 2018.

Share-Based Compensation Expense

The following table sets forth the share-based compensation expense for the years ended February 1, 2020 and February 2, 2019 (in thousands):


	Year Ended February 1, 2020		Year Ended February 2, 2019
Cost of merchandise sold	$	481	$	1,276
Selling, general and administrative expenses	1,047		2,833
Total share-based compensation expense	$	1,528	$	4,109