Share-Based Compensation Plans and Capital Stock Transactions

12 Months Ended

Feb. 01, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation Plans and Capital Stock Transactions

SHARE-BASED COMPENSATION PLANS AND CAPITAL STOCK TRANSACTIONS:

General

In April 2017, the Board approved the Amended and Restated 2012 Omnibus Stock and Incentive Plan (the "Amended Omnibus Plan"), which replaced the Chico's FAS, Inc. 2012 Omnibus Stock and Incentive Plan, effective upon shareholder approval on June 22, 2017. The aggregate number of shares of our common stock that may be issued under the Amended Omnibus Plan (since inception) is 15.5 million shares plus any shares represented by awards granted under prior plans that are forfeited, expired or canceled without delivery of shares. Awards under the Amended Omnibus Plan may be in the form of restricted stock, restricted stock units, performance-based restricted stock, performance-based stock units, stock options and stock appreciation rights, in accordance with the terms and conditions of the Amended Omnibus Plan. The terms of each award will be determined by the Human Resources, Compensation and Benefits Committee of the Board of Directors or by the Board of Directors.

We have historically issued restricted stock, including non-vested restricted stock, performance-based stock units and stock options. Shares of non-vested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon, and are considered to be currently issued and outstanding. The Company's

performance-based stock units are subject to vesting conditions, including meeting specified annual Company performance objectives. Under the annual PSU grants in March 2019, each performance based award recipient could vest 0% to 175% of the target shares granted contingent on the achievement of the Company's financial performance metrics, whereas each performance based award recipient could vest 0% to 150% of the target shares granted under the special PSU grants in August and October 2019. Performance-based stock units are entitled to dividend equivalents only to the extent the specific performance goals are met and are entitled to voting rights only upon the issuance of shares after meeting these specific performance goals. Generally, share-based awards vest evenly over three years or cliff-vest after a three-year period; stock options generally have a 10-year term. As of February 1, 2020, approximately 0.2 million nonqualified stock options are outstanding under a predecessor plan and approximately 4.8 million shares remain available for future grants of share-based awards assuming all awards will vest 100% of the target shares granted.

Share-based compensation expense for all awards is based on the grant date fair value of the award, net of estimated forfeitures, and is recognized over the requisite service period of the awards. Compensation expense for restricted stock awards and stock options with a service condition is recognized on a straight-line basis over the requisite service period. Compensation expense for performance-based awards with a service condition is recognized ratably for each vesting tranche based on our estimate of the level and likelihood of meeting certain Company-specific performance goals. We estimate the expected forfeiture rate for all share-based awards, and only recognize expense for those shares expected to vest. In determining the portion of the share-based payment award that is ultimately expected to be earned, we derive forfeiture rates based on historical data. In accordance with the authoritative guidance, we revise our forfeiture rates, when necessary, in subsequent periods if actual forfeitures differ from those originally estimated. Total compensation expense related to share-based awards in fiscal 2019, 2018 and 2017 was $7.1 million, $19.8 million and $20.7 million, respectively. The total tax benefit associated with share-based compensation for fiscal 2019, 2018 and 2017 was $1.8 million, $5.0 million and $7.6 million, respectively.

Restricted Stock Awards

Restricted stock awards vest in equal annual installments over a three-year period from the date of grant, except for a restricted stock award granted to our Chief Executive Officer ("CEO") in fiscal 2019, which vests over a four-year period from the date of grant and is described further in the Company’s Current Report on Form 8-K/A filed with the SEC on August 20, 2019.

Restricted stock activity for fiscal 2019 was as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,715,466		$	10.92
Granted	3,563,105		4.22
Vested	(1,266,059	)	11.28
Forfeited	(1,832,496	)	7.11
Unvested, end of period	3,180,016		5.47

Total fair value of shares of restricted stock that vested during fiscal 2019, 2018 and 2017 was $6.7 million, $10.6 million and $15.6 million, respectively. The weighted average grant date fair value of restricted stock granted during fiscal 2019, 2018 and 2017 was $4.22, $9.68 and $13.23, respectively. As of February 1, 2020, there was $10.0 million of unrecognized share-based compensation expense related to non-vested restricted stock awards. That cost is expected to be recognized over a weighted average remaining period of approximately 2.1 years.

Performance-based Stock Units

For fiscal 2019, we granted PSUs contingent upon the achievement of Company-specific performance goals. The annual PSU grants in March 2019 have a performance period of the three fiscal years 2019 through 2021. Special PSU grants in August and October 2019 have a performance period of part of fiscal year 2019 through the end of fiscal year 2021. Any units earned as a result of the achievement of the performance goals of the PSUs will vest three years from the date of grant for the March 2019 grants and in March 2022 for the August and October 2019 grants and will be settled in shares of our common stock. All PSUs granted during fiscal 2019 were granted under our Amended Omnibus Plan, except for one PSU award granted as an inducement award as permitted under New York Stock Exchange ("NYSE") Rule 303A.08. The inducement award was granted to our CEO outside of the Amended Omnibus Plan and is described further in the Company’s Current Report on Form 8-K/A filed with the SEC on August 20, 2019.

Performance-based stock unit activity for fiscal 2019 was as follows:

	Number of Units/Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	1,067,338		$	11.40
Granted	2,740,650		2.87
Vested	(244,628	)	13.19
Forfeited	(1,521,222	)	7.26
Unvested, end of period	2,042,138		2.48

Total fair value of performance-based stock units that vested during fiscal 2019, 2018 and 2017 was $1.4 million, $1.9 million and $4.2 million, respectively. There was $3.0 million of unrecognized share-based compensation expense related to performance-based stock units expected to vest as of February 1, 2020. That cost is expected to be recognized over a weighted average period of approximately 2.1 years.

Stock Option Awards

We used the Black-Scholes option-pricing model to value our stock options. No stock options have been issued since fiscal 2011 and all have been fully vested since fiscal 2014. Using this option-pricing model, the fair value of each stock option award was estimated on the date of grant. The fair value of the stock option awards, which are subject to pro-rata vesting generally over three years, was expensed on a straight-line basis over the vesting period of the stock options. For fiscal 2019, 2018 and 2017, we did not grant any stock options.

Stock option activity for fiscal 2019 was as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding, beginning of period	214,277		$	13.54
Granted	—		—
Exercised	—		—
Forfeited or expired	(45,942	)	13.98
Outstanding, end of period	168,335		13.42		0.9	$	—
Vested at February 1, 2020	168,335		13.42		0.9	—
Exercisable at February 1, 2020	168,355		13.42		0.9	—

Employee Stock Purchase Plan

We sponsor an employee stock purchase plan (“ESPP”) under which substantially all full-time employees are given the right to purchase shares of our common stock during each of the two specified offering periods each fiscal year at a price equal to 85 percent of the value of the stock immediately prior to the beginning of each offering period. During fiscal 2019, 2018 and

2017, approximately 354,000, 175,000 and 232,000 shares, respectively, were purchased under the ESPP. Cash received from purchases under the ESPP for fiscal 2019 was $1.1 million.

Share Repurchase Program

In fiscal 2018, we repurchased 12.2 million shares at a total cost of $81.1 million under the Company's $300 million share repurchase program announced in November 2015. We did not repurchase any of the Company's common stock during fiscal 2019. As of February 1, 2020, $55.2 million remains under the share repurchase program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.