NOTE 12 – STOCK-BASED COMPENSATION

The Company’s board of directors may make awards under the 2011 Stock Plan (the “Stock Plan”) to officers, directors and key employees. Awards may include incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), and restricted or unrestricted stock. All stock options awarded under the Stock Plan shall have an exercise price per share at least equal to the common stock’s market value per share at the date of grant. ISOs shall have a term no longer than ten years; NSOs may have up to a ten-year term. In the past, stock options typically became exercisable one year from the date of award. Commencing in January 2018, stock options were awarded with three-year vesting schedules. As of January 31, 2019, there were approximately 1.8 million shares of the Company’s common stock reserved for issuance under the Company’s stock plans. This number includes 610,500 shares of the Company’s common stock available for future awards.

Summaries of stock option activity under the Company’s stock option plans for Fiscal 2019, 2018 and 2017, along with corresponding weighted average per share amounts, are presented below (shares in thousands):




		Exercise		Remaining
	Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2016	1,064	$	26.38	6.36	$	6.91
Granted	270	$	57.88
Exercised	(622)	$	25.57
Forfeited	(5)	$	36.73
Outstanding, January 31, 2017	707	$	39.04	7.82	$	10.22
Granted	302	$	53.49
Exercised	(110)	$	28.81
Forfeited	(10)	$	71.75
Outstanding, January 31, 2018	889	$	44.83	7.91	$	11.74
Granted	257	$	40.54
Exercised	(6)	$	17.19
Outstanding, January 31, 2019	1,140	$	44.01	7.54	$	11.22


Exercisable, January 31, 2019	765	$	44.82	5.97	$	11.79

The changes in the number of non-vested options to purchase shares of common stock for Fiscal 2019, 2018 and 2017, and the weighted average fair value per share for each number, are presented below (shares in thousands):


	Shares	Fair Value
Non-vested, February 1, 2016	300	$	8.97
Granted	270	$	14.93
Vested	(300)	$	8.97
Non-vested, January 31, 2017	270	$	14.93
Granted	302	$	13.55
Vested	(260)	$	15.31
Forfeitures	(10)	$	19.14
Non-vested, January 31, 2018	302	$	13.55
Granted	257	$	9.31
Vested	(184)	$	14.75
Non-vested, January 31, 2019	375	$	10.05

In April 2018 and pursuant to terms of the Stock Plan, the Company awarded performance-based restricted stock units to two senior executives covering up to 36,000 shares of common stock plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. The release of the stock restrictions depends on the total shareholder return performance of the Company’s common stock measured against the performance of a peer-group of common stocks over a three-year period.

Compensation expense related to stock awards was $1.6 million, $4.7 million, and $2.3 million for Fiscal 2019, 2018 and 2017, respectively. At January 31, 2019, there was $3.8 million in unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over the next three years. The total intrinsic values for the stock options exercised during Fiscal 2019, 2018 and 2017 were $0.2 million, $3.6 million and $18.4 million, respectively. At January 31, 2019, the aggregate market value amounts of the shares of common stock subject to outstanding and exercisable stock options that were “in-the-money” exceeded the aggregate exercise prices of such options by $6.0 million and $5.5 million, respectively.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Company believes that its past stock option exercise activity is sufficient to provide it with a reasonable basis upon which to estimate the expected life of newly awarded stock options.

The risk-free interest rates and expected volatility factors used in the determinations of the fair value of stock options awarded during Fiscal 2019 ranged from 2.4% to 2.9% and from 33.0% to 36.0%, respectively. For stock options awarded during Fiscal 2018, the comparable ranges were 1.5% to 2.0% and from 36.0% to 38.3%, respectively. For stock options awarded during Fiscal 2017, the comparable ranges were 1.3% to 1.9% and 33.3% to 35.0%, respectively. The calculations of the expected volatility factors were based on the monthly closing prices of the Company’s common stock for the five-year periods preceding the dates of the corresponding awards. The fair value amounts of each stock option granted in Fiscal 2019, 2018 and 2017 were estimated on the corresponding date of award using the Black-Scholes option-pricing model based on the following weighted average assumptions:


	2019		2018		2017
Dividend yield	2.5	%	1.7	%	1.4	%
Expected volatility	34.5	%	37.3	%	34.6	%
Risk-free interest rate	2.7	%	1.8	%	1.7	%
Expected life (in years)	3.3		3.3		4.2

The Company maintains 401(k) savings plans pursuant to which the Company makes discretionary contributions for the eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were approximately $2.4 million, $2.8 million and $1.9 million for Fiscal 2019, 2018 and 2017, respectively. The Company also maintains a nonqualified plan whereunder the payments of certain amounts of incentive compensation earned by key employees of GPS are deferred for periods of five to seven years; payments are conditioned on continuous employment.