Share-Based Compensation

9 Months Ended

Nov. 02, 2019

Share-based Payment Arrangement [Abstract]

Financial statement impact

The following table details share-based compensation expense and the related income tax benefit for the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018:



	Thirteen Weeks Ended				Thirty-nine Weeks Ended
(in thousands)	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Share-based compensation expense	$	5,796	$	5,957	$	8,464	$	16,896
Income tax benefit associated with share-based compensation expense recognized during the period	$	1,211	$	1,252	$	1,566	$	3,426

The following table details discrete income tax benefits and charges related to share-based compensation awards during the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018:



	Thirteen Weeks Ended						Thirty-nine Weeks Ended
(in thousands)	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
Income tax discrete benefits realized for tax deductions related to the issuance of shares during the period	$	6		$	106		$	1,175		$	1,131
Income tax discrete charges realized upon cancellation of stock appreciation rights during the period	(447		)	(1,942		)	(611		)	(10,883		)
Total income tax discrete benefits (charges) related to share-based compensation awards	$	(441	)	$	(1,836	)	$	564		$	(9,752	)

The following table details the amount of employee tax withheld by the Company upon the issuance of shares associated with restricted stock units vesting and the exercise of stock appreciation rights for the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018:



	Thirteen Weeks Ended				Thirty-nine Weeks Ended
(in thousands)	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Employee tax withheld upon issuance of shares ⁽¹⁾	$	181	$	586	$	6,619	$	6,520


⁽¹⁾	Classified within other financing activities on the Condensed Consolidated Statements of Cash Flows.

Restricted stock units

The following table summarizes activity for restricted stock units for the thirty-nine weeks ended November 2, 2019:



	Service-based Restricted Stock Units				Performance-based Restricted Stock Units				Market-based Restricted Stock Units
	Number of Underlying Shares ⁽¹⁾		Weighted- Average Grant Date Fair Value		Number of Underlying Shares		Weighted- Average Grant Date Fair Value		Number of Underlying Shares		Weighted- Average Grant Date Fair Value
Unvested at February 2, 2019	2,020,030		$	16.76	801,527		$	13.65	435,970		$	21.24
Granted	731,886		22.10		234,984		22.89		115,238		36.24
Adjustments for performance achievement	—		—		(90,616	)	24.06		(72,497	)	28.20
Vested	(736,858	)	17.76		—		—		(18,125	)	28.20
Forfeited	(288,194	)	16.62		(198,022	)	13.08		(38,802	)	29.90
Unvested at November 2, 2019	1,726,864		$	18.62	747,873		$	15.41	421,784		$	23.05

⁽¹⁾

Includes 259,016 unvested restricted stock units as of November 2, 2019, subject to vesting requirements related to the achievement of certain performance metrics, such as operating income and net income, for the fiscal year immediately preceding the vesting date. Holders of these restricted stock units have the opportunity to earn back one or more installments of the award if the cumulative performance requirements are met in a subsequent year.

Fair value of both service-based and performance-based restricted stock units is calculated using the market price of the underlying common stock on the date of grant reduced for anticipated dividend payments on unvested shares. In determining fair value, the Company does not take into account performance-based vesting requirements. Performance-based vesting requirements are taken into account in determining the number of awards expected to vest. For market-based restricted stock units, fair value is calculated using a Monte Carlo simulation with the number of shares that ultimately vest dependent on the Company’s total stockholder return measured against the total stockholder return of a select group of peer companies over a three-year period. For awards with performance-based or market-based vesting requirements, the number of shares that ultimately vest can vary from 0% to 200% of target depending on the level of achievement of performance criteria. Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at 100% of their target vesting amount in the table above.

Service-based restricted stock units are expensed on a straight-line basis over the award’s requisite service period. Performance-based restricted stock units subject to graded vesting are expensed on an accelerated attribution basis. Performance share award expense is primarily recognized in the performance period of the award’s requisite service period. Market-based restricted stock units without graded vesting features are expensed on a straight-line basis over the award’s requisite service period. Compensation expense for stock appreciation rights is recognized on a straight-line basis over the award’s requisite service period. The Company adjusts share-based compensation expense on a quarterly basis for actual forfeitures.

The following table details unrecognized compensation cost and the remaining weighted-average period these costs are expected to be recognized for restricted stock units as of November 2, 2019:



(in thousands)	Service-based Restricted Stock Units	Performance-based Restricted Stock Units	Market-based Restricted Stock Units
Unrecognized compensation cost	23,655	2,684	4,667
Remaining weighted-average period cost is expected to be recognized (years)	1.3	1.1	1.0

Additional information pertaining to restricted stock units for the thirty-nine weeks ended November 2, 2019 and November 3, 2018 follows:



(in thousands)	November 2, 2019		November 3, 2018
Service-based restricted stock units:
Total grant date fair value of awards granted	$	16,175	$	16,652
Total grant date fair value of awards vested	$	13,087	$	15,873

Performance-based restricted stock units:
Total grant date fair value of awards granted	$	5,379	$	4,310
Total grant date fair value of awards vested	$	—	$	—

Market-based restricted stock units:
Total grant date fair value of awards granted	$	4,176	$	4,784
Total grant date fair value of awards vested	$	511	$	137

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the thirty-nine weeks ended November 2, 2019 and November 3, 2018 were as follows:



	November 2, 2019			November 3, 2018
Grant date market price	$	25.34		$	23.59
Fair value	$	36.24		$	33.69
Assumptions:
Price volatility	57		%	54		%
Expected term (years)	2.9			2.9
Risk-free interest rate	2.2		%	2.4		%
Dividend yield	3.2		%	3.4		%
Average volatility of peer companies	40.0		%	37.4		%
Average correlation coefficient of peer companies	0.2407			0.2709

Stock appreciation rights

The following table summarizes stock appreciation rights activity for the thirty-nine weeks ended November 2, 2019:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life (years)
Outstanding at February 2, 2019	1,041,867		$	37.81
Granted	—		—
Exercised	(43,463	)	22.41
Forfeited or expired	(201,679	)	32.27
Outstanding at November 2, 2019	796,725		$	40.06	$	—	2.6
Stock appreciation rights exercisable at November 2, 2019	796,100		$	40.08	$	—	2.6
Stock appreciation rights expected to become exercisable in the future as of November 2, 2019	607		$	22.55	$	—	6.2

Additional information pertaining to stock appreciation rights for the thirty-nine weeks ended November 2, 2019 and November 3, 2018 follows:



(in thousands)	November 2, 2019		November 3, 2018
Total grant date fair value of awards exercised	$	620	$	1,279