STOCK-BASED COMPENSATION

12 Months Ended

Feb. 01, 2020

Share-based Payment Arrangement [Abstract]

The Company generally grants time vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest over one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest in addition to a service period requirement. With the approval of the Board’s Compensation Committee, the Company may settle vested Deferred Awards and Performance Awards to the employee in shares, in a cash amount equal to the market value of such shares at the time all requirements for delivery of the award have been met, or in part shares and cash.

For Performance Awards issued during Fiscal 2017, an employee may earn from 0% to 200% of their Target Shares based on the achievement of cumulative adjusted earnings per share achieved for the applicable performance period, which is generally three years, adjusted operating margin expansion achieved for the performance period, and adjusted return on invested capital (“ROIC”) achieved at the end of the performance period. For Performance Awards issued during Fiscal 2018 and 2019, an employee may earn from 0% to 250% of their Target Shares based on the cumulative adjusted earnings per share achieved for the performance period, which is generally three years, adjusted operating margin expansion achieved for the performance period, adjusted ROIC achieved as of the end of the performance period, and the ranking of our adjusted ROIC relative to that of companies in our peer group as of the end of the performance period. The Performance Awards cliff vest, if earned, after completion of the applicable performance period, which is generally three years. The fair value of the Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to

vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the Company’s estimate of the percentage of the aggregate Target Shares expected to be earned.

The following table summarizes the Company’s stock-based compensation expense:



	Fiscal Year Ended
	February 1, 2020			February 2, 2019		February 3, 2018
	(In thousands)
Deferred Awards	$	18,910		$	12,849	$	11,891
Performance Awards⁽¹⁾	(2,691		)	14,566		18,906
Total stock-based compensation expense⁽²⁾	$	16,219		$	27,415	$	30,797

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(1) The cumulative expense recognized reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, adjusted return on invested capital, and, if applicable, ranking of our adjusted return on invested capital relative to that of companies in our peer group as they occur.

(2) A portion of stock-based compensation is included in cost of sales. Approximately $3.6 million, $3.5 million, and $4.0 million in Fiscal 2019, Fiscal 2018, and Fiscal 2017, respectively, were included in cost of sales. All other stock-based compensation is included in selling, general, and administrative expenses.

The Company recognized a tax benefit related to stock-based compensation expense of $4.3 million, $7.2 million, and $8.2 million for Fiscal 2019, Fiscal 2018, and Fiscal 2017, respectively.

At February 1, 2020, the Company had 415,308 shares available for grant under the Equity Plan.

Changes in the Company’s Unvested Stock Awards during Fiscal 2019, Fiscal 2018, and Fiscal 2017

Deferred Awards



	Fiscal Year Ended
	February 1, 2020				February 2, 2019				February 3, 2018
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)				(in thousands)
Unvested Deferred Awards at beginning of year	299		$	99.98	420		$	82.30	469		$	61.19
Granted	264		102.21		135		124.21		212		110.17
Vested	(126	)	105.24		(197	)	75.65		(202	)	62.30
Forfeited	(60	)	112.09		(59	)	110.63		(59	)	83.25
Unvested Deferred Awards at end of year	377		$	97.88	299		$	99.98	420		$	82.30

Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $18.7 million as of February 1, 2020, which will be recognized over a weighted average period of approximately 1.8 years.

The fair value of Deferred Awards held by the Company’s employees that vested during Fiscal 2019, Fiscal 2018, and Fiscal 2017 was approximately $13.5 million, $25.3 million, and $23.6 million, respectively.

Performance Awards



	Fiscal Year Ended
	February 1, 2020				February 2, 2019				February 3, 2018
	Number of Performance Shares⁽¹⁾		Weighted Average Grant Date Fair Value		Number of Performance Shares⁽¹⁾		Weighted Average Grant Date Fair Value		Number of Performance Shares⁽¹⁾		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)				(in thousands)
Unvested Performance Awards at beginning of year	352		$	90.66	544		$	84.11	515		$	68.11
Granted	201		98.49		87		123.02		172		113.76
Shares earned in excess of target	181		75.83		347		70.09		203		50.97
Vested shares, including shares earned in excess of target	(354	)	76.36		(513	)	70.09		(301	)	50.97
Forfeited	(38	)	110.77		(113	)	114.06		(45	)	86.80
Unvested Performance Awards at end of year	342		$	99.97	352		$	90.66	544		$	84.11

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(1)For those awards for which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period.

For those awards in which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100%; however, the cumulative expense recognized reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, adjusted return on invested capital, and, if applicable, ranking of our adjusted return on invested capital relative to that of companies in our peer group as they occur. Based on the current number of Performance Awards expected to be earned, the total unrecognized stock-based compensation expense related to unvested Performance Awards approximated $8.0 million as of February 1, 2020, which will be recognized over a weighted average period of approximately 1.9 years.

The fair value of Performance Awards held by the Company’s employees that vested during Fiscal 2019, Fiscal 2018, and Fiscal 2017 was approximately $33.9 million, $69.2 million, and $49.1 million, respectively.