Stock-Based Awards

3 Months Ended

Apr. 28, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Awards

Stock-Based Awards

The Company has certain stock-based compensation plans under which it grants stock-based awards, including common stock, stock options, restricted share units, and performance-based restricted share units (“Performance RSUs”) to attract, retain, and reward talented employees, officers, and directors, and to align the interests of employees, officers, and directors with those of the stockholders.

Compensation expense for stock-based awards is based on fair value at the measurement date. It fluctuates over time as a function of the duration of vesting periods of the stock-based awards and the Company’s performance, as measured by criteria set forth in performance-based awards. This expense is included in general and administrative expenses in the condensed consolidated statements of operations and the amount of expense ultimately recognized depends on the quantity of awards that actually vest. Accordingly, stock-based compensation expense may vary from period to period.

The performance criteria for the Company’s performance-based equity awards utilize the Company’s operating earnings (adjusted for certain amounts) as a percentage of contract revenues for the applicable four-quarter period (a “Performance Year”) and its Performance Year operating cash flow level (adjusted for certain amounts). Additionally, certain awards include three-year performance goals that, if met, result in supplemental shares awarded. For Performance RSUs, the Company evaluates compensation expense quarterly and recognizes expense for performance-based awards only if it determines it is probable that performance criteria for the awards will be met.

Stock-based compensation expense and the related tax benefit recognized and realized during the three months endedApril 28, 2018 and April 29, 2017 were as follows (dollars in thousands):

	For the Three Months Ended
	April 28, 2018		April 29, 2017
Stock-based compensation	$	4,863	$	4,915
Income tax effect of stock-based compensation	$	1,069	$	1,943

As of April 28, 2018, the Company had unrecognized compensation expense related to stock options, RSUs, and target Performance RSUs (based on the Company’s estimate of performance goal achievement) of $3.8 million, $11.5 million, and $31.9 million, respectively. This expense will be recognized over a weighted-average number of years of 2.6, 2.8, and 2.5, respectively, based on the average remaining service periods for the awards. As of April 28, 2018, the Company may recognize an additional $13.4 million in compensation expense in future periods if the maximum amount of Performance RSUs is earned based on certain performance measures being met.

Stock Options

The following table summarizes stock option award activity during the three months endedApril 28, 2018:

	Stock Options
	Shares		Weighted Average Exercise Price
Outstanding as of January 27, 2018	636,730		$	27.93
Granted	28,796		$	106.19
Options exercised	(5,084	)	$	13.15
Canceled	—		$	—
Outstanding as of April 28, 2018	660,442		$	31.46
Exercisable options as of April 28, 2018	544,423		$	21.71

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the three months endedApril 28, 2018:

	Restricted Stock
	RSUs				Performance RSUs
	Share Units		Weighted Average Grant Price		Share Units		Weighted Average Grant Price
Outstanding as of January 27, 2018	133,896		$	71.81	390,327		$	80.52
Granted	39,612		$	106.36	218,628		$	106.19
Share units vested	(3,099	)	$	76.98	—		$	—
Forfeited or canceled	(3,299	)	$	59.10	(10,437	)	$	81.55
Outstanding as of April 28, 2018	167,110		$	80.16	598,518		$	89.88

The total amount of granted Performance RSUs presented above consists of 158,841 target shares and 59,787 supplemental shares. The total amount of Performance RSUs outstanding as of April 28, 2018 consists of 431,118 target shares and 167,400 supplemental shares.