Stock-Based Awards

3 Months Ended

May 01, 2021

Share-based Payment Arrangement [Abstract]

We have certain stock-based compensation plans under which we grant stock-based awards, including common stock, stock options, time-based restricted share units (“RSUs”), and performance-based restricted share units (“Performance RSUs”) to attract, retain, and reward talented employees, officers, and directors, and to align stockholder and employee interests.

Compensation expense for stock-based awards is based on fair value at the measurement date. This expense 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. Stock-based compensation 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 measures 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 during the three months ended May 1, 2021 and April 25, 2020 were as follows (dollars in thousands):


	For the Three Months Ended
	May 1, 2021		April 25, 2020
Stock-based compensation	$	3,740	$	2,322
Income tax effect of stock-based compensation	$	919	$	573

In addition, during the three months ended May 1, 2021 and April 25, 2020 the Company realized $2.6 million of net excess tax benefits and $0.5 million of net tax deficiencies, respectively, related to the vesting and exercise of share-based awards.

As of May 1, 2021, we had unrecognized compensation expense related to stock options, RSUs, and target Performance RSUs (based on the Company’s expected achievement of performance measures) of $2.9 million, $18.4 million, and $8.6 million, respectively. This expense will be recognized over a weighted-average number of years of 3.1, 2.9, and 2.5, respectively, based on the average remaining service periods for the awards. As of May 1, 2021, we may recognize an additional $21.6 million in compensation expense in future periods if the maximum number 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 ended May 1, 2021:


	Stock Options
	Shares	Weighted Average Exercise Price
Outstanding as of January 30, 2021	344,963	$	49.66
Granted	29,738	$	85.02
Options exercised	(11,169)	$	32.77
Canceled	—	—
Outstanding as of May 1, 2021	363,532	$	53.07

Exercisable options as of May 1, 2021	254,745	$	53.00

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the three months ended May 1, 2021:


	Restricted Stock
	RSUs			Performance RSUs
	Share Units	Weighted Average Grant Date Fair Value		Share Units	Weighted Average Grant Date Fair Value
Outstanding as of January 30, 2021	648,361	$	33.29	425,344	$	54.03
Granted	57,732	$	85.11	272,942	$	85.01
Share units vested	(155,763)	$	33.25	(70,890)	$	57.59
Forfeited or canceled	(5,482)	$	42.66	(164,410)	$	61.47
Outstanding as of May 1, 2021	544,848	$	38.70	462,986	$	69.10

The total number of granted Performance RSUs presented above consists of 187,967 target shares and 84,975 supplemental shares. The total number of Performance RSUs outstanding as of May 1, 2021 consists of 309,825 target shares and 153,161 supplemental shares. With respect to the Company’s Performance Year ended July 25, 2020, the Company canceled 88,057 target shares and 74,024 supplemental shares during the three months ended May 1, 2021 as a result of the performance period criteria being partially met.