Stock-Based Awards

3 Months Ended

Apr. 29, 2023

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 annual 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 April 29, 2023 and April 30, 2022 were as follows (dollars in thousands):


	For the Three Months Ended
	April 29, 2023		April 30, 2022
Stock-based compensation	$	6,620	$	3,128
Income tax effect of stock-based compensation	$	1,644	$	775

During the three months ended April 29, 2023 and April 30, 2022 the Company realized approximately $2.7 million and $2.5 million of net excess tax benefits, respectively, related to the vesting and exercise of share-based awards.

As of April 29, 2023, 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 $4.6 million, $24.9 million, and $26.0 million, respectively. This expense will be recognized over a weighted-average number of years of 3.2, 3.0, and 1.7, respectively, based on the average remaining service periods for the awards. We may recognize an additional $13.2 million in compensation expense in future periods after April 29, 2023 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 April 29, 2023:


	Stock Options
	Shares	Weighted Average Exercise Price
Outstanding as of January 28, 2023	245,706	$	65.36
Granted	38,155	$	94.99
Options exercised	(7,177)	$	31.45

Outstanding as of April 29, 2023	276,684	$	70.33

Exercisable options as of April 29, 2023	183,071	$	64.23

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the three months ended April 29, 2023:


	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 28, 2023	439,903	$	53.76	385,673	$	90.32
Granted	117,452	$	94.98	230,127	$	94.99
Share units vested	(175,051)	$	95.17	(111,871)	$	83.14
Forfeited or canceled	(801)	$	41.04	(60,434)	$	80.30
Outstanding as of April 29, 2023	381,503	$	71.53	443,495	$	95.92

The total number of granted Performance RSUs presented above consists of 157,380 target shares and 72,747 supplemental shares. The total number of Performance RSUs outstanding as of April 29, 2023 consists of 303,137 target shares and 140,358 supplemental shares. With respect to the Company’s Performance Year ended January 28, 2023, the Company canceled 2,506 target shares and 57,199 supplemental shares during the three months ended April 29, 2023, as a result of the performance period criteria not being met.