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 and nine months ended October 28, 2023 and October 29, 2022 were as follows (dollars in thousands):


	For the Three Months Ended				For the Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Stock-based compensation	$	6,298	$	4,515	$	19,240	$	12,273
Income tax effect of stock-based compensation	$	3,201	$	1,113	$	4,768	$	3,031

During the three months ended October 28, 2023 and October 29, 2022 the Company realized less than $0.1 million and approximately $1.5 million of net excess tax benefits, respectively, related to the vesting and exercise of share-based awards. During the nine months ended October 28, 2023 and October 29, 2022, the Company realized approximately $2.9 million and $4.1 million of net excess tax benefits, respectively.

As of October 28, 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 $3.7 million, $23.6 million, and $19.3 million, respectively. This expense will be recognized over a weighted-average number of years of 2.8, 2.8, and 1.4, respectively, based on the average remaining service periods for the awards. We may recognize an additional $13.1 million in compensation expense in future periods after October 28, 2023 if the maximum number of Performance RSUs is earned based on certain performance measures being met.

The following table summarizes stock option award activity during the nine months ended October 28, 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	(9,879)	$	30.83

Outstanding as of October 28, 2023	273,982	$	70.73

Exercisable options as of October 28, 2023	180,369	$	64.75

The following table summarizes RSU and Performance RSU award activity during the nine months ended October 28, 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	164,052	$	95.27	230,127	$	94.99
Share units vested	(198,746)	$	45.32	(112,787)	$	83.25
Forfeited or canceled	(5,417)	$	63.63	(66,706)	$	81.54
Outstanding as of October 28, 2023	399,792	$	74.86	436,307	$	95.95

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 October 28, 2023 consists of 296,774 target shares and 139,533 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 nine months ended October 28, 2023, as a result of the performance period criteria not being met.