SHARE-BASED PLANS

Our shareholders approved the Big Lots 2012 Long-Term Incentive Plan (“2012 LTIP”) in May 2012, as amended and restated in May 2014. The 2012 LTIP authorizes the issuance of incentive and nonqualified stock options, restricted stock, restricted stock units, deferred stock awards, PSUs, stock appreciation rights, cash-based awards, and other share-based awards. We have issued nonqualified stock options, restricted stock, restricted stock units, and PSUs under the 2012 LTIP. The number of common shares available for issuance under the 2012 LTIP consists of an initial allocation of 7,750,000 common shares plus any common shares subject to the 4,702,362 outstanding awards as of March 15, 2012 under the Big Lots 2005 Long-Term Incentive Plan (“2005 LTIP”) that, on or after March 15, 2012, cease for any reason to be subject to such awards (other than by reason of exercise or settlement). The Compensation Committee of our Board of Directors (“Committee”), which is charged with administering the 2012 LTIP, has the authority to determine the terms of each award. Nonqualified stock options granted to employees under the 2012 LTIP, the exercise price of which may not be less than the fair market value of the underlying common shares on the grant date, generally expire on the earlier of: (1) the seven year term set by the Committee; or (2) one year following termination of employment, death, or disability. The nonqualified stock options generally vest ratably over a four-year period; however, upon a change in control, all awards outstanding automatically vest.

Our former equity compensation plan, the 2005 LTIP, approved by our shareholders in May 2005, expired on May 16, 2012. The 2005 LTIP authorized the issuance of nonqualified stock options, restricted stock, and other award types. We issued only nonqualified stock options and restricted stock under the 2005 LTIP. The Committee, which was charged with administering the 2005 LTIP, had the authority to determine the terms of each award. Nonqualified stock options granted to employees under the 2005 LTIP, the exercise price of which was not less than the fair market value of the underlying common shares on the grant date, generally expire on the earlier of: (1) the seven year term set by the Committee; or (2) one year following termination of employment, death, or disability. The nonqualified stock options generally vest ratably over a four-year period; however, upon a change in control, all awards outstanding automatically vest.

We previously maintained the Big Lots Director Stock Option Plan (“Director Stock Option Plan”) for non-employee directors. The Director Stock Option Plan was terminated on May 30, 2008. The Director Stock Option Plan was administered by the Committee pursuant to an established formula. Neither the Board of Directors nor the Committee exercised any discretion in administration of the Director Stock Option Plan. Grants were made annually at an exercise price equal to the fair market value of the underlying common shares on the date of grant. The annual grants to each non-employee director of an option to acquire 10,000 of our common shares became fully exercisable over a three‑year period: 20% of the shares on the first anniversary, 60% on the second anniversary, and 100% on the third anniversary. Stock options granted to non-employee directors expire on the earlier of: (1) 10 years plus one month; (2) one year following death or disability; or (3) at the end of our next trading window one year following termination. In connection with the amendment to the 2005 LTIP in May 2008, our Board of Directors amended the Director Stock Option Plan so that no additional awards may be made under that plan. Our non-employee directors did not receive any stock options in 2016, 2015, and 2014, but did, as discussed below, receive restricted stock awards under the 2012 and 2005 LTIPs.

Share-based compensation expense was $33.0 million, $13.5 million and $10.5 million in 2016, 2015, and 2014, respectively.

Non-vested Restricted Stock

The following table summarizes the non-vested restricted stock awards and restricted stock units activity for fiscal years 2014, 2015, and 2016:



	Number of Shares		Weighted Average Grant-Date Fair Value Per Share
Outstanding non-vested restricted stock at February 1, 2014	664,101		$	38.34
Granted	317,641		37.81
Vested	(70,155	)	34.54
Forfeited	(166,782	)	39.87
Outstanding non-vested restricted stock at January 31, 2015	744,805		$	38.13
Granted	217,767		49.00
Vested	(128,140	)	38.42
Forfeited	(49,283	)	40.28
Outstanding non-vested restricted stock at January 30, 2016	785,149		$	40.96
Granted	261,792		45.62
Vested	(252,156	)	42.03
Forfeited	(23,264	)	43.63
Outstanding non-vested restricted stock at January 28, 2017	771,521		$	42.12

The non-vested restricted stock units granted in 2014, 2015 and 2016 generally vest, and are expensed, on a ratable basis over three years from the grant date of the award, if certain threshold financial performance objectives are achieved and the grantee remains employed by us through the vesting dates.

The non-vested restricted stock awards granted to employees in prior years vest if certain financial performance objectives are achieved. If we meet a threshold financial performance objective and the grantee remains employed by us, the restricted stock will vest on the opening of our first trading window five years after the grant date of the award. If we meet a higher financial performance objective and the grantee remains employed by us, the restricted stock will vest on the first trading day after we file our Annual Report on Form 10-K with the SEC for the fiscal year in which the higher objective is met.

As of January 28, 2017, we estimated a five-year period for vesting, and therefore expensing, of all non-vested restricted stock awards granted in prior years, as we do not anticipate achieving the higher financial performance objective for any outstanding restricted stock awards.

Performance Share Units

In 2013, in connection with his appointment as CEO and President, Mr. Campisi was awarded 37,800 PSUs, which vest based on the achievement of share price performance goals, that had a weighted average grant-date fair value per share of $34.68. The PSUs have a contractual term of seven years. In 2014, Mr. Campisi’s first two tranches for a total of 25,200 PSUs vested. In 2016,

Mr. Campisi's third and final tranche of 12,600 PSUs vested.

In 2014, 2015, and 2016, we issued PSUs to certain members of management, which vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us through that performance period. At January 28, 2017, 971,595 nonvested PSUs were outstanding in the aggregate. The financial performance objectives for each fiscal year within the three-year performance period are approved by the Compensation Committee of our Board of Directors during the first quarter of the respective fiscal year.

As a result of the process used to establish the financial performance objectives, we will only meet the requirements of establishing a grant date for the PSUs when we communicate the financial performance objectives for the third fiscal year of the award to the award recipients, which will then trigger the service inception date, the fair value of the awards, and the associated expense recognition period. If we meet the applicable threshold financial performance objectives over the three-year performance period and the grantee remains employed by us through the end of the performance period, the PSUs will vest on the first trading day after we file our Annual Report on Form 10-K for the last fiscal year in the performance period.

We have begun or expect to begin recognizing expense related to PSUs as follows:



Issue Year	Outstanding PSUs at January 28, 2017	Actual Grant Date	Expected Valuation (Grant) Date	Actual or Expected Expense Period
2014	360,357	March 2016		Fiscal 2016
2015	259,042		March 2017	Fiscal 2017
2016	352,196		March 2018	Fiscal 2018
Total	971,595

The number of shares to be distributed upon vesting of the PSUs depends on our average performance attained during the three-year performance period as compared to the targets defined by the Compensation Committee, and may result in the distribution of an amount of shares that is greater or less than the number of PSUs granted, as defined in the award agreement. The PSUs issued in 2014 performed above target and more shares will be distributed than initially granted. At January 28, 2017, we estimate the attainment of an average performance that is greater than the targets established for the PSUs issued in 2015. In 2016, we recognized $17.5 million in share-based compensation expense related to PSUs.

The following table summarizes the activity related to PSUs for fiscal year 2016:



	PSUs, excluding 2013 CEO PSUs
	Number of Shares		Weighted Average Grant-Date Fair Value Per Share
Outstanding PSUs at January 30, 2016	—		$	—
Granted	379,794		41.04
Vested	—		—
Forfeited	(19,437	)	41.04
Outstanding PSUs at January 28, 2017	360,357		$	41.04

Board of Directors' Awards

In 2016, 2015, and 2014, we granted to each non-employee member of our Board of Directors a restricted stock award. Each award granted in 2016 had a fair value on the grant date of approximately $110,000. These awards vest on the earlier of (1) the trading day immediately preceding the next annual meeting of our shareholders or (2) the death or disability of the grantee. However, the restricted stock award will not vest if the non-employee director ceases to serve on our Board of Directors before either vesting event occurs.

Stock Options

The following table summarizes information about our stock options outstanding and exercisable at January 28, 2017:



Range of Prices				Options Outstanding				Options Exercisable
Greater Than		Less Than or Equal to		Options Outstanding	Weighted-Average Remaining Life (Years)	Weighted-Average Exercise Price		Options Exercisable	Weighted-Average Exercise Price

$	20.01	$	30.00	10,000	0.7	$	28.22	10,000	$	28.22
30.01		40.00		313,125	3.1	35.67		141,186	35.37
$	40.01	$	50.00	266,550	1.7	42.77		266,550	42.77
				589,675	2.5	$	38.75	417,736	$	39.92

A summary of the annual stock option activity for fiscal years 2014, 2015, and 2016 is as follows:



	Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (000's)
Outstanding stock options at February 1, 2014	3,377,303		$	34.88
Exercised	(1,389,040	)	30.67
Forfeited	(285,050	)	39.19
Outstanding stock options at January 31, 2015	1,703,213		$	37.59
Exercised	(450,136	)	36.17
Forfeited	(78,175	)	35.84
Outstanding stock options at January 30, 2016	1,174,902		$	38.26
Exercised	(572,727	)	37.81
Forfeited	(12,500	)	35.83
Outstanding stock options at January 28, 2017	589,675		$	38.75	2.5	$	5,846
Vested or expected to vest at January 28, 2017	588,733		$	38.76	2.5	$	5,835
Exercisable at January 28, 2017	417,736		$	39.92	2.1	$	3,655

The stock options granted in prior years vest in equal amounts on the first four anniversaries of the grant date and have a contractual term of seven years. The number of stock options expected to vest was based on our annual forfeiture rate assumption.

During 2016, 2015, and 2014, the following activity occurred under our share-based compensation plans:



(In thousands)	2016		2015		2014
Total intrinsic value of stock options exercised	$	7,392	$	5,980	$	18,614
Total fair value of restricted stock vested	$	11,510	$	6,259	$	2,825
Total fair value of performance shares vested	$	621	$	—	$	1,143

The total unearned compensation cost related to all share-based awards outstanding, excluding PSUs, at January 28, 2017 was approximately $13.4 million. This compensation cost is expected to be recognized through September 2019 based on existing vesting terms with the weighted-average remaining expense recognition period being approximately 1.6 years from January 28, 2017.