Share-Based Plans

3 Months Ended

May 02, 2020

Share-based Payment Arrangement [Abstract]

We have issued nonqualified stock options, restricted stock units, and performance share units under our shareholder-approved equity compensation plans. At May 2, 2020, the number of nonqualified stock options outstanding was immaterial. Our restricted stock units and performance share units, as described below, are expensed and reported as non-vested shares. We recognized share-based compensation expense of $3.0 million and $4.3 million in the first quarter of 2020 and the first quarter of 2019, respectively.

Non-vested Restricted Stock Units

The following table summarizes the non-vested restricted stock units activity for the first quarter of 2020:



	Number of Shares		Weighted Average Grant-Date Fair Value Per Share
Outstanding non-vested restricted stock units at February 1, 2020	648,510		$	38.52
Granted	921,309		15.82
Vested	(239,856	)	43.07
Forfeited	(1,511	)	38.60
Outstanding non-vested restricted stock units at May 2, 2020	1,328,452		$	21.95

The non-vested restricted stock units granted in the first quarter of 2020 generally vest and are expensed on a ratable basis over three years from the grant date of the award, if a threshold financial performance objective is achieved and the grantee remains employed by us through the vesting dates.

Performance Share Units

In the first quarter of 2020, we awarded performance share units (“RPSUs”) to certain members of senior management, which vest based on the achievement of share price performance goals and a minimum service requirement of one year. The RPSUs have a contractual term of three years. We use a Monte Carlo simulation to estimate the fair value of the RPSUs on the grant date and recognize expense over the derived service period. If the share price performance goals applicable to the RPSUs are not achieved prior to expiration, the unvested portion of the awards will be forfeited. Shares issued in connection with vested RPSUs are generally restricted from sale, transfer, or other disposition prior to the third anniversary of the grant date except under certain circumstances, such as death, disability, or change in control.

Prior to 2020, we issued performance share units (“PSUs”) to certain members of management, which will vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us during the performance period. Typically, 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. For the first quarter of 2020, due to the lack of business visibility resulting from the COVID-19 pandemic, the Compensation Committee chose to defer establishment of the 2020 performance objectives until later in the fiscal year.

As a result of the process used to establish the financial performance objectives, we will only meet the requirements for establishing a grant date for 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.

As a result of the Compensation Committee’s decision to defer establishment of the 2020 performance objectives for PSUs, the financial performance objectives for the third fiscal year of the PSUs issued in 2018 were not established in the first quarter of 2020 and the grant date for the 2018 PSUs has not been established. We expect the grant date for the 2018 PSUs to be established when the Compensation Committee establishes the 2020 PSU performance objectives.

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



Issue Year	Outstanding PSUs and RPSUs at May 2, 2020	Actual Grant Date	Expected Valuation (Grant) Date	Actual or Expected Expense Period
2018	191,020		August 2020	Fiscal 2020
2019	338,528		March 2021	Fiscal 2021
2020	408,340	April 2020		Fiscal 2020 - 2021
Total	937,888

The number of shares to be distributed upon vesting of the PSUs depends on the average performance attained during the three-year performance period compared to the performance targets established 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. During the first quarter of 2020, the PSUs issued in 2017 vested with an average performance attainment lower than the targets established. During the first quarters of 2020 and 2019, we recognized $0.4 million and $1.2 million in share-based compensation expense related to PSUs, respectively.

The following table summarizes the activity related to PSUs and RPSUs for the first quarter of 2020:



	Number of Units		Weighted Average Grant-Date Fair Value Per Share
Outstanding PSUs and RPSUs at February 1, 2020	181,922		$	31.89
Granted	408,340		11.70
Vested	(181,062	)	31.89
Forfeited	(860	)	31.89
Outstanding PSUs and RPSUs at May 2, 2020	408,340		$	11.70

The following activity occurred under our share-based plans during the respective periods shown:



	First Quarter
(In thousands)	2020		2019
Total intrinsic value of stock options exercised	$	—	$	42
Total fair value of restricted stock vested	4,040		5,042
Total fair value of performance shares vested	$	924	$	9,706

The total unearned compensation cost related to all share-based awards outstanding, excluding PSUs issued in 2018 and 2019, at May 2, 2020 was approximately $29.6 million. This compensation cost is expected to be recognized through April 2023 based on existing vesting terms with the weighted-average remaining expense recognition period being approximately 2.2 years from May 2, 2020.