EQUITY COMPENSATION PLANS

9 Months Ended

Oct. 31, 2015

EQUITY COMPENSATION PLANS

EQUITY COMPENSATION PLANS

NOTE 10—EQUITY COMPENSATION PLANS

The Company has stock-based compensation plans under which it grants stock options, performance share units and restricted stock units to key employees and members of its Board of Directors. The Company generally recognizes compensation expense on a straight-line basis over the vesting period.

In the first nine months of fiscal 2015 and fiscal 2014, the Company granted approximately 707,000 and 684,000 stock options, respectively, with a weighted average grant date fair value of $3.20 per unit and $3.95 per unit, respectively. These options have a seven-year term and vest over a three-year period with a third vesting on each of the first three anniversaries of their grant date.  The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The compensation expense recorded for the options granted during the thirty-nine weeks ended October 31, 2015 and November 1, 2014 was immaterial.

In the first nine months of fiscal 2015 and fiscal 2014, the Company granted approximately 125,000 and 155,000 performance share units, respectively, that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal 2016 and fiscal 2015, respectively. The number of underlying shares that may be issued upon vesting will range from 0% to 150% depending upon the Company achieving the financial targets in fiscal 2016 and fiscal 2015, respectively. The fair value for these awards was $9.63 per unit and $10.26 per unit, respectively, at the date of the grant. The compensation expense recorded for these performance share units during the thirty-nine weeks ended October 31, 2015 and November 1, 2014 was immaterial.

In the first nine months of fiscal 2015 and fiscal 2014, the Company granted approximately 81,000 and 77,000 performance share units, respectively, that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target for the three-year period ending with fiscal 2017 and fiscal 2016, respectively. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $10.01 per unit and $9.13 per unit grant date fair value for fiscal 2015 and fiscal 2014, respectively. The compensation expense recorded for these performance share units during the thirty-nine weeks ended October 31, 2015 and November 1, 2014 was immaterial.

In the first nine months of fiscal 2015 and fiscal 2014, the Company granted approximately 177,000 and 116,000 restricted stock units, respectively, that will vest if the employees remain continuously employed through the third anniversary date of the grant. The fair value for these awards was $10.71 and $10.26 per unit, respectively, at the date of the grant. The compensation expense recorded for these restricted stock units during the thirty-nine weeks ended October 31, 2015 and November 1, 2014 was immaterial.

During the third quarter of fiscal 2014, the Company granted approximately 142,000 restricted stock units that vest continuously over approximately 15 months and have an average fair value of $9.28 per share.