Note 9. Benefit Plans

401(k) Savings Plan

Each segment of the Company offers a 401(k) Savings Plan to eligible employees meeting certain age and service requirements.

The fye segment offers a 401(k) plan which permits participants to contribute up to 80% of their salary, including bonuses, up to the maximum allowable by IRS regulations. The Company matches 50% of the first 6% of employee contributions after completing one year of service. Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Participant vesting of the Company’s matching contribution is based on the years of service completed by the participant. Participants are fully vested upon the completion of four years of service. As of February 3, 2019, the fye segment suspended its matching contribution in response to one of the Company’s cost‑cutting initiatives. The Trans World Entertainment Corporation 401(K) Plan for the fye segment was transferred to the acquiring company as part of the FYE Transaction pursuant to the terms of the Asset Purchase Agreement.

The etailz segment offers a 401(k) plan, the etailz 401(K) Plan, which permits participants to contribute up to the maximum allowable by IRS regulations. The Company matches 100% of the first 6% of employee contributions after completing one year of service. Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Participant vesting of the Company’s matching contribution is based on the years of service completed by the participant. Participants are fully vested upon the completion of three years of service. All participant forfeitures of non-vested benefits are used to reduce the Company’s contributions or fees in future years.

Total expense related to the fye segment’s matching contributions was approximately $0 and $340,000 in fiscal 2019 and fiscal 2018, respectively. Total expense related to the etailz segment’s matching contributions was approximately $303,000 and $297,000 in fiscal 2019 and fiscal 2018, respectively.

Stock Award Plans

As of February 1, 2020, there was approximately $0.3 million of unrecognized compensation cost related to stock option awards comprised of the following: $0.2 million was related to stock option awards listed in the table below and expected to be recognized as expense over a weighted average period of 1.2 years and $0.1 million was related to restricted stock option awards expected to be recognized as expense over a weighted average period of 2.7 years. The FYE Transaction in February 2020 constituted a change of control and vesting on all unvested options was accelerated. As a result, all of the unrecognized compensation expense was recognized in the first quarter of fiscal 2020.

The Company has outstanding awards under three employee stock award plans, the 2005 Long Term Incentive and Share Award Plan, the Amended and Restated 2005 Long Term Incentive and Share Award Plan (the “Old Plans”); and the 2005 Long Term Incentive and Share Award Plan (as amended and restated April 5, 2017 (the “New Plan”). Collectively, these plans are referred to herein as the Stock Award Plans. Additionally, the Company had a stock award plan for non-employee directors (the “1990 Plan”). The Company no longer issues stock options under the Old Plans or the 1990 Plan.

Equity awards authorized for issuance under the New Plan total 250 thousand. As of February 1, 2020, of the awards authorized for issuance under the Stock Award Plans, approximately 129 thousand were granted and are outstanding, 99 thousand of which were vested and exercisable. Shares available for future grants of options and other share-based awards under the New Plan at February 1, 2020 were 213 thousand.

The fair values of the options granted have been estimated at the date of grant using the Black - Scholes option pricing model with the following assumptions:

	2019			2018
Dividend yield		0	%		0	%
Expected stock price volatility		63.7-70.1	%		50.5-54.0	%
Risk-free interest rate		1.35%-1.62	%		2.71%-3.01	%
Expected award life ( in years)		5.64-6.98			5.64-6.98
Weighted average fair value per share of awards granted during the year	$	4.46		$	10.00

The following table summarizes stock option activity under the Stock Award Plans:

	Employee and Director Stock Award Plans

	Number of Shares Subject To Option			Stock Award Exercise Price Range Per Share		Weighted Average Exercise Price		Other Share Awards ⁽¹⁾			Weighted Average Grant Fair Value/ Exercise Price

Balance February 3, 2018		129,296		$	32.00-$97.40	$	61.20		8,921		$	65.20
Granted		27,750		$	19.60-$20.80		19.80		11,224			22.40
Cancelled/Forfeited		(18,125	)	$	19.60-$77.60		57.68		-			38.80
Exercised		-			-		-		(6,575	)		-
Balance February 2, 2019		138,921		$	19.60-$97.40	$	55.00		13,571		$	33.60
Granted		5,750		$	3.51-$5.40		3.76		-			-

Cancelled/Forfeited		(15,475	)	$	34.60-$95.40		57.68		-			-
Exercised		-			-		-		(3,626	)		5.66
Balance February 1, 2020		129,196		$	3.51-$97.40	$	52.11		9,945		$	36.75

⁽¹⁾Other Share Awards include deferred shares granted to executives and directors.

As of February 1, 2020, all stock awards outstanding and exercisable had a grant price higher than the market price of the stock and had no intrinsic value.

During fiscal 2019, the Company recognized approximately $40 thousand in expenses for deferred shares issued to non-employee directors. During fiscal 2018, the Company recognized approximately $79 thousand in expenses for deferred shares issued to non-employee directors. There were no exercises of non-restricted stock options during fiscal 2019 and fiscal 2018.

In connection with the acquisition of etailz, the Company issued 78,628 restricted shares of Company common stock to a key etailz employee, with a grant date fair value of $71.20 per share, as adjusted for the reverse stock split. These shares vested ratably through January 2019 and were fully amortized in fiscal 2018. Total expense related to these shares was $2.4 million in fiscal 2018. The Company recognized a total of $5.6 million of compensation cost related to these restricted shares.

Defined Benefit Plans

The Company maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”) for certain Executive Officers of the Company. The SERP, which is unfunded, provides eligible executives defined pension benefits that supplement benefits under other retirement arrangements. The annual benefit amount is based on salary and bonus at the time of retirement and number of years of service.

Prior to June 1, 2003, the Company had provided the Board of Directors with a noncontributory, unfunded retirement plan (“Director Retirement Plan”) that paid retired directors an annual retirement benefit.

For fiscal 2019 and 2018, net periodic benefit cost recognized under both plans totaled approximately $0.6 million in each fiscal year. The accrued pension liability for both plans was approximately $17.5 million and $18.3 million at February 1, 2020 and February 2, 2019, respectively, and is recorded within other long-term liabilities on the Consolidated Balance Sheets. The accumulated benefit obligation for both plans was $17.7 million and $18.4 million as of the fiscal years ended February 1, 2020 and February 2, 2019, respectively.

The following is a summary of the Company’s defined benefit pension plans as of each fiscal year-end:

Obligation and Funded Status:

(amounts in thousands)	February 1, 2020			February 2, 2019
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year	$	17,476		$	18,334
Service cost		55			56
Interest cost		568			560
Actuarial loss (gain)		773			(275	)
Benefits paid		(1,199	)		(1,199	)
Benefit obligation at end of year	$	17,673		$	17,476

Fair value of plan assets at end of year	$	-		$	-

Funded status	$	(17,673	)	$	(17,476	)
Unrecognized net actuarial loss (gain)		529			(263	)
Accrued benefit cost	$	(17,144	)	$	(17,739	)

Amounts recognized in the Consolidated Balance Sheets consist of:

	February 1, 2020			February 2, 2019
(amounts in thousands)
Current liability	$	(1,199	)	$	(1,199	)
Long term liability		(17,247	)		(16,002	)
Accumulated other comprehensive loss (income)		773			(275	)
Net amount recognized	$	(17,673	)	$	(17,476	)

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss:

Net Periodic Benefit Cost:

	Fiscal Year
	2019			2018
Service cost	$	55		$	56
Interest cost		568			560
Amortization of actuarial net gain		(20	)		(19	)
Net periodic benefit cost	$	603		$	597

Other Changes in Benefit Obligations Recognized in Other Comprehensive Loss:

	2019		2018
Net prior service cost recognized as a component of net periodic benefit cost	$	-	$	-
Net actuarial loss (gain) arising during the period		744		(263	)
		744		(263	)
Income tax effect		-		-
Total recognized in other comprehensive loss	$	744	$	(263	)
Total recognized in net periodic benefit cost and other comprehensive loss	$	1,341	$	334

The pre-tax components of accumulated other comprehensive loss, which have not yet been recognized as components of net periodic benefit cost as of February 1, 2020 and February 2, 2019 and the tax effect are summarized below.

(amounts in thousands)	February 1,			February 2,
	2020			2019
Net unrecognized actuarial loss (gain)	$	744		$	(263	)
Other actuarial adjustments		(365	)		(102	)
Accumulated other comprehensive loss (income)	$	379		$	(365	)
Tax expense		1,100			1,100
Accumulated other comprehensive loss	$	1,479		$	735

	Fiscal Year
	2019			2018
Weighted-average assumptions used to determine benefit obligation:
Discount rate		2.31	%		3.37	%
Salary increase rate		0.00	%		3.00	%
Measurement date	Jan 31, 2020			Jan 31, 2019

	Fiscal Year
	2019			2018
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate		2.31	%		3.61	%
Salary increase rate		N/A			3.00	%

The discount rate is based on the rates implicit in high-quality fixed-income investments currently available as of the measurement date. The Citigroup Pension Discount Curve (CPDC) rates are intended to represent the spot rates implied by the high-quality corporate bond market in the U.S. The projected benefit payments attributed to the projected benefit obligation have been discounted using the CPDC mid-year rates and the discount rate is the single constant rate that produces the same total present value.

The following benefit payments over the next ten years are expected to be paid:

Year	Pension Benefits
(amounts in thousands)
2020		1,184
2021		1,184
2022		1,149
2023		1,149
2024		1,149
2025 – 2029		6,504