Stock-Based Compensation

9 Months Ended

Oct. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

6. Stock-Based Compensation

The Company has one active stock-based compensation plan: the 2016 Incentive Compensation Plan (the “2016 Plan”). The initial share reserve under the 2016 Plan was 5,725,538 shares of common stock. A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted. A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted. The Company’s shareholders approved amendments to increase the share reserve by 2,800,000 shares on August 8, 2019, an additional 1,740,000 shares on August 12, 2020 and an additional 4,855,000 on August 5, 2021. At October 30, 2021, the Company had 4,800,386 shares available under the 2016 Plan.

In accordance with the terms of the 2016 Plan, any shares outstanding under the previous 2006 Incentive Compensation Plan (the “2006 Plan”) at August 4, 2016 that subsequently terminate, expire or are cancelled for any reason without having been exercised or paid are added back and become available for issuance under the 2016 Plan, with stock options being added back on a one-for-one basis and full-value awards being added back on a 1 to 1.9 basis. At October 30, 2021, 389,509 stock options remained outstanding under the 2006 Plan.

The 2016 Plan is administered by the Compensation Committee. The Compensation Committee is authorized to make all determinations with respect to amounts and conditions covering awards. Options are not granted at a price less than fair value on the date of the grant. Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the first nine months of fiscal 2021:


	RSUs (1)			Deferred shares (2)		Performance Share Units (3)			Total number of shares			Weighted- average grant-date fair value
Shares
Outstanding non-vested shares at beginning of year		815,292			435,568		720,000			1,970,860		$	1.69
Shares granted		8,054			—		—			8,054		$	0.66
Shares vested/issued		(308,055	)		—		(240,000	)		(548,055	)	$	2.05
Outstanding non-vested shares at end of quarter		515,291			435,568		480,000			1,430,859		$	1.54

(1)

During the first nine months of fiscal 2021, the vesting of RSUs was primarily related to the time-based awards under the Company’s LTIP plans, see Note 5, Long-Term Incentive Plans.

(2)

Represents compensation to certain directors, in lieu of cash, in accordance with their irrevocable elections. Beginning in fiscal 2021, all equity issued to directors for compensation, in lieu of cash, is issued only from the Non-Employee Director Compensation Plan. The outstanding deferred shares will be issued upon the director’s separation from service.

(3)

The 720,000 shares of performance stock units (“PSUs”), with a fair value of $1.0 million, represent a sign-on grant to Mr. Kanter. The PSUs vest in installments when the following milestones are met: one-third of the PSUs vest when the trailing 90-day volume-weighted average closing stock price (“VWAP”) is $4.00, one-third of the PSUs vest when the VWAP is $6.00 and one-third when the VWAP is $8.00. On September 9, 2021, 240,000 PSUs vested as a result of achieving a VWAP of $4.00 per share. As a result of net share settlement, of the 240,000 PSUs which vested, only 181,560 shares of common stock were issued. Subsequent to the end of the third quarter of fiscal 2021, an additional 240,000 PSUs vested when the $6.00 VWAP was achieved. The remaining 240,000 PSUs will expire on April 1, 2023 if the $8.00 VWAP is not achieved by that date.


	Number of shares			Weighted- average exercise price per option		Weighted- average remaining contractual term		Aggregate intrinsic value
Stock Options
Outstanding options at beginning of year		3,647,581		$	1.09	8.5 years		$	810,596
Options granted (1)		1,518,154		$	0.71		—		—
Options exercised (2)		(429,955	)	$	0.81				2,211,896
Options expired and canceled		(22,542	)	$	4.19		—		—
Outstanding options at end of quarter		4,713,238		$	0.98	8.3 years		$	28,912,358
Options exercisable at end of quarter		843,431		$	2.67	5.4 years		$	3,748,935

(1)

Primarily represents the grant of stock options to purchase an aggregate of 1,078,913 shares of the Company’s common stock, at an exercise price of $0.69 per share, in connection with the time-based grant of awards under its 2021-2023 LTIP, see Note 5, Long-Term Incentive Plans. In March 2021, the Company also granted to active participants of the LTIP a discretionary grant of stock options to purchase an aggregate of 414,337 shares of the Company’s common stock, at an exercise price of $0.75 per share, which will vest ratably over 3 years.

(2)

As a result of net share settlement, of the 429,955 stock options exercised, only 298,150 shares of common stock were issued.

For the first nine months of fiscal 2021, the Company granted stock options to purchase an aggregate of 1,518,154 shares of common stock and 8,054 restricted stock units. For the first nine months of fiscal 2020, the Company granted stock options to purchase an aggregate of 3,185,542 shares of common stock and 134,999 shares of deferred stock.

Non-Employee Director Compensation Plan

The Company granted 222,478 shares of common stock, with a fair value of approximately $296,300, to certain of its non-employee directors as compensation in lieu of cash in the first nine months of fiscal 2021.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $0.9 million and $1.1 million for the first nine months of fiscal 2021 and fiscal 2020, respectively. The total compensation cost related to time-vested stock options, RSU and PSU awards not yet recognized as of October 30, 2021 was approximately $1.9 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 26 months.