Stock-Based Compensation

6 Months Ended

Jul. 30, 2022

Share-Based Payment Arrangement [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 July 30, 2022, the Company had 3,825,095 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 July 30, 2022, 298,231 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 six months of fiscal 2022:


	RSUs (1)			Deferred shares (2)		Performance Share Units (3)		Fully-Vested Shares (4)			Total number of shares			Weighted- average grant-date fair value
Shares
Outstanding non-vested shares at beginning of year		515,291			435,568		240,000		—			1,190,859		$	1.57
Shares granted		496,467			—		—		17,532			513,999		$	4.98
Shares vested and/or issued		(318,657	)		—		—		(17,532	)		(336,189	)	$	2.35
Shares forfeited		(2,604	)									(2,604	)	$	5.02
Outstanding non-vested shares at end of quarter		690,497			435,568		240,000		—			1,366,065		$	2.66

(1)

During the first six months of fiscal 2022, the Company granted RSUs for the achievement of performance metrics under the 2019-2021 LTIP that are subject to additional vesting through August 31, 2022 and time-based RSUs under its 2022-2024 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 318,657 RSUs that vested, only 232,027 shares of common stock were issued

(2)

The outstanding deferred shares will be issued upon the director’s separation from service.

(3)

Represents the remaining performance stock units (“PSUs”) granted to Mr. Kanter in February 2019. The 240,000 PSUs will vest when the trailing 90-day volume-weighted average closing stock price (“VWAP”) is $8.00. The PSUs will expire on April 1, 2023 if the $8.00 VWAP is not achieved by that date.

(4)

Represents compensation, with a fair value of $80,985, to certain directors, who are required to receive shares, in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Plan. Voluntary shares received, in lieu of cash, are reported below under Non-Employee Director Compensation Plan.


	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		4,621,550		$	0.90	8.2 years		$	16,066,914
Options granted		3,640		$	4.70		—		—
Options exercised		(48,019	)	$	0.54				211,710
Options expired and canceled		(19,269	)	$	0.63		—		66,641
Outstanding options at end of quarter		4,557,902		$	0.91	7.6 years		$	15,006,017
Options exercisable at end of quarter		1,969,767		$	1.30	6.8 years		$	5,881,812

For the first six months of fiscal 2022, the Company granted stock options to purchase an aggregate of 3,640 shares of common stock, 496,467 restricted stock units and 17,532 fully-vested shares. For the first six 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.

Non-Employee Director Compensation Plan

The Company granted 36,690 shares of common stock, with a fair value of approximately $169,482, to certain of its non-employee directors as compensation in lieu of cash in the first six months of fiscal 2022. These shares are in addition to any shares that may be granted under the 2016 Plan related to the requirement to receive equity if a director has not yet satisfied his or her minimum equity ownership requirement under the Non-Employee Director Compensation Plan.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $0.8 million and $0.6 million for the first six months of fiscal 2022 and fiscal 2021, respectively. The total compensation cost related to time-vested stock options and RSU awards not yet recognized as of July 30, 2022 was approximately $2.1 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 32 months.