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Long-Term Incentive Plans
12 Months Ended
Jan. 28, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Long-Term Incentive Plans

F. LONG-TERM INCENTIVE PLANS

The following is a summary of the Company’s long-term incentive plans.  All equity awards granted under these long-term incentive plans were issued from the Company’s 2006 Incentive Compensation Plan until July 31, 2016 when the 2006 Incentive Compensation Plan expired.  As of August 4, 2016, all grants of equity awards are issued under the Company’s stockholder-approved 2016 Incentive Compensation Plan.  See Note G, “Stock Compensation Plans.”

2013-2016 Long-Term Incentive Plan

The 2013-2016 Long-Term Incentive Plan (the “2013-2016 LTIP”) was approved in the second quarter of fiscal 2013.  Pursuant to the terms of the 2013-2016 LTIP, on the date of grant, each participant was granted an unearned and unvested award equal in value to four times his/her annual salary multiplied by the applicable long-term incentive program percentage, which is 100% for the Company’s Chief Executive Officer, 70% for its senior executives and 50% for other participants in the plan, which the Company refers to as the “Projected Benefit Amount.” Each participant was granted 50% of the Projected Benefit Amount in shares of restricted stock, 25% in stock options and the remaining 25% in cash.

Of the total Projected Benefit Amount, 50% is subject to time-based vesting and 50% is subject to performance-based vesting. The time-vested portion of the award (half of the shares of restricted stock, options and cash) vests in three installments with 20% of the time-vested portion having vested at the end of fiscal 2014, 40% having vested at the end of fiscal 2015 and the remaining 40% vesting at the end of fiscal 2016.

In order for the participants to receive 100% vesting of the performance-based awards, the Company must achieve revenue of at least $600 million and have an operating margin of not less than 8.0% in fiscal 2016.  If the Company did not meet the performance target at the end of fiscal 2016, but the Company was able to achieve revenue equal to or greater than $510 million at the end of fiscal 2016 and the operating margin was not less than 8.0%, then the participants could have received a pro-rata portion of the performance-based award based on minimum sales of $510 million (50% payout) and $600 million (100% payout).  Because the Company did not achieve minimum sales of at least $510 million or operating income of at least 8.0%, all unvested performance-based awards were forfeited, subsequent to year-end.  Because the performance targets were not considered probable during the term of the 2013-2016 LTIP, no compensation expense was recognized through the end of fiscal 2016.  See Note G, “Stock Compensation Plans” for a summary of the equity awards.

The Company incurred total compensation expense (cash and equity) of approximately $9.4 million related to the time-vested awards.  The cost was expensed over forty-four months through January 28, 2017, based on the respective vesting dates, of which $1.1 million was incurred in fiscal 2016.

2016 Long-Term Incentive Wrap-Around Plan

On November 7, 2014, the Company’s Compensation Committee of the Company’s Board of Directors approved the 2016 Long-Term Incentive Wrap-Around Plan (the “2016 Wrap”). The 2016 Wrap was a supplemental performance-based incentive plan that was only effective if there was no vesting of the performance-based awards under the 2013-2016 LTIP and, as a result, all performance-based awards under the 2013-2016 LTIP were forfeited. Under the 2016 Wrap, if the target level performance metrics for fiscal 2016 were met, participants were eligible to receive a payout equal to 80% of the dollar value of the performance-based compensation they were eligible to receive under the 2013-2016 LTIP. If the target level performance metrics for fiscal 2016 under the 2016 Wrap were exceeded, the greatest payout that participants were eligible to receive was 100% of the dollar value of the performance-based compensation they were eligible to receive under the 2013-2016 LTIP.

The performance target under the 2016 Wrap consisted of two metrics, Sales and EBITDA, with threshold (50%), target (80%) and maximum (100%) payout levels. Each metric was weighted as 50% of the total performance target. However, in order for there to be any payout under either metric, EBITDA for fiscal 2016 must be equal to or greater than the minimum threshold.

The 2016 Wrap provided for an opportunity to receive additional shares of restricted stock if the performance targets were achieved and the Company’s closing stock price was $6.75 or higher on the day earnings for fiscal 2016 are publicly released. If the Company’s stock price was $6.75, the 50% payout in restricted shares would be increased by 20% and if the stock price was $7.25 or higher, the 50% payout in restricted shares would be increased by 30%, with a pro-rata payout between $6.75 and $7.25.

Based on the operating results for fiscal 2016, the Company achieved 50.6% of its EBITDA target.  The minimum threshold for the Sales target was not achieved.  Accordingly, subsequent to year-end, the Compensation Committee of the Board of Directors approved awards totaling $2.3 million, with a grant date of March 20, 2017.  On that date, the Company will grant shares of restricted stock, with a fair value of approximately $1.0 million and cash awards totaling approximately $1.3 million.  All awards will vest on the last day of the second quarter of fiscal 2017.  At January 28, 2017, $1.9 million of the $2.3 million payout was accrued.  Based on the Company’s closing stock price of $3.30 at January 28, 2017, the Company does not expect that there will be any additional grant of shares for achieving a stock price greater than $6.75 per share at the close of business on the day the Company’s earnings are publicly released.

2016-2017 Long-Term Incentive Plan

With the 2013-2016 LTIP and 2016 Wrap expiring at the end of fiscal 2016, on March 15, 2016, the Compensation Committee approved the Destination XL Group, Inc. Long-Term Incentive Plan (the “New LTIP”).

Under the terms of the New LTIP, each year the Compensation Committee will establish performance targets which will cover a two-year performance period (each a “Performance Period”), thereby creating overlapping Performance Periods.  Each participant in the plan will be entitled to receive an award based on that participant’s “Target Cash Value” which is defined as the participant’s annual base salary (on the participant’s effective date) multiplied by his or her long-term incentive program percentage, which is 100% for the Company’s Chief Executive Officer, 70% for its senior executives and 25% for other participants in the plan.  Because of the overlapping two-year Performance Periods, the Target Cash Value for any award is based on one year of annual salary, as opposed to two years to avoid doubling an award payout in any given fiscal year.

For each participant, 50% of the Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting.  The time-vested portion of the award will vest in two installments with 50% of the time-vested portion vesting on April 1 following the fiscal year end which marks the end of the applicable Performance Period and 50% vesting on April 1 the succeeding year. The performance-based vesting is subject to the achievement of the performance target(s) for the applicable Performance Period. Any performance award granted will vest on August 31 following the end of the applicable Performance Period.  

The Compensation Committee established two performance targets for the 2016-2017 Performance Period under the new LTIP (the “2016-2017 LTIP”), each weighted 50%. The first target is EBITDA for fiscal 2017, defined as earnings before interest, taxes, depreciation and amortization, and the second target is “DXL Comparable Store Marginal Cash-Over-Cash Return”, defined as the aggregate of each comparable DXL store’s four-wall cash flow for fiscal 2017 divided by the aggregate capital investment, net of any tenant allowance, for each comparable DXL store.  

All awards granted under the 2016-2017 LTIP were in restricted stock units (RSUs). Assuming that the Company achieves the performance target at target levels and all time-vested awards vest, the compensation expense associated with the 2016-2017 LTIP is estimated to be approximately $3.8 million.  Approximately half of the compensation expense, or $1.9 million, relates to the time-vested RSUs, which is being expensed over thirty-six months, based on the respective vesting dates. With respect to the performance-based component, RSUs will be granted at the end of the performance period if the performance targets are achieved. Through the end of fiscal 2016, the Company has accrued approximately $0.3 million in compensation expense related to the potential payout of performance awards under the 2016-2017 LTIP.