8. Capitalization

Preferred Stock

The Company is authorized to issue up to 1,000,000 shares of preferred stock. The Board of Directors can determine the rights, preferences, privileges and restrictions on the preferred stock, including any conversion and voting rights. As of January 31, 2015 and February 1, 2014, no shares of preferred stock were outstanding.

Dividends

On April 11, 2014, the Board of Directors declared a dividend of $420, or $0.05 per share, which was paid on June 16, 2014 to stockholders of record as of April 11, 2014. On August 1, 2014, the Board of Directors declared a dividend of $421, or $0.05 per share, which was paid on September 15, 2014 to stockholders of record as of September 1, 2014.

Stock-Based Compensation

Effective July 16, 2013, the Company's stockholders approved the 2013 Stock Incentive Award Plan (the "2013 Plan"). The 2013 Plan serves as the successor to the 2006 Incentive Award Plan (which includes the 2003 Incentive Award Plan as amended by the adoption of the 2006 Incentive Award Plan) (the "2006 Plan"). The 2013 Plan authorized to be issued 700,000 additional shares of common stock, and (ii) 102,483 shares of common stock previously reserved but unissued under the 2006 Plan. No future grants will be awarded under the 2006 Plan, but outstanding awards previously granted under the 2006 Plan continue to be governed by its terms. Any such shares of common stock that are subject to outstanding awards under the 2006 Plan which are forfeited, terminate or expire unexercised and would otherwise have been returned to the share reserve under the 2006 Plan will be available for issuance as common stock under the 2013 Plan. The 2013 Plan provides for the issuance of equity-based awards to officers, other employees, and directors.

Stock Options

Stock options issued to employees are granted at the market price on the date of grant, generally vest over a three-year period, and generally expire seven to ten years from the date of grant. The Company issues new shares of common stock upon exercise of stock options. The Company has also granted non-plan options to certain executives as a material inducement for employment. The Company accounts for stock options under authoritative guidance, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors based on estimated fair values.

The Company estimates the fair value of stock-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the consolidated statements of income. The compensation expense recognized for all stock-based awards is net of estimated forfeitures over the award's service period.

Stock-based compensation expense recognized in selling, general and administrative expenses for stock options in Fiscal 2015 was approximately $800, for Fiscal 2014 was approximately $900, and for Fiscal 2013 was approximately $1,000.

The estimated fair value of options granted during Fiscal 2015, Fiscal 2014 and Fiscal 2013 as of each grant date was estimated using the Black-Scholes option-pricing model with the following assumptions:

	Fiscal 2015		Fiscal 2014		Fiscal 2013
Expected Dividend Yield		1.00%		3.00%		6.45%
Expected Volatility		30.15 to 30.84		37.32 to 58.13		51.63 to 53.33
Risk-Free Interest Rate		1.46% to 1.57%		0.75% to 1.52%		0.57% to 1.01%
Expected Life (in years)		4.66 to 4.80		4.71 to 4.75		4.0 to 4.5
Estimated Forfeiture Rate		0% to 10%		0% to 10%		10%

The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on the historical volatility of the Company's stock price. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant with an equivalent remaining term. The dividend yield is based on the past dividends paid and the current dividend yield at the time of grant.

A summary of activity for the Company's stock options as of and for Fiscal 2015, Fiscal 2014 and Fiscal 2013 is as follows:

	Shares			Weighted Average Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, at January 28, 2012		973,833		$	17.92
Granted		293,000		$	12.50
Exercised		(5,500	)	$	13.06
Canceled/forfeited		(186,333	)	$	18.44

Outstanding, at February 2, 2013		1,075,000		$	16.37		4.49		425
Granted		168,500		$	12.92
Exercised		(3,332	)	$	10.92
Canceled/forfeited		(83,334	)	$	14.57

Outstanding, at February 1, 2014		1,156,834		$	16.02		3.85		436
Granted		188,000		$	13.82
Exercised		(125,065	)	$	14.83
Canceled/forfeited		(34,002	)	$	12.58

Outstanding, at January 31, 2015		1,185,767		$	15.89		3.49		2,910


Vested and Exercisable at January 31, 2015		774,096		$	16.74		2.66		1,304

The weighted average grant date fair value of options granted under the plans for Fiscal 2015, Fiscal 2014 and Fiscal 2013 was $3.49, $4.09, and $3.23, respectively. The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on January 31, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on January 31, 2015 (the last trading day of Fiscal 2015). This amount changes based on the fair market value of the Company's common stock. The total intrinsic value of options exercised for Fiscal 2015, Fiscal 2014 and Fiscal 2013 was $411, $6 and $8, respectively.

As of January 31, 2015, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $1,100, which is expected to be recognized over a weighted average period of approximately 1.68 years. The total fair value of all options which vested during Fiscal 2015, Fiscal 2014 and Fiscal 2013 was approximately $700, $800, and $1,100, respectively.

Restricted Stock and Restricted Stock Units

In 2013, the Compensation Committee of the Company's Board of Directors granted certain performance-based equity awards to executives under the plans.

The performance metric applicable to such awards is compound stock price growth, using the closing price of the Company's common stock on February 1, 2013, or $13.95, as the benchmark. The target growth rate is 10% annually, which results in an average share price target of (i) $15.35 for Fiscal 2014, (ii) $16.88 for Fiscal 2015 and (iii) $18.57 for the Company's fiscal year ending in 2016. The average share price will be calculated as the average of all market closing prices during the January preceding the fiscal year end. If a target is met at the end of a fiscal year, one third of the shares subject to the award will vest. If the stock price target is not met, the relevant portion of the shares subject to the award will not vest but will roll over to the following fiscal year. The executive must continue to be employed by the Company through the relevant vesting dates to be eligible for vesting. The target average share price was met for Fiscal 2015, which resulted in the vesting of two-thirds of the shares subject to each award.

Since the vesting of these performance-based equity awards is subject to performance conditions, the fair value of these awards was measured on the date of grant using the Monte Carlo simulation model for each vesting tranche. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the performance conditions stipulated in the award grant and calculates the fair market value for the performance units granted. The Monte Carlo simulation model also uses stock price volatility and other variables to estimate the probability of satisfying the performance conditions and the resulting fair value of the award.

In August 2014, the Compensation Committee of the Company's Board of Directors granted a sales-based performance-based equity award to an employee under the 2013 Plan, which vests in five increments dependent upon achievement of certain annual sales targets. The fair value of this award was measured on the effective date of grant using the price of the Company's common stock.

Pursuant to a compensation program for non-employee directors adopted by the Compensation Committee, at the meeting of the Board of Directors held in June each year each non-employee member of the Board of Directors must make an election regarding the percentage, up to 100%, of his annual compensation for service on the Board of Directors to be paid in equity, in the form of restricted stock units ("RSU's"). All of the RSU's issuable under this program in June 2014 were approved and granted on July 28, 2014. The fair value of these awards was measured on the effective date of grant using the price of the Company's common stock.

The RSU's awarded to the non-employee directors are subject to the terms of the 2013 Plan and RSU agreements that provide for quarterly vesting over a one-year service period of August 4, 2014 through August 3, 2015, subject to acceleration of vesting upon the earlier to occur of the following: (i) a change in control of the Company, (ii) the death of the recipient or (iii) the recipient's failure to be re-elected to the Board of Directors in any election in which the recipient stands for re-election.

Stock-based compensation expense for shares of restricted stock and performance stock units was approximately $400, $200 and $10 for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. The following table summarizes information about restricted stock and performance stock activity as of and for Fiscal 2014 and Fiscal 2015:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested stock at January 28, 2012		—			—
Granted		9,000		$	13.24
Vested		—			—
Forfeited		(1,500	)	$	13.06

Unvested stock at February 2, 2013		7,500		$	13.27
Granted		79,500		$	4.99
Vested		—			—
Forfeited		—			—

Unvested stock at February 1, 2014		87,000		$	5.70
Granted		51,576		$	17.22
Vested		(44,640	)		5.55
Forfeited		(17,000	)		7.92

Unvested stock at January 31, 2015		76,936		$	13.02

As of January 31, 2015, total unrecognized stock-based compensation expense related to restricted stock and performance stock was approximately $600, which is expected to be recognized over a weighted average period of approximately 1.69 years.