9.Capitalization

Preferred Stock

The Company is authorized to issue up to 1,000,000 shares of preferred stock. The Company's board of directors (“Board of Directors”) can determine the rights, preferences, privileges and restrictions on the preferred stock, including any conversion and voting rights. As of January 28, 2017 and January 30, 2016, no shares of preferred stock were outstanding.

Stock Repurchases

Pursuant to the approval of the Board of Directors in June 2016 the Company repurchased and retired 60,082 shares of common stock in open market transactions at a weighted average purchase price of $12.24 and for an aggregate purchase price of approximately $735.

Public Offering

On December 2, 2016, the Company closed an underwritten public offering of 4,237,750 shares of the Company’s common stock at a public offering price of $9.50 per share, for net proceeds to the Company of approximately $38,000, after deducting the underwriting discount and offering expenses paid by the Company. The net proceeds of the offering were used to fund a portion of the purchase price for the Hi-Tec Acquisition.

Stock‑Based Compensation

Effective July 16, 2013, the Company’s stockholders approved the 2013 Stock Incentive Plan and effective June 6, 2016, the Company’s stockholders approved the amendment and restatement of such 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 authorizes to be issued 1,200,000 additional shares of common stock, and (ii) 121,484 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 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 stock 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 the Black-Scholes 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 operations. 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 2017 was approximately $1,030, for Fiscal 2016 was approximately $1,100, and for Fiscal 2015 was approximately $800.

The estimated fair value of stock options granted during Fiscal 2017, Fiscal 2016 and Fiscal 2015 as of each grant date was estimated using the following assumptions:


	Fiscal 2017					Fiscal 2016					Fiscal 2015
Expected Dividend Yield				—	%				—	%				1.00	%
Expected Volatility	39.35		to	42.57		29.82		to	29.88		30.15		to	30.84
Risk-Free Interest Rate	0.97	%	to	1.76	%	1.32	%	to	1.58	%	1.46	%	to	1.57	%
Expected Life (in years)	3.50		to	4.83		4.58		to	4.88		4.66		to	4.80
Estimated Forfeiture Rate	—	%	to	10.00	%	—	%	to	10.00	%	—	%	to	10.00	%

The expected term of the stock 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.

The following table summarizes activity for the Company’s stock options as of and for Fiscal 2017, Fiscal 2016 and Fiscal 2015:


				Weighted
				Average
				Remaining
		Weighted		Contractual	Aggregate
		Average		Term	Intrinsic
	Shares	Price		(in years)	Value
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
Granted	335,000	$	22.79
Exercised	(261,097)	$	17.06
Canceled/forfeited	(146,667)	$	17.33
Outstanding, at January 30, 2016	1,113,003	$	17.50	4.06	1,339
Granted	142,000	$	11.29
Exercised	—	$	—
Canceled/forfeited	(162,501)	$	18.22
Outstanding, at January 28, 2017	1,092,502	$	16.59	3.66	—
Vested and Exercisable at January 28, 2017	675,824	$	15.90	2.91	—

The weighted average grant date fair value of stock options granted under the 2013 Plan for Fiscal 2017, Fiscal 2016 and Fiscal 2015 was $3.82, $6.35, and $3.49, respectively. The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on January 28, 2017 and the exercise price, multiplied by the number of shares subject to in‑the‑money stock options) that would have been received by the option holders had all option holders exercised their stock options on January 27, 2017 (the last trading day of Fiscal 2017). This amount changes based on the fair market value of the Company’s common stock. The total intrinsic value of stock options exercised for Fiscal 2017, Fiscal 2016 and Fiscal 2015 was $0, $1,731 and $411, respectively.

As of January 28, 2017, total unrecognized stock‑based compensation expense related to nonvested stock options was approximately $1,500, which is expected to be recognized over a weighted average period of approximately 1.80 years. The total fair value of all stock options that vested during Fiscal 2017, Fiscal 2016 and Fiscal 2015 was approximately $1,300, $700, and $700, respectively.

Performance Stock Units and Restricted Stock Units

In August 2014, the Compensation Committee of the Board of Directors granted a 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.

In June 2015, the Compensation Committee of the Board of Directors granted restricted stock units and stock options to each member of the Board of Directors and to each of the Company’s executive officers under the 2013 Plan. All of these equity awards vest in equal annual installments over three years, such that all shares subject to each award will be vested on the third anniversary of the grant date. The fair value of the restricted stock unit awards was measured on the effective date of grant using the price of the Company’s common stock.

In April 2016, the Compensation Committee of the Company’s Board of Directors granted certain performance‑based equity awards, or performance stock units, to executives under the 2013 Plan. The performance metric applicable to such awards is compound stock price growth, using the closing price of the Company’s common stock on April 5, 2016, or $16.89, as the benchmark. The target growth rate is 10% annually, which results in an average share price target of (i) $18.58 for Fiscal 2017, (ii) $20.44 for Fiscal 2018 and (iii) $22.48 for Fiscal 2019. The average share price is calculated as the average of all market closing prices during the January preceding the applicable 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 at the end of a fiscal year, 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 not achieved for Fiscal 2017.

Since the vesting of these performance‑based equity awards is subject to market-based 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 and calculates the fair market value for the performance stock 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.

Stock-based compensation expense for performance stock units and restricted stock units recognized in selling, general and administrative expenses was approximately $1,350, $1,100 and $400 for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.

The following table summarizes performance stock unit and restricted stock unit activity as of and for Fiscal 2015, Fiscal 2016 and Fiscal 2017:


		Weighted
		Average
	Number of	Grant-Date
	Shares	Fair Value
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
Granted	166,000		22.71
Vested	(27,435)		15.74
Forfeited	(19,001)		4.27
Unvested stock at January 30, 2016	196,500	$	21.67
Granted	31,500		10.08
Vested	(65,831)		21.10
Forfeited	(5,000)		17.81
Unvested stock at January 28, 2017	157,169	$	19.71

As of January 28, 2017, total unrecognized stock‑based compensation expense related to performance stock units and restricted stock units was approximately $1,900, which is expected to be recognized over a weighted average period of approximately 1.47 years.