Equity and Incentive Compensation Plans

Repurchase Program

On August 21, 2013, the Company’s Board of Directors approved a new $250 million securities repurchase program (the “Repurchase Program”). Purchases of shares of common stock may be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases or in privately negotiated transactions. Repurchased shares of common stock increase treasury shares available for general corporate purposes. The Repurchase Program will expire when the Company has repurchased all securities authorized for repurchase thereunder, unless terminated earlier by the Company’s Board of Directors.

During the nine months ended November 1, 2014, the Company repurchased 1.3 million shares of its common stock through open market purchases under its Repurchase Program at a cost of $50 million. There were no shares repurchased under the Repurchase Program during the quarter ended November 1, 2014. As of November 1, 2014, there was $200 million available for additional share repurchases under the Repurchase Program.

The Company repurchased 1.5 million shares of its common stock through open market purchases during the second quarter of Fiscal 2013 under its then existing $600 million securities repurchase program at a cost of $49.1 million, fully exhausting that securities repurchase program.

Stock Incentive Plans

During the quarter and nine months ended November 1, 2014, the Company recognized approximately $2.8 million and $9.6 million, respectively, in stock-based compensation expense. During the quarter and nine months ended November 2, 2013, the Company recognized approximately $4.0 million and $11.6 million, respectively, in stock-based compensation expense. As of November 1, 2014, there was $2.0 million and $15.8 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock awards, respectively, which is expected to be recognized over a remaining weighted average vesting period of 1.7 years and 2.9 years, respectively. Restricted stock award grants and shares underlying the exercise of stock options during the nine months ended November 1, 2014 were issued out of treasury stock. In addition, restricted stock awards forfeited, as well as shares returned to cover employee tax withholding obligations related to the exercise of stock options and the vesting of restricted stock, were returned to treasury stock.

Stock Options

The following table summarizes stock option activity for the nine months ended November 1, 2014:



	Shares		Weighted Average Exercise Price
Options outstanding at February 1, 2014	2,199,719		$	26.60
Granted (1)	63,700		37.52
Exercised	(478,713	)	29.11
Forfeited or expired	(62,274	)	30.18
Options outstanding at November 1, 2014	1,722,432		26.18
Vested and exercisable at November 1, 2014	1,495,451		$	25.35
Options expected to vest in the future as of November 1, 2014	206,451		$	31.88


(1)	Awards vest annually over a three-year period and expire ten years after the grant date.


5.	Equity and Incentive Compensation Plans (Continued)

Stock Options (continued)

The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted as of the grant date. For the nine months ended November 1, 2014 and November 2, 2013, the fair value of options granted was estimated using the following weighted average assumptions:



	Nine Months Ended
	November 1, 2014		November 2, 2013
Expected volatility	47.5	%	52.9	%
Risk-free interest rate	1.7	%	0.9	%
Expected life (years)	5.4		5.0
Dividend yield	—	%	—	%

The weighted average fair value of options granted during the nine months ended November 1, 2014 and November 2, 2013 was $16.79 and $14.09 per share, respectively. There were no options granted during the quarter ended November 1, 2014. The Company estimates the volatility of its common stock on the date of grant based on an average of its historical common stock volatility and the implied volatility of publicly traded options on its common stock.

Restricted Stock

The following table summarizes restricted stock activity for the nine months ended November 1, 2014:



	Time - Based					Performance - Based
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock awards at February 1, 2014	602,205			$	29.95	289,935			$	29.56
Granted	408,393		⁽¹⁾	37.55		141,617		⁽²⁾	37.53
Vested	(216,616	)		28.92		(124,139	)		29.24
Forfeited	(127,263	)		32.36		(75,294	)		31.07
Restricted stock awards at November 1, 2014	666,719			34.48		232,119			34.10


(1)	Of this amount, 22,893 shares vest in June 2015; 127,700 shares vest in equal installments in each of March 2015, 2016 and 2017; 255,900 shares vest in equal installments in each of March 2017, 2018 and 2019; and 1,900 shares vest in equal installments in each of June 2015, 2016 and 2017.


(2)	These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 200% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.

Long-Term Performance Compensation

The Company maintains a long-term cash incentive program, the Restricted Cash Program (“RCP”), for vice-presidents and above. Compensation expense under the RCP is charged to the same income statement line item as the base salary earned by participating associates. During the quarters ended November 1, 2014 and November 2, 2013, the Company recognized $2.1 million and $2.6 million, respectively, in compensation expense under the RCP, inclusive of the effect of changes in estimates. During the nine months ended November 1, 2014 and November 2, 2013, the Company recognized $3.3 million and $9.4 million, respectively, in compensation expense under the RCP, inclusive of the effect of changes in estimates. RCP compensation expense for the nine months ended November 1, 2014 also reflects the impact of changes in forfeiture rate estimates recorded during the first quarter of Fiscal 2014 in connection with the Company’s restructuring. As of November 1, 2014, there was $14.3 million of unrecognized compensation cost under the RCP, which is expected to be recognized over a remaining weighted average deferral period of 2.5 years.