At our 2017 annual meeting of shareholders held on June 13, 2017, our shareholders approved a new equity incentive plan, the Shoe Carnival, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which replaces our 2000 Stock Option and Incentive Plan, as amended (the “2000 Plan”). We may issue stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to eligible participants under the 2017 Plan. According to the terms of the 2017 Plan, upon approval of the 2017 Plan by our shareholders, no further awards may be made under the 2000 Plan. A maximum of 1,000,000 shares of our common stock are available for issuance and sale under the 2017 Plan. In addition, any shares of our common stock subject to an award granted under the 2017 Plan, or to an award granted under the 2000 Plan that was outstanding on the date our shareholders approved the 2017 Plan, that expires, is cancelled or forfeited, or is settled for cash will, to the extent of such cancellation, forfeiture, expiration or cash settlement, automatically become available for future awards under the 2017 Plan.

Stock-based compensation includes stock options, cash-settled stock appreciation rights (SARs), restricted stock awards, restricted stock units and performance stock units. Stock options that were outstanding under the 2000 Plan typically were granted such that one-third of the shares underlying the stock options granted would vest and become fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a 10-year term from the date of grant. During fiscal 2017, all remaining stock options were exercised.

Equity awards issued to employees are classified as either performance-based or service-based. Performance-based restricted stock awards historically were granted such that they vest upon the achievement of specified levels of annual earnings per diluted share during a six-year period starting from the grant date. Should the annual earnings per diluted share criteria not be met within the six-year period from the grant date, any shares still restricted will be forfeited. In fiscal 2016, we granted performance-based restricted stock awards that vest on March 31, 2019 if we achieve a specified level of annual earnings per diluted share in any of fiscal 2016, 2017 or 2018. Should the annual earnings per diluted share criteria not be met in any of the three specified fiscal years, the restricted stock awards will be forfeited on March 31, 2019. In fiscal 2017, we granted performance-based restricted stock awards with two-thirds vesting on March 31, 2019, and one-third vesting on March 31, 2020. The number of shares vesting depends on whether the cumulative diluted earnings per share for fiscal 2017 and fiscal 2018 meet the threshold, target, or maximum levels of performance. If performance goals are not achieved, the restricted stock will be forfeited. In fiscal 2018, we granted performance stock units with one-half vesting on March 31, 2019, and one-half vesting on March 31, 2020. The number of units that will vest depends on whether the diluted earnings per share for fiscal 2018 meet the established threshold, target, or maximum level of performance. If diluted earnings per share for fiscal 2018 does not exceed the threshold level of performance, all of the performance stock units will be forfeited. If diluted earnings per share for fiscal 2018 is between the threshold and target level of performance, any performance stock units that are determined not to be earned will be forfeited.

Service-based restricted stock awards and restricted stock units typically are granted under one of four vesting periods: (a) one-third of the shares would vest on each of the first three anniversaries subsequent to the date of the grant; (b) the full award would vest at the end of a 5-year service period subsequent to the date of grant; (c) the full award would vest at the end of a 2-year service period subsequent to the date of grant; or (d) for our Directors, all restricted stock awards are issued to vest on January 2^nd of the year following the year of the grant. Awards that contain both performance and service-based conditions require that the performance target be met during the required service period.

Under the 2017 Plan, all dividends paid with respect to shares subject to the non-vested portion of a restricted stock award are subject to the same restrictions and risk of forfeiture as the shares of restricted stock to which such dividends relate. Recipients of restricted stock units and performance stock units will be entitled to receive dividend equivalents, based on dividends actually declared and paid, on the restricted stock units and performance stock units, and such dividend equivalents will be subject to the same restrictions and risk of forfeiture as the restricted stock units and performance stock units. For awards granted under the 2000 Plan, all shares of non-vested service-based restricted stock provide non-forfeitable rights to all dividends declared by the Company, and dividends on non-vested performance-based restricted stock are subject to deferral until such times as the shares vest and are released.

No stock options have been granted since fiscal 2008. All outstanding options had vested as of the end of fiscal 2011; therefore, no unrecognized compensation expense remains.

(In thousands)	2018		2017		2016
Total intrinsic value⁽¹⁾	$	0	$	127	$	0
Total cash received	$	0	$	54	$	0
Associated excess income tax benefits recorded	$	0	$	0	$	0

The following table summarizes transactions for our restricted stock awards pursuant to our stock-based compensation plans:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock at February 3, 2018		915,925		$	23.62
Granted		10,998			32.74
Vested		(49,992	)		26.61
Forfeited		(51,650	)		17.65
Restricted stock at February 2, 2019		825,281		$	23.94

The total fair value at grant date of restricted stock awards that vested during fiscal 2018, 2017 and 2016 was $1.3 million, $3.5 million and $1.4 million, respectively. The weighted-average grant date fair value of stock awards granted during fiscal 2017 and fiscal 2016 was $24.09 and $24.98, respectively.

The following table summarizes transactions for our restricted stock units and performance stock units pursuant to our stock-based compensation plans:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock units and performance stock units at February 3, 2018		4,000		$	19.55
Granted		200,000			25.05
Vested		(1,333	)		19.55
Forfeited		0			0.00
Restricted stock units and performance stock units at February 2, 2019		202,667		$	24.98

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards, restricted stock units and performance stock units:

(In thousands)

2018

2017

2016

Stock-based compensation expense before the

recognized income tax benefit

9,591

5,041

3,507

Income tax benefit

2,328

2,490

1,322

The $9.6 million of expense recognized in fiscal 2018 included a $2.2 million cumulative catch-up of expense recorded in the third quarter of fiscal 2018. This cumulative catch-up expense was related to performance-based restricted stock awards, which management had previously determined were not probable to vest prior to their expiration, but given our financial performance in fiscal 2018, in the third quarter of fiscal 2018, such awards were deemed by management as probable to vest.

As of February 2, 2019, there was approximately $4.3 million of unrecognized compensation expense remaining related to both our performance-based and service-based restricted stock awards, restricted stock units and performance stock units. The cost is expected to be recognized over a weighted average period of approximately 0.4 years. This incorporates our current assumptions with respect to the estimated requisite service period required to achieve the designated performance conditions for performance-based stock awards.

Our cash-settled stock appreciation rights (“SARs”) were granted during the first quarter of fiscal 2015 to certain non-executive employees, such that one-third of the shares underlying the SARs vested and became fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a five-year term from the date of grant, after which any unexercised SARs would expire. Each SAR entitled the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our stock on the date of exercise less the exercise price, with a maximum amount of gain defined. The SARs granted during the first quarter of fiscal 2015 were issued with a defined maximum gain of $10.00 over the exercise price of $24.26. During the second quarter of fiscal 2018, all remaining SARs granted during the first quarter of fiscal 2015 were exercised.

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at February 3, 2018		103,475		$	24.26
Exercised		(103,475	)		24.26
Outstanding at February 2, 2019		0		$	0.00		0.0

The fair value of liability awards was remeasured, using a trinomial lattice model at each reporting period until the date of settlement. Increases or decreases in stock-based compensation expense were recognized over the vesting period, or immediately for vested awards. As of February 2, 2019, all outstanding SARs were exercised.

The fair value was estimated using a trinomial lattice model with the following assumptions:

	February 3, 2018			January 28, 2017
Risk free interest rate yield curve	1.40% - 2.58		%	0.49% - 1.94		%
Expected dividend yield		1.3	%		1.1	%
Expected volatility		39.21	%		35.51	%
Maximum life	2.1 Years			3.1 Years
Exercise multiple		1.34			1.34
Maximum payout		$ 10.00			$ 10.00
Employee exit rate	2.2% - 9.0		%	2.2% - 9.0		%

The risk free interest rate was based on the U.S. Treasury yield curve in effect at the end of the reporting period. The expected dividend yield was based on our quarterly cash dividends, with the assumption that quarterly dividends would continue at that rate. Expected volatility was based on the historical volatility of our common stock. The exercise multiple and employee exit rate were based on historical option data.

The following table summarizes information regarding stock-based compensation recognized for SARs:

(In thousands)

2018

2017

2016

Stock-based compensation before the

recognized income tax effect

540

(61

)

276

Income tax effect

131

(30

)

104

As of February 2, 2019, no unrecognized compensation expense remained related to the SARs.