STOCK COMPENSATION PLANS AND CAPITAL STOCK TRANSACTIONS:

General

In April 2012, the Board approved the Chico’s FAS, Inc. 2012 Omnibus Stock and Incentive Plan (the “Omnibus Plan”), which replaced the Chico’s FAS, Inc. 2002 Omnibus Stock and Incentive Plan and was approved by our shareholders, effective June 21, 2012. As of the effective date, the Omnibus Plan provided for 7.0 million shares of our common stock that may be delivered to participants and their beneficiaries in addition to approximately 3.5 million shares of our common stock available for future awards under prior plans. Awards under the Omnibus Plan may be in the form of restricted stock, restricted stock units, performance-based restricted stock, performance-based stock units, stock options, and stock appreciation rights, in accordance with the terms and conditions of the Omnibus Plan. The terms of each award will be determined by the Compensation and Benefits Committee of the Board of Directors.

We have historically issued restricted stock, including non-vested restricted stock and performance-based restricted stock, performance-based stock units, and stock options. Shares of non-vested restricted stock and performance-based restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon, and are considered to be currently issued and outstanding. Performance-based stock units are entitled to dividends based on certain Company-specific performance goals and are entitled to voting rights upon meeting these Company-specific performance goals. Generally, stock-based awards vest evenly over three years; stock options generally have a 10-year term. As of January 28, 2017, approximately 0.6 million nonqualified stock options are outstanding under the Omnibus Plan and approximately 5.8 million shares remain available for future grants of stock-based awards.

Stock-based compensation expense for all awards is based on the grant date fair value of the award, net of estimated forfeitures, and is recognized over the requisite service period of the awards. Compensation expense for restricted stock awards and stock options with a service condition is recognized on a straight-line basis over the requisite service period. Compensation expense for performance-based awards with a service condition is recognized ratably for each vesting tranche based on our estimate of the level and likelihood of meeting certain Company-specific performance goals. We estimate the expected forfeiture rate for all stock-based awards, and only recognize expense for those shares expected to vest. In determining the portion of the stock-based payment award that is ultimately expected to be earned, we derive forfeiture rates based on historical data. In accordance with the authoritative guidance, we revise our forfeiture rates, when necessary, in subsequent periods if actual forfeitures differ from those originally estimated. Total compensation expense related to stock-based awards in fiscal 2016, 2015 and 2014 was $21.2 million, $30.1 million and $26.5 million, respectively. The total tax benefit associated with stock-based compensation for fiscal 2016, 2015 and 2014 was $8.1 million, $11.5 million and $10.1 million, respectively.

Restricted Stock Awards

Restricted stock activity for fiscal 2016 was as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,585,392		$	16.60
Granted	1,817,830		12.38
Vested	(1,157,261	)	16.75
Forfeited	(782,775	)	15.19
Unvested, end of period	2,463,186		13.87

Total fair value of shares of restricted stock that vested during fiscal 2016, 2015 and 2014 was $14.7 million, $34.8 million and $21.8 million, respectively. The weighted average grant date fair value of restricted stock granted during the fiscal 2016, 2015 and 2014 was $12.38, $16.97, and $16.44, respectively. As of January 28, 2017, there was $18.7 million of unrecognized stock-based compensation expense related to non-vested restricted stock awards. That cost is expected to be recognized over a weighted average remaining period of 1.8 years.

Performance-based Stock Units

Performance-based stock unit activity for fiscal 2016 was as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	469,898		$	18.23
Granted	733,360		12.55
Vested	(228,105	)	18.23
Forfeited	(322,905	)	15.34
Unvested, end of period	652,248		13.28

Total fair value of performance-based stock units that vested during fiscal 2016 and 2015 was $2.9 million and $3.9 million, respectively. There was $3.3 million of unrecognized stock-based compensation expense related to performance-based stock units expected to vest. That cost is expected to be recognized over a weighted average period of approximately 1.5 years.

Stock Option Awards

We used the Black-Scholes option-pricing model to value our stock options. No stock options have been issued since 2011. Using this option-pricing model, the fair value of each stock option award was estimated on the date of grant. The fair value of the stock option awards, which are subject to pro-rata vesting generally over three years, was expensed on a straight-line basis over the vesting period of the stock options. As of January 28, 2017, all outstanding stock options were fully vested, and there was no unrecognized compensation expense.

Stock option activity for fiscal 2016 was as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding, beginning of period	1,060,774		$	15.17
Granted	—		—
Exercised	(213,310	)	10.67
Forfeited or expired	(270,218	)	22.13
Outstanding, end of period	577,246		$	13.58	2.97	$	603
Vested and expected to vest at January 28, 2017	577,246		$	13.58	2.97	$	603
Exercisable at January 28, 2017	577,246		$	13.58	2.97	$	603

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the excess, if any, of the closing stock price on the last trading day of fiscal 2016 and the exercise price, multiplied by the number of such in-the-money options) that would have been received by the option holders had all option holders exercised their options on January 28, 2017. This amount changes based on the fair market value of our common stock. Total intrinsic value of options exercised during fiscal 2016, 2015 and 2014 (based on the difference between our stock price on the respective exercise date and the respective exercise price, multiplied by the number of respective options exercised) was $0.7 million, $4.6 million and $1.5 million, respectively.

Cash received from option exercises for fiscal 2016 was $2.3 million. The actual tax benefit realized for the tax deduction from option exercises of stock option awards totaled $0.3 million for fiscal 2016.

Employee Stock Purchase Plan

We sponsor an employee stock purchase plan (“ESPP”) under which substantially all full-time employees are given the right to purchase shares of our common stock during each of the two specified offering periods each fiscal year at a price equal to 85 percent of the value of the stock immediately prior to the beginning of each offering period. During fiscal 2016, 2015 and 2014, approximately 191,000, 174,000, and 180,000 shares, respectively, were purchased under the ESPP. Cash received from purchases under the ESPP for fiscal 2016 was $2.1 million.

Share Repurchase Program

During fiscal 2016, we repurchased 8.1 million shares, at a total cost of approximately $96.4 million. In fiscal 2015, the Company repurchased 14.6 million shares for $250.0 million through our $300 million share repurchase program announced in December 2013, and 3.7 million shares for $40.0 million under its $300 million share repurchase program announced in November 2015. As of January 28, 2017, $163.6 million remains under the share repurchase program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.