Share-Based Compensation

3 Months Ended

May 02, 2020

Share-based Payment Arrangement [Abstract]

The following table summarizes the share-based compensation expense recognized under all of the Company’s stock plans during the three months ended May 2, 2020 and May 4, 2019 (in thousands):



	Three Months Ended
	May 2, 2020		May 4, 2019
Stock options	$	695	$	590
Stock awards/units	4,926		3,815
Employee Stock Purchase Plan	165		63
Total share-based compensation expense	$	5,786	$	4,468

Unrecognized compensation cost related to nonvested stock options and nonvested stock awards/units totaled approximately $7.6 million and $20.2 million, respectively, as of May 2, 2020. This cost is expected to be recognized over a weighted average period of 1.8 years.

There were no stock options granted during the three months ended May 2, 2020. The weighted average grant date fair value of stock options granted was $6.72 during the three months ended May 4, 2019.

Grants

As a precautionary measure to maintain maximum liquidity in response to the COVID-19 pandemic, the Company elected to pay out its fiscal 2020 corporate bonus in stock awards rather than cash compensation. As such, on April 27, 2020, the Company issued 811,944 restricted stock units that vested immediately. These awards were granted to certain of the Company’s employees that were eligible to receive the corporate bonus based on the satisfaction of certain performance measures during fiscal 2020.

In connection with a new employment agreement entered into between the Company and Carlos Alberini (the “Alberini Employment Agreement”), who became the Company’s Chief Executive Officer on February 20, 2019, the Company granted Mr. Alberini 600,000 stock options and 250,000 nonvested stock units which were subject to the achievement of certain performance-based vesting conditions. Mr. Alberini was also granted 150,000 restricted stock units which were considered contingently returnable as a result of certain service conditions set forth in the Alberini Employment Agreement. The service conditions were satisfied during the three months ended May 2, 2020.

On June 10, 2019, the Company made a special grant of 1,077,700 stock options to certain of its employees. On June 20, 2019, the Company also granted select key management 205,339 nonvested stock units which were subject to certain performance-based vesting conditions.

Annual Grants

On April 13, 2020, the Company made an annual grant of 743,800 nonvested stock awards/units to its employees. On March 29, 2019, the Company made an annual grant of 5,100 stock options and 280,700 nonvested stock awards/units to its employees.

Performance-Based Awards

The Company has granted certain nonvested stock units subject to performance-based vesting conditions to select executive officers. Each award of nonvested stock units generally has an initial vesting period from the date of the grant through either (i) the end of the first fiscal year or (ii) the first anniversary of the date of grant, followed by annual vesting periods which may range from two-to-three years.

The Company has also granted a target number of nonvested stock units to select key management, including certain executive officers. The number of shares that may ultimately vest with respect to each award may range from 0% up to 200% of the target number of shares, subject to the achievement of certain performance-based vesting conditions. Any shares that are ultimately issued are scheduled to vest at the end of the third fiscal year following the grant date.

The following table summarizes the activity for nonvested performance-based units during the three months ended May 2, 2020:



	Number of Units		Weighted Average Grant Date Fair Value
Nonvested at February 1, 2020	1,140,023		$	16.66
Vested	(310,199	)	13.98
Forfeited	(236,404	)	11.72
Nonvested at May 2, 2020	593,420		$	20.03

Market-Based Awards

The Company has granted certain nonvested stock units subject to market-based vesting conditions to select executive officers. The number of shares that may ultimately vest will equal 0% to 150% of the target number of shares, subject to the performance of the Company’s total stockholder return (“TSR”) relative to the TSR of a select group of peer companies over a three-year period. Vesting is also subject to continued service requirements through the vesting date.

The following table summarizes the activity for nonvested market-based units during the three months ended May 2, 2020:



	Number of Units		Weighted Average Grant Date Fair Value
Nonvested at February 1, 2020	288,202		$	13.43
Granted¹	101,566		10.62
Vested¹	(305,901	)	10.62
Nonvested at May 2, 2020	83,867		$	20.28

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Notes:

As a result of the achievement of certain market-based vesting conditions, there were 101,566 shares that vested in addition to the original target number of shares granted in fiscal 2018.