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Share-Based Compensation
 12 Months Ended
Jan. 28, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
Share-Based Compensation Plans
The Company has two share-based compensation plans. The Guess?, Inc. 2004 Equity Incentive Plan (the “Plan”) provides that the Board of Directors may grant stock options and other equity awards to officers, non-employee directors, key employees and certain consultants and advisors to the Company or any of its subsidiaries.
On April 22, 2022, the Company’s stockholders approved an amendment and restatement of the Plan. The amendment and restatement of the Plan (a) increased the aggregate number of shares of the Company’s common stock available for award grants under the Plan by 680,000 shares (from 29,100,000 shares to 29,780,000 shares), (b) changed the ratio at which a “Full-Value Award” (any award granted under the Plan other than a stock option or stock appreciation right) counts against the total share limit under the Plan from 3.54 shares for every one share actually issued in connection with such award to 1.6 shares for every one share actually issued in connection with such award, (c) extended the Company’s ability to grant new awards under the Plan through March 26, 2032, and (d) made members of the Company’s Board of Directors who are not employees of the Company or any of its subsidiaries eligible to receive award grants under the Plan. As of January 28, 2023 and January 29, 2022, there were 4,525,424 and 3,955,910 shares available for grant under the Plan, respectively. Stock options granted under the Plan have ten-year terms and typically vest and become fully exercisable in increments of one-fourth of the shares granted on each anniversary from the date of grant. Stock awards/units granted under the Plan typically vest in increments of one-fourth of the shares granted on each anniversary from the date of grant. The three most recent annual grants for stock options and other equity awards had initial vesting periods of nine months followed by three annual vesting periods.
The Guess?, Inc. Employee Stock Purchase Plan (“ESPP”) allows qualified employees to participate in the purchase of designated shares of the Company’s common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period.
The Guess?, Inc. 2006 Non-Employee Directors’ Stock Grant and Stock Option Plan (the “Director Plan”), which was terminated in March 2022, previously provided for the grant of equity awards to non-employee directors. Future equity grants are no longer permitted under the Director Plan, which continues to govern outstanding awards previously made thereunder. As of January 29, 2022, there were 240,941 shares available for grant under this plan.
Performance-Based Awards
The Company has granted certain nonvested units that require certain minimum performance targets to be achieved in order for these awards to vest. Vesting is also subject to continued service requirements through the vesting date. If the minimum performance targets are not forecasted to be achieved, no expense is recognized during the period.
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 nonvested stock units are subject to the achievement of certain performance-based vesting conditions.
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 100% 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.
Market-Based Awards
The Company has granted certain nonvested stock units which are subject to market-based performance targets in order for these units to vest. Vesting is also subject to continued service requirements through the vesting date. The grant date fair value for such nonvested stock units was estimated using a Monte Carlo simulation that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. Compensation expense for such nonvested stock units is recognized on a straight-line basis over the vesting period, regardless of whether the market condition is satisfied.
The Company has granted certain nonvested stock units subject to market-based vesting conditions to select executive officers. These market-based awards include (i) units where 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 and (ii) units scheduled to vest based on the attainment of certain absolute stock price levels over a four-year period. Vesting is also subject to continued service requirements through the vesting date.
Contingently Returnable Restricted Stock Awards
In connection with an employment agreement entered into between the Company and Mr. Alberini (the “Alberini Employment Agreement”), who became the Company’s Chief Executive Officer on February 20, 2019, the Company granted 150,000 restricted stock units that vested immediately but were considered contingently returnable as a result of a one-year implied service condition set forth in the Alberini Employment Agreement. This service condition was satisfied during fiscal 2021.
Compensation expense for these types of restricted stock units are recognized on a straight-line basis over the implied service period.
Other Special 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 816,708 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.
Share-Based Compensation Expense
Compensation expense for nonvested stock options and stock awards/units that are not subject to performance-based vesting conditions is recognized on a straight-line basis over the vesting period. Compensation expense for performance-based awards that vest in increments is recognized based on an accelerated attribution method. The Company has elected to account for forfeitures as they occur.
The following summarizes the share-based compensation expense recognized under all of the Company’s stock plans (in thousands):
Year Ended
Jan 28, 2023Jan 29, 2022Jan 30, 2021
Stock options$2,709 $3,528 $3,430 
Stock awards/units17,478 17,385 15,110 
ESPP208 206 290 
Total share-based compensation expense$20,395 $21,119 $18,830 
Stock options
The following summarizes the stock option activity under all of the Company’s stock plans:
Number of SharesWeighted Average
Exercise Price		Weighted Average
Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value ($000’s)
Options outstanding at January 29, 20223,097,158 $16.58   
Granted— $—   
Exercised(242,647)$15.06   
Forfeited(166,782)$13.87   
Expired(118,100)$30.89   
Options outstanding at January 28, 20232,569,629 $16.24 5.46$17,915 
Exercisable at January 28, 20232,022,700 $16.89 5.12$13,045 
The fair value of each stock option was estimated on the grant date using the Black-Scholes option-pricing model. There were no stock options granted during fiscal 2023 and fiscal 2022. The following weighted average assumptions were used for grants:
Year Ended
Valuation AssumptionsJan 30, 2021
Risk-free interest rate0.3 %
Expected stock price volatility91.6 %
Expected dividend yield5.1 %
Expected life of stock options4.3 years
The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. The expected stock price volatility is determined based on an average of both historical volatility and implied volatility. Implied volatility is derived from exchange traded options on the Company’s common stock. The expected dividend yield is based on the Company’s history and expectations of dividend payouts. The expected life is determined based on historical trends.
The weighted average grant date fair value of options granted was $4.41 during fiscal 2021. The total intrinsic value of stock options exercised was $1.6 million, $1.8 million and $4.0 million during fiscal 2023, fiscal 2022 and fiscal 2021, respectively. The intrinsic value of stock options is defined as the difference between the Company’s stock price on the exercise date and the grant date exercise price. The total cash received from option exercises was $3.7 million, $3.3 million and $6.2 million during fiscal 2023, fiscal 2022 and fiscal 2021, respectively.
The compensation expense included in SG&A expense recognized was $2.7 million before the recognized income tax benefit of $0.6 million during fiscal 2023. As of January 28, 2023, there was approximately $0.7 million of unrecognized compensation cost related to nonvested stock options. This cost is expected to be recognized over a weighted average period of 0.3 years. The excess tax shortfall included in cash flows from operating activities related to stock option activity was immaterial for fiscal 2023.
Stock awards/units
The following summarizes the nonvested stock awards/units activity under all of the Company’s stock plans:
Number of Awards/UnitsWeighted Average Grant Date Fair Value
Nonvested at January 29, 20222,275,593 $16.72 
Granted1,049,886 $19.74 
Vested(799,229)$17.85 
Forfeited(185,958)$15.18 
Nonvested at January 28, 20232,340,292 $17.81 
The following summarizes the activity for nonvested performance-based units and nonvested market-based units included in the above:
Performance-Based UnitsMarket-Based Units
Number of UnitsWeighted Average Grant Date Fair ValueNumber of UnitsWeighted Average Grant Date Fair Value
Nonvested at January 29, 2022643,813 $18.78 877,813 $14.22 
Granted294,985 $20.34 156,845 $14.66 
Vested(314,453)$17.31 — $— 
Forfeited(11,718)$26.40 (87,871)$9.39 
Nonvested at January 28, 2023612,627 $20.14 946,787 $14.75 

The fair value of each market-based nonvested stock unit was estimated on the grant date using the Monte Carlo simulation. The following assumptions were used for the grants:
Year Ended
Valuation AssumptionsJan 28, 2023Jan 29, 2022Jan 30, 2021
Risk-free interest rate2.8 %0.6 %0.2 %
Expected stock price volatility71.3 %78.4 %62.8 %
Expected dividend yield— %— %— %
Expected life of market-based awards2.7 years3.5 years2.6 years
The weighted average grant date fair value for the total nonvested stock awards/units granted was $19.74, $24.21 and $8.65 during fiscal 2023, fiscal 2022 and fiscal 2021, respectively. The total fair value at grant date of previously nonvested stock awards/units that were vested during fiscal 2023, fiscal 2022 and fiscal 2021 was $14.3 million, $13.2 million and $22.9 million, respectively. During fiscal 2023, fiscal 2022 and fiscal 2021, the total intrinsic value of nonvested stock awards/units that vested was $17.2 million, $15.9 million and $22.1 million, respectively. The total intrinsic value of nonvested stock awards/units outstanding and unvested as of January 28, 2023 was $53.2 million.
The compensation expense included in SG&A expense recognized during fiscal 2023 was $17.5 million before the recognized income tax benefit of $3.8 million. As of January 28, 2023, there was approximately $20.5 million of total unrecognized compensation cost related to nonvested stock awards/units. This cost is expected to be recognized over a weighted average period of 1.6 years. The excess tax windfall of $0.5 million related to stock award/unit activity was included in cash flows from operating activities for fiscal 2023.
ESPP
The Company’s ESPP allows qualified employees (as defined) to participate in the purchase of designated shares of the Company’s common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. The ESPP requires participants to hold any shares purchased under
the ESPP for a minimum period of six months after purchase. In addition, all Company employees are subject to the terms of the Company’s securities trading policy which generally prohibits the purchase or sale of any Company securities during the two weeks before the end of each fiscal quarter through two days after the public announcement by the Company of its earnings for that period. The Company has 4,000,000 shares of common stock registered under the ESPP.
During fiscal 2023, fiscal 2022 and fiscal 2021, 45,843 shares, 38,144 shares and 86,780 shares of the Company’s common stock were issued pursuant to the ESPP at an average price of $12.70, $11.81 and $11.82 per share, respectively.
The fair value of stock compensation expense associated with the Company’s ESPP was estimated on the date of grant using the Black-Scholes option-pricing valuation model with the following weighted average assumptions used for grants:
Year Ended
Valuation AssumptionsJan 28, 2023Jan 29, 2022Jan 30, 2021
Risk-free interest rate2.4 %0.0 %0.1 %
Expected stock price volatility55.4 %50.4 %145.9 %
Expected dividend yield5.3 %2.4 %1.4 %
Expected life of ESPP options3 months3 months3 months
The weighted average grant date fair value of ESPP options granted during fiscal 2023, fiscal 2022 and fiscal 2021 was $4.55, $5.44 and $3.32, respectively.