Share-Based Compensation

6 Months Ended

Aug. 03, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

10.  Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”), which requires companies to measure and recognize compensation expense for all share-based payments at fair value.

Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 and 26 weeks ended August 3, 2019 and was $9.3 million ($7.0 million, net of tax) and $14.3 million ($10.9 million, net of tax), respectively, and for the 13 and 26 weeks ended August 4, 2018 was $6.0 million ($4.7 million, net of tax) and $11.7 million ($9.0 million, net of tax), respectively.    

Stock Option Grants

The Company grants both time-based and performance-based stock options. A summary of the Company’s stock option activity for the 26 weeks ended August 3, 2019 follows:

				Weighted- Average		Weighted- Average Remaining Contractual		Aggregate
	Options			Exercise Price		Term		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding - February 2, 2019		1,912		$	16.75
Granted		807		$	21.26
Exercised (1)		(124	)	$	16.06
Cancelled		(11	)	$	19.89
Outstanding - August 3, 2019		2,584		$	18.18		5.4	$	1,446
Vested and expected to vest - August 3, 2019		2,279		$	18.25		5.4	$	510
Exercisable - August 3, 2019 (2)		997		$	16.10		4.5	$	910

(1) Options exercised during the 26 weeks ended August 3, 2019 had exercise prices ranging from $14.59 to $23.53.     

(2) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price on August 3, 2019.

Cash received from the exercise of stock options was $2.1 million and $15.5 million for the 26 weeks ended August 3, 2019 and August 4, 2018, respectively. The actual tax benefit realized from stock option exercises totaled $0.1 million for the 26 weeks ended August 3, 2019 and $0.9 million for the 26 weeks ended August 4, 2018.

As of August 3, 2019, there was $7.6 million of unrecognized compensation expense for stock option awards that is expected to be recognized over a weighted average period of 2.2 years.  

The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	26 Weeks Ended			26 Weeks Ended
	August 3,			August 4,
Black-Scholes Option Valuation Assumptions	2019			2018
Risk-free interest rate (1)		2.2	%		2.6	%
Dividend yield		2.4	%		2.5	%
Volatility factor (2)		38.2	%		39.5	%
Weighted-average expected term (3)	4.4 years			4.5 years

(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.

(2) Based on a combination of historical volatility of the Company’s common stock and implied volatility.

(3) Represents the period of time options are expected to be outstanding. The weighted average expected option terms were determined based on historical experience.            

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units.  These awards vest over three years.  Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

Performance-based restricted stock awards include performance-based restricted stock units.  These awards cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals throughout the term of the award.  Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

The grant date fair value of all restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant.

A summary of the Company’s restricted stock activity is presented in the following table:

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	26 Weeks Ended					26 Weeks Ended
	August 3, 2019					August 3, 2019
(Shares in thousands)	Shares			Weighted -Average Grant Date Fair Value		Shares			Weighted -Average Grant Date Fair Value
Nonvested - February 2, 2019		1,999		$	18.00		1,900		$	17.44
Granted		1,141		$	17.54		591		$	19.87
Vested		(906	)	$	16.06		(245	)	$	15.99
Cancelled		(47	)	$	16.82		(346	)	$	16.00
Nonvested - August 3, 2019		2,187		$	18.58		1,900		$	19.14

As of August 3, 2019, there was $32.0 million of unrecognized compensation expense related to non-vested, time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.4 years. Based on current probable performance, there is $7.3 million of unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of performance goals is probable over a one to three year period.

As of August 3, 2019, the Company had 4.0 million shares available for all equity grants.