Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation Plans

v3.5.0.2
Share-Based Compensation Plans
9 Months Ended
Oct. 29, 2016
Share-Based Compensation Plans  
Share-Based Compensation Plans

10.  Share-Based Compensation Plans

 

For a discussion of our share-based compensation plans refer to Note 13 in our Annual Report on Form 10-K for the fiscal year ended January 30, 2016.  In June 2016 our shareholders approved the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the “2016 LTIP”), which replaced our 2004 Long-Term Incentive Plan (the “2004 LTIP”).  Awards are no longer available for grant under the 2004 LTIP but outstanding awards under the 2004 LTIP remain in effect in accordance with the terms of the awards and the 2004 LTIP.  The number of shares of our common stock authorized for awards under the 2016 LTIP is 6.4 million, subject to adjustments.  Under the 2016 LTIP, 18,328 awards have been issued as of October 29, 2016. 

 

We account for share-based awards in accordance with the authoritative guidance regarding share-based payments, which requires the compensation cost resulting from all share-based payment transactions be recognized in the financial statements. The amount of compensation cost is measured based on the grant-date fair value of the instrument issued and is recognized over the vesting period.  Share-based compensation expense recognized for the three and nine months ended October 29, 2016 was $5.2 million and $14.0 million, respectively. Share-based compensation expense recognized for the three and nine months ended October 31, 2015 was $4.2 million and $12.6 million, respectively.

 

Non-Vested Deferred Stock Units, Performance Units and Restricted Stock

 

The following table summarizes the activity of time-based and performance-based awards for the nine months ended October 29, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

Units

 

Grant-Date Fair Value

 

 

 

Time-

 

Performance-

 

Time-

 

Performance-

 

 

    

Based

    

Based

    

Based

    

Based

 

Non-Vested at January 30, 2016

 

478,106

 

168,656

 

$

49.60

 

$

47.87

 

Granted

 

830,002

 

258,168

 

 

16.68

 

 

17.43

 

Vested(1)

 

(216,936)

 

 —

 

 

49.01

 

 

 —

 

Forfeited

 

(24,426)

 

(59,943)

 

 

39.49

 

 

33.72

 

Non-Vested at October 29, 2016

 

1,066,746

 

366,881

 

$

24.34

 

$

28.76

 


(1)

Includes 71,896 shares relinquished for tax payments related to vested deferred stock units for the nine months ended October 29, 2016.

 

On April 3, 2013, our Board of Directors approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”).  As revised, the award agreements provide that dividend equivalents, if any, will be accrued during the vesting period for such DSU awards and paid out only upon vesting of the underlying DSUs.  As such, grants of DSU awards on or after April 3, 2013 earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying share award.  Grants of DSUs generally vest over a period of three years.  DSU awards granted prior to April 3, 2013 are entitled to receive non-forfeitable dividend equivalents, if any, when and if paid to shareholders of record at the payment date.  Included in the non-vested time-based awards as of October 29, 2016 are 11,288 DSUs granted prior to April 3, 2013.

 

The  performance units granted in the first nine months of 2016 represent a contingent right to earn shares of common stock, subject to the achievement of a Company-specific performance target for fiscal 2016-2017. Assuming the performance target is achieved, 50% of the award will vest on the two year anniversary of the grant date and the remaining 50% of the award will vest on the three year anniversary of the grant date. Performance units that are unvested at the end of the performance period will lapse and be forfeited.  The performance units earn dividends throughout the vesting period that are subject to the same vesting terms as the underlying performance-based awards.

 

The following table summarizes the activity of restricted stock for the nine months ended October 29, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-
Average

 

 

    

Shares

    

Grant-Date
Fair Value

 

Non-Vested at January 30, 2016

 

33,157

 

$

27.93

 

Granted

 

18,646

 

 

17.37

 

Vested

 

(6,951)

 

 

58.44

 

Forfeited

 

 —

 

 

 —

 

Non-Vested at October 29, 2016

 

44,852

 

$

18.81

 

 

Restricted stock awards receive non-forfeitable dividends, if any, when and if paid to shareholders of record at the payment date.

 

As of October 29, 2016, we have unrecognized compensation expense related to non-vested DSUs, performance units, and shares of restricted stock of approximately $24.6 million, which is expected to be recognized over a weighted-average period of 1.5 years.

 

Stock Options

 

The following table summarizes the activity of stock options for the nine months ended October 29, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

Number of

 

Average

 

 

    

Shares

    

Exercise Price

 

Outstanding at January 30, 2016

 

681,117

 

$

39.65

 

Granted

 

593,509

 

 

17.43

 

Exercised

 

 —

 

 

 —

 

Forfeited

 

(3,051)

 

 

48.31

 

Expired

 

(1,525)

 

 

48.31

 

Outstanding at October 29, 2016

 

1,270,050

 

$

29.23

 

Exercisable at October 29, 2016

 

450,630

 

$

36.25

 

 

The weighted-average grant date fair value of the 593,509 stock options granted during the nine months ended October 29, 2016 was $5.18 per share.  The following table summarizes the weighted-average assumptions used to fair value stock options at the date of grant using the Black-Scholes option pricing model for the nine months ended October 29, 2016: 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

October 29,

 

 

    

2016

 

Risk-free interest rates

 

1.22%

 

Expected lives

 

5.0 years

 

Dividend yield

 

4.13%

 

Expected volatility

 

47.95%

 

 

As of October 29, 2016, we have unrecognized compensation expense related to non-vested stock options of approximately $4.5 million, which is expected to be recognized over a weighted-average period of 1.4 years.