Annual report pursuant to Section 13 and 15(d)

EQUITY AND SHARE-BASED COMPENSATION PLANS

v3.6.0.2
EQUITY AND SHARE-BASED COMPENSATION PLANS
12 Months Ended
Jan. 28, 2017
EQUITY AND SHARE-BASED COMPENSATION PLANS  
EQUITY AND SHARE-BASED COMPENSATION PLANS

13.  EQUITY AND SHARE‑BASED COMPENSATION PLANS

Preferred Stock

Our Board is authorized to issue up to 2,000,000 shares of preferred stock and to determine the dividend rights and terms, redemption rights and terms, liquidation preferences, conversion rights, voting rights and sinking fund provisions of those shares without any further vote or act by Company shareholders. There was no issued preferred stock as of January 28, 2017 and January 30, 2016, respectively.

Stock Plans

In June 2016, our shareholders approved the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the “2016 LTIP”), which will be used for equity grants after June 2016. The 2016 LTIP provides for an aggregate of up to 6,400,000 shares of our common stock (or the fair market value thereof) with respect to which stock options, stock appreciation rights, restricted stock, deferred stock units and performance based awards may be granted to full‑time key employees and to non‑employee directors of the Company. 

In addition, we continue to administer the 2004 Long-Term Incentive Plan (the “2004 LTIP”), the 1996 Long‑Term Incentive Plan (“1996 Plan”) and the Non‑Employee Director Stock Option Plan (“Director Plan”) as a result of awards which remain outstanding pursuant to such plans. Awards are no longer available for grant under the 2004 LTIP, 1996 Plan and the Director Plan. 

Options granted under these plans vest annually in varying increments over a period from one to ten years and must be exercised within ten years of the date of grant. Grants of deferred stock units, performance units or restricted stock generally vest over a period from one to three years; however, certain grants vest annually at varying increments over a period up to ten years.

As of January 28, 2017, 5,897,273 shares were available for grant under the 2016 LTIP and 8,677,876 shares of common stock were reserved for future issuance under the existing plans.

Non‑Vested Deferred Stock Units, Performance Units and Restricted Stock Shares

The following table summarizes the activity of time-based and performance-based (collectively, “DSUs”) awards during fiscal 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

Shares

 

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

 

866,520

 

448,620

 

 

17.12

 

 

21.51

 

Vested(1)

 

(231,267)

 

 —

 

 

47.85

 

 

 —

 

Forfeited

 

(51,394)

 

(93,328)

 

 

31.84

 

 

31.16

 

Non-Vested at January 28, 2017

 

1,061,965

 

523,948

 

$

24.31

 

$

28.28

 


(1)

Includes 76,485 shares relinquished for tax payments related to vested DSUs in fiscal 2016.

The following table summarizes additional information about DSUs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

 

    

2016

    

2015

    

2014

 

DSUs issued

 

 

1,315,140

 

 

397,811

 

 

352,636

 

Weighted average grant date fair value

 

$

18.61

 

$

53.03

 

$

49.21

 

The fair value of shares vested was $11.1 million, $10.2 million and $13.8 million in fiscal 2016, 2015 and 2014, respectively. As of January 28, 2017, the intrinsic value of non‑vested DSUs was $31.6 million.

For grants of DSUs issued on or after April 3, 2013, 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 January 28, 2017 are 11,288 DSUs granted prior to April 3, 2013.

Of the 448,620 performance-based DSUs granted in 2016, 258,168 represent a contingent right to earn shares of common stock, subject to the achievement of a Company-specific performance target for fiscal 2016-2017. The remaining 190,452 represent a contingent right to receive one share of common stock, subject to the achievement of a Company-specific performance target for fiscal 2017. Assuming the performance targets are 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-based DSUs that are unvested at the end of the performance period will lapse and be forfeited.  The performance-based DSUs earn dividends throughout the vesting period that are subject to the same vesting terms as the underlying awards.

 

The following table summarizes activity of restricted stock during fiscal 2016:

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

    

Shares

    

Grant-Date

Fair Value

 

Non-Vested at January 30, 2016

 

33,157

 

$

27.93

 

Granted

 

18,646

 

 

17.37

 

Vested

 

(14,925)

 

 

45.29

 

Forfeited

 

 —

 

 

 —

 

Non-Vested at January 28, 2017

 

36,878

 

$

15.56

 

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

The following table summarizes additional information about restricted stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

 

    

2016

    

2015

    

2014

 

Stock issued

 

 

18,646

    

 

33,157

    

 

30,166

 

Weighted average grant date fair value

 

$

17.37

 

$

27.93

 

$

49.36

 

Fair value of shares vested (in millions)

 

$

0.7

 

$

2.0

 

$

1.6

 

As of January 28, 2017, the intrinsic value of non‑vested restricted stock shares was $0.7 million.

As of January 28, 2017, we have unrecognized compensation expense related to non‑vested DSUs and shares of restricted stock of approximately $22.7 million which is expected to be recognized over a weighted‑average period of 1.6 years.

Stock Options

The following table summarizes the activity of stock options during fiscal 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

Remaining

 

Intrinsic

 

 

 

Number of

 

Average

 

Contractual

 

Value

 

 

    

Shares

    

Exercise Price

 

Term

    

(in thousands)

 

Outstanding at January 30, 2016

 

681,117

 

$

39.65

 

 

 

 

 

 

Granted

 

593,509

 

 

17.43

 

 

 

 

 

 

Exercised

 

(15,441)

 

 

17.43

 

 

 

 

 

 

Forfeited

 

(58,860)

 

 

23.39

 

 

 

 

 

 

Expired

 

(5,635)

 

 

38.86

 

 

 

 

 

 

Outstanding at January 28, 2017

 

1,194,690

 

$

29.70

 

6.6

Years  

$

1,086

 

Vested and expected to vest at January 28, 2017

 

1,181,788

 

$

29.81

 

6.6

Years  

$

1,061

 

Exercisable at January 28, 2017

 

466,351

 

$

36.63

 

3.8

Years  

$

 —

 

 

The weighted‑average grant date fair value of stock options granted during fiscal 2016, 2015 and 2014 was $5.18,  $18.63 and $16.82, respectively. The fair value of options is estimated on the date of grant using the Black‑Scholes option pricing model using the following weighted‑average assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

 

 

2016

    

2015

    

2014

 

Risk-free interest rates

 

1.22%

 

1.51%

 

1.79%

 

Expected lives

 

5.0 years

 

5.0 years

 

5.0 years

 

Dividend yield

 

4.13%

 

1.38%

 

1.58%

 

Expected volatility

 

47.95%

 

39.74%

 

42.77%

 

The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected lives represents the period of time the options are expected to be outstanding after their grant date. The dividend yield is based on the average of the annual dividend divided by the market price of our common stock at the time of declaration. The expected volatility is based on historical volatility of our common stock. The total intrinsic value of options exercised during fiscal 2016, 2015 and 2014 was $0.1 million, $0.5 million and $4.4 million, respectively. As of January 28, 2017, we have unrecognized compensation expense related to non‑vested stock options of approximately $3.4 million which is expected to be recognized over a weighted‑average period of 1.3 years.