Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation Plans

v2.4.0.8
Share-Based Compensation Plans
9 Months Ended
Nov. 01, 2014
Share-Based Compensation Plans  
Share-Based Compensation Plans

 

11.  Share-Based Compensation Plans

 

For a discussion of our share-based compensation plans refer to Note 10 in our Annual Report on Form 10-K for the fiscal year ended February 1, 2014.

 

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 November 1, 2014 was $4.3 million and $12.3 million, respectively.  Share-based compensation expense recognized for the three and nine months ended November 2, 2013 was $3.6 million and $12.7 million, respectively.

 

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

 

The following table summarizes the activity of time-based and performance-based awards for the nine months ended November 1, 2014:

 

 

 

Units

 

Weighted-Average
Grant-Date Fair Value

 

 

 

Time-
Based

 

Performance-Based(2)

 

Time-
Based

 

Performance- Based

 

Non-Vested at February 1, 2014

 

573,042

 

82,558

 

$

32.95

 

$

33.09

 

Granted

 

258,940

 

91,440

 

47.79

 

53.31

 

Vested (1) 

 

(417,159

)

(1,134

)

32.74

 

33.09

 

Forfeited

 

(23,185

)

 

37.70

 

 

Non-Vested at November 1, 2014

 

391,638

 

172,864

 

$

42.70

 

$

43.79

 

 

(1)

Includes 141,594 shares relinquished for tax payments related to vested deferred stock units for the nine months ended November 1, 2014.

(2)

Includes 18,789 and 72,651 of units granted in April 2014 and September 2014, respectively, which are further described below.

 

On April 3, 2013, our Board approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”) to participants under our 2004 Long-Term Incentive Plan.  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 from one to 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 November 1, 2014 are 36,137 DSUs granted prior to April 3, 2013.

 

Performance units granted in September 2014 (“September 2014 performance units”) represent a contingent right to receive up to 2.25 shares of common stock and vest after our 2017 fiscal year, subject to our achievement of a performance target for fiscal 2017.  Assuming the performance target is achieved, the number of September 2014 performance units earned will be adjusted based on multipliers related to (1) the Company’s adjusted earnings per share for fiscal 2017 and (2) the Company’s relative total shareholder return (“TSR”) compared to the TSR of other peer companies over a pre-defined period.  Any September 2014 performance units that are unvested at the end of the performance period will lapse and be forfeited.  The September 2014 performance units earn dividends throughout the vesting period and are subject to the same vesting terms as the underlying performance-based awards.

 

Performance-based DSUs granted in April 2014 (“April 2014 performance-based DSUs”) represent a contingent right to receive one share of common stock and vest over a one year period, subject to our achievement of a performance target for 2014.  Any April 2014 performance-based DSUs that are unvested at the end of the one year period will lapse and be forfeited.  The April 2014 performance-based DSUs earn dividends throughout the vesting period and are subject to the same vesting terms as the underlying performance-based awards.

 

Performance-based DSUs granted in 2013 (“2013 performance-based DSUs”) represent a contingent right to receive one share of common stock and generally vest in one-third tranches over a three year period, subject to our achievement of a performance target during an applicable performance period.  Any unvested 2013 performance-based DSUs at the end of the performance period are rolled over and become eligible to vest in subsequent performance periods.  Any 2013 performance-based DSUs that are unvested at the end of all vesting periods will lapse and be forfeited.  The 2013 performance-based DSUs earn dividends throughout the vesting period and 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 November 1, 2014:

 

 

 

Shares

 

Weighted-
Average
Grant-Date
Fair Value

 

Non-Vested at February 1, 2014

 

80,919

 

$

31.36

 

Granted

 

26,084

 

49.81

 

Vested

 

(40,125

)

35.19

 

Forfeited

 

 

 

Non-Vested at November 1, 2014

 

66,878

 

$

37.00

 

 

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

 

As of November 1, 2014, we have unrecognized compensation expense related to non-vested DSUs and shares of restricted stock of approximately $16.4 million, which is expected to be recognized over a weighted-average period of 1.8 years.

 

Stock Options

 

The following table summarizes the activity of stock options for the nine months ended November 1, 2014:

 

 

 

Shares

 

Weighted-
Average
Exercise
Price

 

Outstanding at February 1, 2014

 

645,990

 

$

28.80

 

Granted

 

253,836

 

49.16

 

Exercised

 

(170,340

)

26.19

 

Forfeited

 

(60,000

)

17.18

 

Expired

 

 

 

Outstanding at November 1, 2014

 

669,486

 

$

38.23

 

Exercisable at November 1, 2014

 

264,222

 

$

31.31

 

 

The weighted-average grant date fair value of the 253,836 stock options granted during the nine months ended November 1, 2014 was $16.84 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 November 1, 2014:

 

 

 

For the Nine
Months Ended

 

 

 

November 1,
2014

 

 

 

 

 

Risk-free interest rate

 

1.79% 

 

Expected lives

 

5.0 years

 

Dividend yield

 

1.59% 

 

Expected volatility

 

42.79% 

 

 

As of November 1, 2014, we have unrecognized compensation expense related to non-vested stock options of approximately $5.0 million which is expected to be recognized over a weighted-average period of 2.0 years.

 

Employee Stock Discount Plan

 

The Employee Stock Discount Plan (“ESDP”) allows employees to authorize after-tax payroll deductions to be used for the purchase of up to 2,137,500 shares of our common stock at 85% of the lesser of the fair market value on the first day of the offering period or the fair market value on the last day of the offering period.  During the nine months ended November 1, 2014, employees purchased 63,700 shares under the ESDP, which had a weighted-average share price of $41.67 per share.  As of November 1, 2014, 676,638 shares were reserved for future issuance under the ESDP.