Stock-Based Compensation

12 Months Ended

Feb. 03, 2019

Note G: Stock-Based Compensation

Equity Award Programs

Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”), restricted stock awards, restricted stock units (including those that are performance-based), deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate

of approximately

36,570,000 shares. As of February 3, 2019, there were approximately 7,436,000 shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee members of the

Board of Directors of the company (the “Board”) or any parent or subsidiary. Shares issued as a result of award exercises or releases are primarily funded with the issuance of new shares.

Option Awards

Annual grants of option awards are limited to 1,000,000 shares on a per person basis and have a maximum term of seven years. The exercise price of these option awards is not less than 100% of the closing price of our stock on the day prior to the grant date. Option awards granted to employees generally vest evenly over a period of four years for service-based awards. Certain option awards contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a similar corporate event.

Stock Awards

Annual grants of stock awards are limited to 1,000,000 shares on a per person basis and have a maximum term of seven years. Stock awards granted to employees generally vest evenly over a period of four years for service-based awards. Certain performance-based awards, which have variable payout conditions based on predetermined financial targets, vest three years from the date of grant. Certain stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a similar corporate event. Stock awards granted to non-employee Board members generally vest in one year. Non-employee Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-employee Board member).

Stock-Based Compensation Expense

During fiscal 2018, fiscal 2017 and fiscal 2016, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses, of $59,802,000, $42,988,000, and $51,116,000, respectively. As of February 3, 2019, there was $78,694,000 of unrecognized stock-based compensation expense (net of estimated forfeitures), which we expect to recognize on a straight-line basis over a weighted average remaining service period of approximately two years. At each reporting period, all compensation expense attributable to vested awards has been fully recognized.

Stock-Settled Stock Appreciation Rights

A stock-settled stock appreciation right is an award that allows the recipient to receive common stock equal to the appreciation in the fair market value of our common stock between the grant date and the conversion date for the number of shares converted.

The following table summarizes our stock-settled stock appreciation right activity during fiscal 2018:

	Shares			Weighted Average Conversion ‎Price 1
Balance at January 28, 2018 (100% vested)		167,737		$	30.91
Granted		—			—
Converted into common stock		(166,447	)		30.83
Cancelled		(1,290	)		40.87
Balance at February 3, 2019		—		$	—

1	Conversion price is equal to the market value on the date of grant.

No stock-settled stock appreciation rights were granted in fiscal 2018, fiscal 2017 or fiscal 2016. The total intrinsic value of awards converted to common stock was $4,394,000 for fiscal 2018, $7,287,000 for fiscal 2017 and $5,237,000 for fiscal 2016. Intrinsic value for conversions is based on the excess of the market value on the date of conversion over the conversion price.

Restricted Stock Units

The following table summarizes our restricted stock unit activity during fiscal 2018:

	Shares			Weighted Average Grant Date Fair Value		Weighted Average Contractual Term Remaining (Years)		Intrinsic ‎Value 1
Balance at January 28, 2018		2,358,137		$	58.18
Granted		1,432,954			49.72
Granted, with vesting subject to performance conditions		256,350			48.76
Released		(677,251	)		59.47
Cancelled		(357,267	)		60.48
Balance at February 3, 2019		3,012,923		$	52.88		3.03	$	162,698,000
Vested plus expected to vest at February 3, 2019		2,389,343		$	52.74		3.10	$	129,025,000

1	Intrinsic value for outstanding and unvested restricted stock units is based on the market value of our common stock on the last business day of the fiscal year (or $54.00).

The following table summarizes additional information about restricted stock units:

	Fiscal 2018		Fiscal 2017		Fiscal 2016
Weighted average grant date fair value per share of awards granted	$	49.57	$	52.76	$	59.17
Intrinsic value of awards released 1	$	34,213,000	$	35,508,000	$	56,405,000

1	Intrinsic value for releases is based on the market value on the date of release.

Tax Effect

In accordance with ASU 2016-09

, Improvements to Employee Share-Based Payment Accounting

, we record excess tax benefits and deficiencies resulting from the settlement of stock-based awards as a benefit or expense within income taxes in the period in which they occur. Further, in accordance with the ASU, we no longer classify such tax benefits as a financing cash inflow and an operating cash outflow. We adopted the classification requirements of this ASU prospectively as of the first quarter of fiscal 2017 and, as such, our Consolidated Statement of Cash Flows for fiscal 2016 has not been retrospectively adjusted. During fiscal 2018, fiscal 2017 and fiscal 2016, proceeds related to stock-based awards were $0, $0 and $1,532,000, respectively, and the current tax benefit related to stock-based awards totaled $9,927,000, $16,066,000 and $24,129,000, respectively.