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Share-Based Compensation | 12 Months Ended
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Jan. 31, 2021
Share-based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation 2019 Omnibus Incentive Plan In June 2019, the Company’s board of directors adopted and approved the 2019 Omnibus Incentive Plan (the “2019 Plan”). The 2019 Plan became effective on June 13, 2019 and allows for the issuance of up to 31,864,865 shares of Class A common stock. No awards may be granted under the 2019 Plan after June 2029. The 2019 Plan provides for the grant of stock options, including incentive stock options, non-qualified stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock appreciation rights, and cash awards (collectively “awards”). The awards may be granted to the Company’s employees, consultants, and directors, and the employees and consultants of the Company’s affiliates and subsidiaries. Service and Performance-Based Awards Beginning in June 2019, the Company granted restricted stock units that vest upon satisfaction of both a service-based vesting condition and a performance-based condition (“PRSUs”) as described below. The service-based vesting condition was or will be satisfied with respect to 25% of an employee’s PRSUs on either (i) the first anniversary of the registration date (as defined in the 2019 Plan) or (ii) the first anniversary of the vesting commencement date, and will then be satisfied with respect to 12.5% of an employee’s PRSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date. The performance-based vesting condition was or will be be satisfied with respect to a percentage of an employee’s PRSUs, as and when the price per share of Class A common stock specified is achieved, on a volume adjusted weighted-average basis, on every trading day during a consecutive 45-trading day period completed prior to the fifth anniversary of the 2019 Plan’s effective date subject to the employee’s continued employment with the Company through the applicable vesting date. As of June 13, 2020, the performance-based vesting condition was fully satisfied. Service-Based Awards During the fiscal year ended January 31, 2021, the Company granted restricted stock units with a service-based vesting condition (“RSUs”). The service-based vesting condition for employees will be satisfied with respect to 25% of an employee’s RSUs on the one-year anniversary of the vesting commencement date and 12.5% of an employee’s RSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date. The Company records share-based compensation expense for RSUs on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur. Service and Performance-Based Awards Activity The following table summarizes the activity related to the Company’s PRSUs for Fiscal Year 2020 (in thousands, except for weighted average grant date fair value):
| Number of PRSUs |  | Weighted Average Grant Date Fair Value
Outstanding as of February 2, 2020 | 21,284 |  |  | $ | 36.20 |
Granted | 805 |  |  | $ | 32.30 |
Vested | (7,823) |  |  | $ | 36.42 |
Forfeited | (1,255) |  |  | $ | 34.94 |
Unvested and outstanding as of January 31, 2021 | 13,011 |  |  | $ | 35.95 |
The total fair value of PRSUs that vested during Fiscal Year 2020 and Fiscal Year 2019 was $784.4 million and $103.3 million, respectively. As of January 31, 2021, total unrecognized compensation expense related to unvested PRSUs was $82.5 million and is expected to be recognized over a weighted-average expected performance period of 1.7 years. During Fiscal Year 2020 and Fiscal Year 2019, vesting occurred for 279,925 and 82,941 PRSUs, respectively, previously granted to a director of the Company. For accounting purposes, the issuance of Class A common stock upon vesting of these PRSUs is treated as a distribution to the Parent because such director is an employee of the Parent. The fair value of the PRSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:
Performance period | 5 years
Weighted-average risk-free interest rate | 1.8%
Weighted-average volatility | 49.6%
Weighted-average dividend yield | —%
The risk-free interest rate utilized is based on a 5-year term-matched zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on historical volatility of the stock of the Company’s peer firms. Service-Based Awards Activity The following table summarizes the activity related to the Company’s RSUs for Fiscal Year 2020 (in thousands, except for weighted average grant date fair value):
| Number of RSUs |  | Weighted Average Grant Date Fair Value
Outstanding as of February 2, 2020 | — |  |  | $ | — |
Granted | 774 |  |  | $ | 48.28 |
Forfeited | (61) |  |  | $ | 41.81 |
Unvested and outstanding as of January 31, 2021 | 713 |  |  | $ | 48.58 |
As of January 31, 2021, total unrecognized compensation expense related to unvested RSUs was $29.3 million and is expected to be recognized over a weighted-average expected performance period of 3.4 years. The fair value for RSUs is established based on the market price of the Company’s Class A common stock on the date of grant. As of January 31, 2021, there were 7.5 million additional shares of Class A common stock reserved for future issuance under the 2019 Plan. Citrus Profits Interest Plan Subsequent to the PetSmart Acquisition of the Company in 2017, the Company’s share-based compensation included profits interests units (“PIUs”) granted by Citrus Intermediate Holdings L.P. (the “Citrus Partnership”), a Delaware limited partnership (the “Citrus Profits Interest Plan”). The Citrus Partnership is a parent company of PetSmart and a wholly-owned subsidiary of the Sponsors. The Company recognized share-based compensation as equity contributions from the Citrus Partnership in its consolidated financial statements for awards granted under the Citrus Profits Interest Plan as it relates to grantees’ services as employees of the Company. As of June 13, 2019, an aggregate of 768,785 profits interests units under the Citrus Profits Interest Plan were held by employees of Chewy, Inc. and were canceled. Share-Based Compensation Expense Share-based compensation expense is included within selling, general and administrative expenses in the consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):
| Fiscal Year
| 2020 |  | 2019 |  | 2018
PRSUs | $ | 115,505 |  |  | $ | 124,761 |  |  | $ | — |
RSUs | 5,760 |  |  | — |  |  | — |
PIUs | — |  |  | 10,165 |  |  | 14,351 |
Total share-based compensation expense | $ | 121,265 |  |  | $ | 134,926 |  |  | $ | 14,351 |

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