NOTE 13 — STOCK-BASED COMPENSATION

The Company’s board of directors may make awards under the 2011 Stock Plan (the “Stock Plan”) to officers, directors and key employees. Awards may include incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), and restricted or unrestricted stock. ISOs granted under the Stock Plan shall have an exercise price per share at least equal to the common stock’s market value per share at the date of grant and shall have a term no longer than ten years. NSOs may be granted at an exercise price per share that differs from the common stock’s market value per share at the date of grant and may have up to a ten-year term. In the past, stock options typically became exercisable one year from the date of award. Commencing in January 2018, stock options were awarded with three-year vesting schedules.

As of January 31, 2018, there were approximately 1.0 million shares of the Company’s common stock reserved for issuance under the Company’s stock option plans, including approximately 0.2 million shares of the Company’s common stock available for future awards.

Summaries of activity under the Company’s stock option plans for the years ended January 31, 2018, 2017 and 2016, along with corresponding weighted average per share amounts, are presented below (shares in thousands):

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Term (years)	Weighted Average Fair Value
Outstanding, February 1, 2015	876		$	22.34	7.08	$	6.01
Granted	300		$	34.70
Exercised	(106	)	$	17.10
Forfeited	(6	)	$	17.33

Outstanding, January 31, 2016	1,064		$	26.38	6.36	$	6.91
Granted	270		$	57.88
Exercised	(622	)	$	25.57
Forfeited	(5	)	$	36.73

Outstanding, January 31, 2017	707		$	39.04	7.82	$	10.22
Granted	302		$	53.49
Exercised	(110	)	$	28.81
Forfeited	(10	)	$	71.75

Outstanding, January 31, 2018	889		$	44.83	7.91	$	11.74


Exercisable, January 31, 2018	587		$	40.39	7.03	$	10.80

The changes in the number of non-vested options to purchase shares of common stock for the years ended January 31, 2018, 2017 and 2016, and the weighted average fair value per share for each number, are presented below (shares in thousands):

	Shares		Weighted Average Fair Value
Non-vested, February 1, 2015	306		$	7.14
Granted	300		$	8.97
Vested	(306	)	$	7.14

Non-vested, January 31, 2016	300		$	8.97
Granted	270		$	14.93
Vested	(300	)	$	8.97

Non-vested, January 31, 2017	270		$	14.93
Granted	302		$	13.55
Vested	(260	)	$	15.31
Forfeitures	(10	)	$	19.14

Non-vested, January 31, 2018	302		$	13.55

Compensation expense amounts related to stock options were $4.7 million, $2.3 million, and $2.4 million for the years ended January 31, 2018, 2017 and 2016, respectively. At January 31, 2018, there was $2.4 million in unrecognized compensation cost related to outstanding stock options. The Company expects to recognize the compensation expense for these awards within the next three years. The total intrinsic values for the stock options exercised during the years ended January 31, 2018, 2017 and 2016 were $3.6 million, $18.4 million and $2.1 million, respectively. At January 31, 2018, the aggregate market values of the shares of common stock subject to outstanding and exercisable stock options that were “in-the-money” as of January 31, 2018 exceeded the aggregate exercise prices of such options by $6.3 million in both cases.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. For companies with limited stock option exercise experience, guidance provided by the SEC permits the use of a “simplified method” in developing the estimate of the expected term of a “plain-vanilla’’ share option based on the average of the vesting period and the option term, which the Company used to estimate the expected terms of its stock options awarded in prior years. In most cases, the simplified method resulted in the use of 5.5 years as the estimated expected life of each stock option. However, the Company believes that its stock option exercise activity has become and remains sufficient to provide it with a reasonable basis upon which to estimate the expected life of newly awarded stock options. Accordingly, the estimated expected life used in the determination of the fair value of stock option awards since January 2017 is 3.3 years.

The risk-free interest rates and expected volatility factors used in the determinations of the fair value of stock options awarded during the year ended January 31, 2018 ranged from 1.5% to 2.0% and from 36.0% to 38.3%, respectively. For stock options awarded during the year ended January 31, 2017, the comparable ranges were 1.3% to 1.9% and 33.3% to 35.0%, respectively. For stock options awarded during the year ended January 31, 2016, the comparable ranges were 1.0% to 1.7% and 33.9% to 35.3%, respectively. The calculations of the expected volatility factors were based on the monthly closing prices of the Company’s common stock for the five-year periods preceding the dates of the corresponding awards. The fair value of each stock option granted in the years ended January 31, 2018, 2017 and 2016 was estimated on the corresponding date of award using the Black-Scholes option-pricing model based on the following weighted average assumptions:

	2018		2017		2016
Dividend yield	1.7	%	1.4	%	2.0	%
Expected volatility	37.3	%	34.6	%	34.8	%
Risk-free interest rate	1.8	%	1.7	%	1.3	%
Expected life (in years)	3.3		4.2		4.9

The Company also has 401(k) savings plans pursuant to which the Company makes discretionary contributions for the eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were approximately $2.8 million, $1.9 million and $1.5 million for the years ended January 31, 2018, 2017 and 2016, respectively.