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Stock-Based Compensation | 12 Months Ended
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Jan. 28, 2023
Stock-Based Compensation. |
Stock-Based Compensation | NOTE 18—STOCK-BASED COMPENSATION We recorded stock-based compensation expense of $44 million, $48 million and $146 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively, which is included in selling, general and administrative expenses on the consolidated statements of income. No stock-based compensation expense has been capitalized in the accompanying consolidated financial statements. 2012 Stock Incentive Plan and 2012 Stock Option Plan The Restoration Hardware 2012 Stock Incentive Plan (the “Stock Incentive Plan”) was adopted on November 1, 2012. The Stock Incentive Plan provides for the grant of incentive stock options to our employees, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants. The Restoration Hardware 2012 Stock Option Plan (the “Option Plan”) was adopted on November 1, 2012 and on such date 6,829,041 fully vested options were granted under this plan to certain of our employees and advisors. Aside from these options granted on November 1, 2012, no other awards were granted under the Option Plan. As of January 29, 2022, there were a total of 1,185,322 shares issuable under the Stock Incentive Plan. On January 31, 2022, an additional 430,139 shares became issuable under the Stock Incentive Plan in accordance with the Stock Incentive Plan evergreen provision, increasing the total number of shares issuable under the Stock Incentive Plan to 1,615,461. Awards under the plans reduced the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the Stock Incentive Plan increased the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the Option Plan were immediately retired and were no longer available for future issuance. On November 1, 2022, both the Stock Incentive Plan and Option Plan expired. Upon expiration of the Stock Incentive Plan, a total of 1,607,508 shares that were available for future issuance under the plan were cancelled and were no longer available for the grant of awards under the plan. 2012 Stock Incentive Plan and 2012 Stock Option Plan—Stock Options A summary of stock option activity under the Stock Incentive Plan and the Option Plan was as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | WEIGHTED-AVERAGE
​ | ​ | OPTIONS | ​ | EXERCISE PRICE
Outstanding—January 29, 2022 |  | 7,700,107 | ​ | $ | 111.76
Granted |  | 85,500 | ​ | ​ | 263.56
Exercised |  | (4,249,285) | ​ | ​ | 54.44
Cancelled |  | (120,370) | ​ | ​ | 305.40
Outstanding—January 28, 2023 |  | 3,415,952 | ​ | $ | 180.03
​ The fair value of stock options granted was estimated on the date of grant using the following assumptions: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | YEAR ENDED |
​ |  | JANUARY 28, |  | JANUARY 29, |  | JANUARY 30, |
​ | ​ | 2023 | ​ | 2022 | ​ | 2021 |
Expected volatility |  | 62.4 | % | 64.2 | % | 58.9 | %
Expected life (years) |  | 7.3 |  | 7.3 |  | 8.3 | ​
Risk-free interest rate |  | 3.8 | % | 1.4 | % | 0.6 | %
Dividend yield |  | — |  | — |  | — | ​
​ A summary of additional information about stock options was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | YEAR ENDED
​ |  | JANUARY 28, |  | JANUARY 29, |  | JANUARY 30,
​ | ​ | 2023 | ​ | 2022 | ​ | 2021
​ | ​ | (in thousands, except per share amounts)
Weighted-average fair value per share of stock options granted | ​ | $ | 171.78 | ​ | $ | 392.65 | ​ | $ | 168.90
Aggregate intrinsic value of stock options exercised | ​ |  | 1,102,657 | ​ |  | 280,060 | ​ |  | 75,011
Fair value of stock options vested | ​ |  | 18,071 | ​ |  | 22,665(1) | ​ |  | 12,429
| (1) | The fair value of stock options vested in fiscal 2021 was disclosed as $59,074 in our fiscal 2021 Form 10-K and has been updated with the amount presented herein.
Information about stock options outstanding, vested or expected to vest, and exercisable as of January 28, 2023 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | OPTIONS OUTSTANDING | ​ | OPTIONS EXERCISABLE
​ |  | ​ |  | WEIGHTED- |  | ​ | ​ |  | ​ |  | ​ | ​
​ | ​ | ​ | ​ | AVERAGE | ​ | WEIGHTED- | ​ | ​ | ​ | WEIGHTED-
​ | ​ | ​ | ​ | REMAINING | ​ | AVERAGE | ​ | ​ | ​ | AVERAGE
​ | ​ | NUMBER OF | ​ | CONTRACTUAL | ​ | EXERCISE | ​ | NUMBER OF | ​ | EXERCISE
RANGE OF EXERCISE PRICES | ​ | OPTIONS | ​ | LIFE (IN YEARS) | ​ | PRICE | ​ | OPTIONS | ​ | PRICE
$25.39 — $45.82 |  | 269,642 | ​ | 3.32 | ​ | $ | 35.67 | ​ | 269,642 | ​ | $ | 35.67
$50.00 — $50.00 |  | 1,000,000 | ​ | 4.26 | ​ | ​ | 50.00 | ​ | 1,000,000 | ​ | ​ | 50.00
$53.47 — $109.87 | ​ | 516,826 | ​ | 4.10 | ​ | ​ | 87.31 | ​ | 320,296 | ​ | ​ | 77.35
$111.37 — $164.12 |  | 478,479 | ​ | 7.15 | ​ | ​ | 154.17 | ​ | 92,639 | ​ | ​ | 153.70
$174.32 — $380.53 | ​ | 330,780 | ​ | 7.91 | ​ | ​ | 285.34 | ​ | 61,060 | ​ | ​ | 280.85
$385.30 — $385.30 | ​ | 700,000 | ​ | 7.72 | ​ | ​ | 385.30 | ​ | 700,000 | ​ | ​ | 385.30
$389.34 — $713.52 | ​ | 120,225 | ​ | 8.33 | ​ | ​ | 601.85 | ​ | 14,130 | ​ | ​ | 591.29
Total |  | 3,415,952 |  | ​ | ​ | $ | 180.03 |  | 2,457,767 | ​ | $ | 160.25
Vested or expected to vest |  | 3,218,626 |  | ​ | ​ | $ | 175.84 |  |  | ​ |  |
​ The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of January 28, 2023 was $537 million, $516 million and $427 million, respectively. Stock options exercisable as of January 28, 2023 had a weighted-average remaining contractual life of 5.15 years. We recorded stock-based compensation expense related to stock options of $41 million, $45 million and $140 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. The expense includes $18 million, $24 million and $117 million, respectively, associated with the option grant to Mr. Friedman in October 2020 (refer to Chairman and Chief Executive Officer Option Grant below). As of January 28, 2023, the total unrecognized compensation expense related to unvested options was $83 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 4.13 years. In addition, as of January 28, 2023, the total unrecognized compensation expense related to the fully vested option grant made to Mr. Friedman in October 2020 was $15 million, which will be recognized on an accelerated basis through May 2025 (refer to Chairman and Chief Executive Officer Option Grant below). Chairman and Chief Executive Officer Option Grant On October 18, 2020, our Board of Directors granted Mr. Friedman an option to purchase 700,000 shares of our common stock with an exercise price equal to $385.30 per share under the 2012 Stock Incentive Plan. The option contains selling restrictions on the underlying shares that lapse upon the achievement of both time-based service requirements and stock price performance-based metrics. The option was fully vested on the date of grant but the shares underlying the option remain subject to transfer restrictions to the extent the performance-based and time-based requirements have not been met. The option will result in aggregate non-cash stock compensation expense of $174 million, of which $18 million, $24 million and $117 million was recognized in fiscal 2022, fiscal 2021 and fiscal 2020, respectively (which is included in the stock-based compensation expense amounts noted above). 2012 Stock Incentive Plan—Restricted Stock Awards We grant restricted stock awards, which include restricted stock and restricted stock units, to our employees and members of our Board of Directors. A summary of restricted stock award activity is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | WEIGHTED- |  | ​ | ​
​ | ​ | ​ | ​ | AVERAGE | ​ | ​ | ​
​ | ​ | ​ | ​ | GRANT DATE FAIR | ​ | INTRINSIC
​ | ​ | AWARDS | ​ | VALUE | ​ | VALUE
Outstanding—January 29, 2022 |  | 19,750 | ​ | $ | 399.89 |  | ​ |
Granted |  | 14,577 | ​ | ​ | 318.86 |  | ​ |
Released |  | (11,747) | ​ | ​ | 229.36 |  | ​ |
Cancelled |  | (1,660) | ​ | ​ | 340.24 |  | ​ |
Outstanding—January 28, 2023 |  | 20,920 | ​ | $ | 443.92 | ​ | $ | 6,498,798
​ A summary of additional information about restricted stock awards is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | YEAR ENDED
​ |  | JANUARY 28, |  | JANUARY 29, |  | JANUARY 30,
​ | ​ | 2023 | ​ | 2022 | ​ | 2021
Weighted-average fair value per share of awards granted | ​ | $ | 318.86 | ​ | $ | 582.79 | ​ | $ | 371.36
Grant date fair value of awards released (in thousands) | ​ |  | 2,694 | ​ |  | 4,257 | ​ |  | 6,710
​ We recorded stock-based compensation expense related to restricted stock awards of $3.0 million, $3.0 million and $4.9 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. As of January 28, 2023, the total unrecognized compensation expense related to unvested restricted stock awards was $7.2 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 3.97 years. Compensation Related to Consolidated VIEs Refer to Note 8—Variable Interest Entities for details of non-cash compensation related to consolidated variable interest entities.

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