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Note 6 - Stock-based Compensation

9 Months Ended

Oct. 31, 2020

Share-based Payment Arrangement [Text Block]

6. Stock-based Compensation

On April 14, 2020, the Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc. (the “Company”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”). On June 11, 2020, at the Company’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan, which is administered by the Compensation and Development Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, other stock-based awards, including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the 2020 Incentive Plan. The 2020 Incentive Plan will terminate on April 14, 2030, unless earlier terminated by the Board. The number of shares of the Company’s common stock authorized for issuance under the 2020 Incentive Plan is 1,000,000, plus shares of stock that remained available for issuance under the Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (the “2017 Incentive Plan”) at the time the 2020 Incentive Plan was approved by the Company’s stockholders, and shares that are subject to outstanding awards made under the 2017 Incentive Plan that on or after April 14, 2020 may be forfeited, expire or be settled for cash.

For the thirteen weeks ended October 31, 2020 and November 2, 2019, Selling, general and administrative expense included $0.5 million and $0.4 million, respectively, of stock-based compensation expense, and for the thirty-nine weeks ended October 31, 2020 and November 2, 2019, Selling, general and administrative expense included $1.3 million and $1.8 million, respectively. As of October 31, 2020, there was $2.8 million of total unrecognized compensation expense related to unvested restricted stock and option awards which is expected to be recognized over a weighted-average period of 1.3 years.

The following table is a summary of the balances and activity for stock options for the thirty-nine weeks ended October 31, 2020:

	*Options*
	*Shares*			*Weighted Average Exercise Price*
Outstanding, February 1, 2020		923,254		$	9.76
Granted		-			-
Exercised		-			-
Forfeited		-			-
Canceled or expired		(102,516	)		8.13
Outstanding, October 31, 2020		820,738		$	9.97

The following table is a summary of the balances and activity related to time-based and performance-based restricted stock for the thirty-nine weeks ended October 31, 2020:

	*Time-Based Restricted Stock*					*Performance-Based Restricted Stock*
	*Shares*			*Weighted Average Grant Date Fair Value*		*Shares*			*Weighted Average Grant Date Fair Value*
Outstanding, February 1, 2020		453,403		$	6.71		262,964		$	7.59
Granted		767,390			2.45		157,374			2.78
Vested		(260,317	)		6.98		(56,380	)		8.85
Forfeited		(18,408	)		6.79		-			-
Canceled or expired		-			-		(27,517	)		8.85
Outstanding, October 31, 2020		942,068		$	3.16		336,441		$	5.03

The total fair value of shares vested during the thirty-nine weeks ended October 31, 2020 and November 2, 2019 was $2.3 million and $2.1 million, respectively.

In October 2020, the Company awarded three-year performance-based restricted stock subject to the achievement of liquidity, profitability and strategic performance objectives for fiscal 2020, 2021 and 2022 and assigned a weighting to each objective. Profitability will be measured by the Company’s achievement of consolidated earnings before interest and taxes (“EBIT”). The EBIT targets for the 2021 and 2022 fiscal years were not established by the Compensation and Development Committee of the Board as of the award date. As a result, under ASC 718 Compensation - Stock Compensation the expense related to these EBIT awards will not begin recognition until the targets are established by the Compensation and Development Committee as this portion of the award is not considered granted until the specific targets are established.

The outstanding performance shares as of October 31, 2020 consist of the following:

	*Performance Shares*

Unearned shares subject to performance-based restrictions at target:
2018 - 2020 consolidated total revenue growth objectives		20,756
2018 - 2020 consolidated pre-tax income growth objectives		62,500
2019 - 2021 consolidated pre-tax income growth objectives		95,811
2020 - 2022 consolidated liquidity and strategic performance objectives		89,168
2020 - 2022 consolidated earnings before interest and taxes (EBIT) objectives		68,206
Performance shares outstanding, October 31, 2020		336,441