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Share-Based Compensation | 12 Months Ended
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Feb. 03, 2024
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation Share-Based Compensation Plans The Company has two share-based compensation plans. The Guess?, Inc. 2004 Equity Incentive Plan (the “Plan”) provides that the Board of Directors may grant stock options and other equity awards to officers, non-employee directors, key employees and certain consultants and advisors to the Company or any of its subsidiaries. On April 22, 2022, the Company’s stockholders approved an amendment and restatement of the Plan. The amendment and restatement of the Plan (a) increased the aggregate number of shares of the Company’s common stock available for award grants under the Plan by 680,000 shares (from 29,100,000 shares to 29,780,000 shares), (b) changed the ratio at which a “Full-Value Award” (any award granted under the Plan other than a stock option or stock appreciation right) counts against the total share limit under the Plan from 3.54 shares for every one share actually issued in connection with such award to 1.6 shares for every one share actually issued in connection with such award, (c) extended the Company’s ability to grant new awards under the Plan through March 26, 2032, and (d) made members of the Company’s Board of Directors who are not employees of the Company or any of its subsidiaries eligible to receive award grants under the Plan. As of February 3, 2024 and January 28, 2023, there were 3,628,245 and 4,525,424 shares available for grant under the Plan, respectively. Stock options granted under the Plan have ten-year terms and typically vest and become fully exercisable in increments of one-fourth of the shares granted on each anniversary from the date of grant. Stock awards/units granted under the Plan typically vest in increments of one-fourth of the shares granted on each anniversary from the date of grant. The three most recent annual grants for stock awards/units had initial vesting periods of about nine months followed by three annual vesting periods. The Guess?, Inc. Employee Stock Purchase Plan (“ESPP”) allows qualified employees to participate in the purchase of designated shares of the Company’s common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. Performance-Based Awards The Company has granted certain nonvested units that require certain minimum performance targets to be achieved in order for these awards to vest. Vesting is also subject to continued service requirements through the vesting date. If the minimum performance targets are not forecasted to be achieved, no expense is recognized during the period. The Company has granted certain nonvested stock units subject to performance-based vesting conditions to select executive officers. Each award of nonvested stock units generally has an initial vesting period from the date of the grant through either (i) the end of the first fiscal year or (ii) the first anniversary of the date of grant, followed by annual vesting periods which may range from two-to-three years. The nonvested stock units are subject to the achievement of certain performance-based vesting conditions. The Company has also granted a target number of nonvested stock units to select key management, including certain executive officers. The number of shares that may ultimately vest with respect to each award may range from 0% up to 100% of the target number of shares, subject to the achievement of certain performance-based vesting conditions. Any shares that are ultimately issued are scheduled to vest at the end of the third fiscal year following the grant date. Market-Based Awards The Company has granted certain nonvested stock units which are subject to market-based performance targets in order for these units to vest. Vesting is also subject to continued service requirements through the vesting date. The grant date fair value for such nonvested stock units was estimated using a Monte Carlo simulation that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. Compensation expense for such nonvested stock units is recognized on a straight-line basis over the vesting period, regardless of whether the market condition is satisfied. The Company has granted certain nonvested stock units subject to market-based vesting conditions to select executive officers. These market-based awards include (i) units where the number of shares that may ultimately vest will equal 0% to 150% of the target number of shares, subject to the performance of the Company’s total stockholder return (“TSR”) relative to the TSR of a select group of peer companies over a three-year period and (ii) units scheduled to vest based on the attainment of certain absolute stock price levels over a four-year period. Vesting is also subject to continued service requirements through the vesting date. Share-Based Compensation Expense Compensation expense for nonvested stock options and stock awards/units that are not subject to performance-based vesting conditions is recognized on a straight-line basis over the vesting period. Compensation expense for performance-based awards that vest in increments is recognized based on an accelerated attribution method. The Company has elected to account for forfeitures as they occur. The following summarizes the share-based compensation expense recognized under all of the Company’s stock plans (in thousands):
| Year Ended
| Feb 3, 2024 |  | Jan 28, 2023 |  | Jan 29, 2022
Stock options | $ | 713 |  |  | $ | 2,709 |  |  | $ | 3,528 |
Stock awards/units | 19,369 |  |  | 17,478 |  |  | 17,385 |
ESPP | 164 |  |  | 208 |  |  | 206 |
Total share-based compensation expense | $ | 20,246 |  |  | $ | 20,395 |  |  | $ | 21,119 |
Stock options The following summarizes the stock option activity under all of the Company’s stock plans:
| Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value ($000’s)
Options outstanding at January 28, 2023 | 2,569,629 |  |  | $ | 16.24 |  |  |  |  |
Granted | — |  |  | $ | — |  |  |  |  |
Exercised | (262,402) |  |  | $ | 15.49 |  |  |  |  |
Forfeited | (11,175) |  |  | $ | 14.32 |  |  |  |  |
Expired | (155,450) |  |  | $ | 25.19 |  |  |  |  |
Options outstanding at February 3, 2024 | 2,140,602 |  |  | $ | 15.69 |  |  | 4.83 |  | $ | 16,136 |
Exercisable at February 3, 2024 | 2,140,602 |  |  | $ | 15.69 |  |  | 4.83 |  | $ | 16,136 |
There were no stock options granted during fiscal 2024, fiscal 2023 and fiscal 2022. The total intrinsic value of stock options exercised was $1.9 million, $1.6 million and $1.8 million during fiscal 2024, fiscal 2023 and fiscal 2022, respectively. The intrinsic value of stock options is defined as the difference between the Company’s stock price on the exercise date and the grant date exercise price. The total cash received from option exercises was $4.1 million, $3.7 million and $3.3 million during fiscal 2024, fiscal 2023 and fiscal 2022, respectively. The compensation expense included in SG&A expense recognized was $0.7 million before the recognized income tax benefit of $0.2 million during fiscal 2024. As of February 3, 2024, there was no unrecognized compensation cost related to nonvested stock options. The excess tax windfall included in cash flows from operating activities related to stock option activity was immaterial for fiscal 2024. On March 20, 2024, the Company announced a special cash dividend of $2.25 per share on the Company’s common stock in addition to the quarterly cash dividend. All stock options that were outstanding at the time of the special dividend were modified to reduce the exercise price pursuant to the nondiscretionary anti-dilution provisions in the related stock-based compensation plan. There was no incremental compensation expense related to the modification. Stock awards/units The following summarizes the nonvested stock awards/units activity under all of the Company’s stock plans:
| Number of Awards/Units |  | Weighted Average Grant Date Fair Value
Nonvested at January 28, 2023 | 2,340,292 |  |  | $ | 17.81 |
Granted | 1,280,124 |  |  | $ | 17.10 |
Vested | (1,458,039) |  |  | $ | 14.51 |
Forfeited | (214,521) |  |  | $ | 20.20 |
Nonvested at February 3, 2024 | 1,947,856 |  |  | $ | 19.56 |
The following summarizes the activity for nonvested performance-based units and nonvested market-based units included in the above:
| Performance-Based Units |  | Market-Based Units
| Number of Units |  | Weighted Average Grant Date Fair Value |  | Number of Units |  | Weighted Average Grant Date Fair Value
Nonvested at January 28, 2023 | 612,627 |  |  | $ | 20.14 |  |  | 946,787 |  |  | $ | 14.75 |
Granted 1 | 340,042 |  |  | $ | 18.14 |  |  | 281,487 |  |  | $ | 12.06 |
Vested 1 | (391,388) |  |  | $ | 20.02 |  |  | (505,494) |  |  | $ | 6.38 |
Forfeited | (184,365) |  |  | $ | 20.34 |  |  | — |  |  | $ | — |
Nonvested at February 3, 2024 | 376,916 |  |  | $ | 18.36 |  |  | 722,780 |  |  | $ | 19.55 |
______________________________________________________________________ 1 As a result of the achievement of certain market-based vesting conditions, there were 145,003 shares that vested in addition to the original target number of market-based shares granted in fiscal 2021. The fair value of each market-based nonvested stock unit was estimated on the grant date using the Monte Carlo simulation. The following assumptions were used for the grants:
|  | Year Ended
Valuation Assumptions |  | Feb 3, 2024 |  | Jan 28, 2023 |  | Jan 29, 2022
Risk-free interest rate |  | 3.7 | % |  | 2.8 | % |  | 0.6 | %
Expected stock price volatility |  | 59.7 | % |  | 71.3 | % |  | 78.4 | %
Expected dividend yield |  | — | % |  | — | % |  | — | %
Expected life of market-based awards |  | 2.7 years |  | 2.7 years |  | 3.5 years
The weighted average grant date fair value for the total nonvested stock awards/units granted was $17.10, $19.74 and $24.21 during fiscal 2024, fiscal 2023 and fiscal 2022, respectively. The total fair value at grant date of previously nonvested stock awards/units that were vested during fiscal 2024, fiscal 2023 and fiscal 2022 was $21.2 million, $14.3 million and $13.2 million, respectively. During fiscal 2024, fiscal 2023 and fiscal 2022, the total intrinsic value of nonvested stock awards/units that vested was $30.9 million, $17.2 million and $15.9 million, respectively. The total intrinsic value of nonvested stock awards/units outstanding and unvested as of February 3, 2024 was $44.5 million. The compensation expense included in SG&A expense recognized during fiscal 2024 was $19.4 million before the recognized income tax benefit of $4.4 million. As of February 3, 2024, there was approximately $21.5 million of total unrecognized compensation cost related to nonvested stock awards/units. This cost is expected to be recognized over a weighted average period of 1.6 years. The excess tax windfall of $0.3 million related to stock award/unit activity was included in cash flows from operating activities for fiscal 2024. ESPP The Company’s ESPP allows qualified employees (as defined) to participate in the purchase of designated shares of the Company’s common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. The ESPP requires participants to hold any shares purchased under the ESPP for a minimum period of six months after purchase. In addition, all Company employees are subject to the terms of the Company’s securities trading policy which generally prohibits the purchase or sale of any Company securities during the two weeks before the end of each fiscal quarter through two days after the public announcement by the Company of its earnings for that period. The Company has 4,000,000 shares of common stock registered under the ESPP. During fiscal 2024, fiscal 2023 and fiscal 2022, 38,127 shares, 45,843 shares and 38,144 shares of the Company’s common stock were issued pursuant to the ESPP at an average price of $13.06, $12.70 and $11.81 per share, respectively. The fair value of stock compensation expense associated with the Company’s ESPP was estimated on the date of grant using the Black-Scholes option-pricing valuation model with the following weighted average assumptions used for grants:
|  | Year Ended
Valuation Assumptions |  | Feb 3, 2024 |  | Jan 28, 2023 |  | Jan 29, 2022
Risk-free interest rate |  | 5.2 | % |  | 2.4 | % |  | 0.0 | %
Expected stock price volatility |  | 40.8 | % |  | 55.4 | % |  | 50.4 | %
Expected dividend yield |  | 5.8 | % |  | 5.3 | % |  | 2.4 | %
Expected life of ESPP options |  | 3 months |  | 3 months |  | 3 months
The weighted average grant date fair value of ESPP options granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $4.38, $4.55 and $5.44, respectively.

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