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Stock-Based Compensation

3 Months Ended

Apr. 29, 2017

Share-based Compensation [Abstract]

Stock-Based Compensation

Note 5 - Stock-Based Compensation

Stock-based compensation includes stock options, cash-settled stock appreciation rights (SARs) and restricted stock awards. Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our employee stock purchase plan. Stock-based compensation expense for the employee stock purchase plan was $11,000 before the income tax benefit of $4,000 and $13,000 before the income tax benefit of $5,000 for the thirteen weeks ended April 29, 2017, and April 30, 2016, respectively.

No stock options have been granted since fiscal 2008. All outstanding options had vested as of the end of fiscal 2011; therefore no unrecognized compensation expense remains.

The following table summarizes the stock option transactions pursuant to our 2000 Stock Option and Incentive Plan (the “2000 Plan”):

		Number of Shares				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (Years)				Aggregate Intrinsic Value (in thousands)
Outstanding at January 28, 2017			7,000			$	7.63
Granted			0
Forfeited or expired			0
Exercised			(3,500	)			7.63
Outstanding and exercisable at April 29, 2017			3,500			$	7.63				0.73			$	62

The following table summarizes information regarding options exercised:

(In thousands)		Thirteen Weeks Ended April 29, 2017				Thirteen Weeks Ended April 30, 2016

Total intrinsic value ⁽¹⁾		$	57			$	0
Total cash received		$	26			$	0

(1) Defined as the difference between the market value at exercise and the grant price of stock options exercised.

The following section summarizes the restricted stock transactions pursuant to the 2000 Plan:

		Number of Shares				Weighted- Average Grant Date Fair Value
Restricted stock at January 28, 2017			964,858			$	22.63
Granted			258,120				24.37
Vested			(28,940	)			24.32
Forfeited or expired			(145,419	)			17.45
Restricted stock at April 29, 2017			1,048,619			$	23.73

The weighted-average grant date fair value of stock awards granted during the thirteen week periods ended April 29, 2017 and April 30, 2016 was $24.37 and $24.94, respectively. The total fair value at grant date of restricted stock awards that vested during the first three months of fiscal 2017 was $704,000. The total fair value at grant date of restricted stock awards that vested during the first three months of fiscal 2016 was $777,000. Of the 145,419 shares of restricted stock that were forfeited or that expired in the first quarter of fiscal 2017, 135,000 shares were restricted stock awards that expired unvested, as the performance measures were not achieved. These awards represented the three tiers of the restricted stock awards granted on March 15, 2011.

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards:

(In thousands)		Thirteen Weeks Ended April 29, 2017				Thirteen Weeks Ended April 30, 2016
Stock-based compensation expense before the recognized income tax benefit		$	11			$	489
Income tax benefit		$	4			$	187

The $11,000 of expense recognized in the first three months of fiscal 2017 was comprised of compensation expense of $927,000, partially offset by income of $916,000. The income was attributable to the reversal of the cumulative prior period expense for performance-based awards, which were deemed by management as being no longer probable to vest prior to their expiration.

As of April 29, 2017, approximately $7.1 million of unrecognized compensation expense remained related to both our performance-based and service-based restricted stock awards. The cost is expected to be recognized over a weighted average period of approximately 1.9 years. This incorporates our current assumptions with respect to the estimated requisite service period required to achieve the designated performance conditions for performance-based stock awards.

The following table summarizes the SARs activity:

				Number of Shares				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (Years)
	Outstanding at January 28, 2017				111,300			$	24.26
	Forfeited				0				0.00
	Exercised				0				0.00
	Outstanding at April 29, 2017				111,300			$	24.26				2.9
	Exercisable at April 29, 2017				64,741			$	24.26				2.9

SARs were granted during the first quarter of fiscal 2015 to certain non-executive employees, such that one-third of the shares underlying the SARs will vest and become fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a five-year term from the date of grant, after which any unexercised SARs will expire. Each SAR entitles the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our common stock on the date of exercise less the exercise price, with a maximum amount of gain defined. The SARs granted during the first quarter of fiscal 2015 were issued with a defined maximum gain of $10.00 over the exercise price of $24.26.

The fair value of these liability awards are remeasured, using a trinomial lattice model, at each reporting period until the date of settlement. Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. The weighted-average fair value of outstanding, non-vested SAR awards as of April 29, 2017 and April 30, 2016 was $4.50 and $4.57, respectively.

The fair value was estimated using a trinomial lattice model with the following assumptions:

		April 29, 2017				April 30, 2016
Risk free interest rate yield curve			0.68% - 1.81	%			0.16% - 1.28	%
Expected dividend yield			1.1	%			1.0	%
Expected volatility			34.61	%			36.13	%
Maximum life			2.9 Years				3.9 Years
Exercise multiple			1.34				1.34
Maximum payout		$	10.00			$	10.00
Employee exit rate			2.2% - 9.0	%			2.2% - 9.0	%

The risk free interest rate was based on the U.S. Treasury yield curve in effect at the end of the reporting period. The expected dividend yield was based on our historical quarterly cash dividends, with the assumption that quarterly dividends would continue at that rate. Expected volatility was based on the historical volatility of our common stock. The exercise multiple and employee exit rate were based on historical option data.

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)		Thirteen Weeks Ended April 29, 2017				Thirteen Weeks Ended April 30, 2016
Stock-based compensation expense before the recognized income tax benefit		$	24			$	140
Income tax benefit		$	9			$	53

As of April 29, 2017, approximately $71,000 in unrecognized compensation expense remained related to non-vested SARs. This expense is expected to be recognized over a weighted-average period of approximately 0.9 years.