The Company expenses the fair value of all stock awards over the requisite service period, ensuring that the amount of cumulative stock-based compensation expense recognized at any date is at least equal to the portion of the grant-date fair value of the award that is vested at that date. The Company has elected to adjust stock-based compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize stock-based compensation expense on a straight-line basis for awards that only have a service requirement with multiple vest dates.

The Company has granted the following types of stock awards to employees at management levels and above, each of which are granted under the Company’s stockholder approved stock plans, other than inducement grants outside of the Company’s stockholder approved stock plans in accordance with Nasdaq Listing Rule 5635(c)(4):

ii.

Performance Awards are in the form of restricted stock units and have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. The Performance Awards granted in Fiscal 2023 are subject to a relative total shareholder return (“TSR”) modifier which is based on the Company’s total return to stockholders over the measurement period relative to a custom peer group. The Target Shares earned can range from 50% to 200% (such result, the “Earned Shares”) once minimum thresholds have been reached and depend on the achievement of Adjusted EBITDA and revenue performance measures, for the cumulative period comprised of three-consecutive fiscal years beginning with the fiscal year of the grant date. For Fiscal 2023 Performance Awards, the TSR modifier can result in an adjustment of 75% to 125% of the Earned Shares, subject to an overall cap of 200% and a modifier limitation to 100% in the event TSR is negative. Performance Awards are also subject to limitations under the Company’s stockholder approved stock plans. The applicable percentage of the Target Shares, as determined by performance, vest after the completion of the applicable three-year performance period and upon determination of achievement of the performance measures by the Compensation Committee of the Board of Directors, and unearned Target Shares are forfeited. The fair value of the Performance Awards granted before Fiscal 2023 are based on the closing price of the Company’s common stock on the grant date. For awards granted in Fiscal 2023 which include market conditions, the grant date fair value is based on the Monte Carlo simulation model. Stock-based compensation expense, including awards with market conditions, is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover and adjusted based on the Company’s estimate of the percentage of the aggregate Target Shares expected to be earned. The Company accrues for Performance Awards on a 100% payout unless it becomes probable that the outcome will be significantly different, or the performance can be more accurately measured.

The following table provides a summary of the Company’s stock-based compensation expense, which is included in Selling and administrative expense in the Consolidated Statements of Operations:


(in thousands)	Fiscal 2023			Fiscal 2022			Fiscal 2021
Deferred awards	$	3,491		$	5,744		$	5,683
Performance awards (1)		(87	)		(2,090	)		4,370
Option awards		423			99			103
Total stock-based compensation expense	$	3,827		$	3,753		$	10,156

(1)

Net credit expense for Fiscal 2023 and Fiscal 2022 includes a reduction of the accrual for Performance Awards based on actual and projected results relative to performance measures and forfeitures.

The following table provides a summary of the Deferred Awards activity for Fiscal 2023, Fiscal 2022 and Fiscal 2021.


	Fiscal Year Ended
	February 2, 2024					January 27, 2023					January 28, 2022
(in thousands, except per share amounts)	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Deferred Awards at beginning of year		906		$	16.46		913		$	14.60		1,093		$	10.86
Granted		844			8.53		503			18.09		247			29.90
Vested		(449	)		12.21		(398	)		14.14		(401	)		13.89
Forfeited		(342	)		16.53		(112	)		16.94		(26	)		13.46
Deferred Awards at end of year		959		$	11.44		906		$	16.46		913		$	14.60

Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $6.2 million as of February 2, 2024, which is expected to be recognized ratably over a weighted average period of 2.1 years. The total fair value of Deferred Awards vested during Fiscal 2023 and Fiscal 2022 was $5.5 million and $5.7 million, respectively. Deferred Awards granted to employees during Fiscal 2023 vest over a period of three years.

The following table provides a summary of the Performance Awards activity for Fiscal 2023, Fiscal 2022 and Fiscal 2021:


	Fiscal Year Ended
	February 2, 2024					January 27, 2023					January 28, 2022
(in thousands, except per share amounts)	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Performance Awards at beginning of year		355		$	24.39		436		$	21.15		393		$	18.32
Granted		567			9.74		248			20.65		166			29.95
Change in estimate - performance												42			15.73
Vested		—			—		(270	)		15.73		(165	)		21.90
Forfeited		(315	)		19.68		(59	)		24.39		—			—
Performance Awards at end of year		607		$	13.14		355		$	24.39		436		$	21.15

Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $2.2 million as of Fiscal 2023 which is expected to be recognized ratably over a weighted average period of 2.2 years. The Performance Awards granted to employees during Fiscal 2023 vest, if earned, after completion of the applicable three-year performance period. The fair value for the Performance Awards granted during Fiscal 2023, which includes a relative TSR modifier, was estimated on the grant date using a Monte Carlo simulation with the below noted assumptions:


Monte Carlo Simulation Assumptions
Risk-free interest rate (1)		4.46	%
Expected dividend yield		0.00	%
Expected volatility (2)		78.04	%
Expected term (in years) (3)		2.63
Grant date fair value per share	$	9.74

(1)

The risk-free interest is based on the continuously compounded yield on a zero-coupon U.S. Treasury STRIPS as of the grant date for a period equal to the expected term.

(2)

The expected volatility is estimated based on the historical volatility of the Company’s common stock with a term consistent with the expected term of the performance award.

(3)

The expected term (in years) of the performance award represents the estimated period of time from the grant date to the end of the performance period.

The following table provides a summary of the changes in outstanding Options Awards for Fiscal 2023 and Fiscal 2022.


	Fiscal Year Ended
	February 2, 2024				January 27, 2023
	Option Awards		Weighted Average Exercise Price per Share		Option Awards		Weighted Average Exercise Price per Share
(in thousands, except per share amounts)
Option Awards outstanding at beginning of year		511	$	16.08		343	$	18.66
Granted		—		—		168		10.81
Vested		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Option Awards outstanding at end of year		511	$	16.08		511	$	16.08

The following table provides a summary of information about the Option Awards vested and expected to vest during the contractual term, as well as Option Awards exercisable as of February 2, 2024:


	Option Awards		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
(in thousands, except per share and contractual life amounts)
Option Awards vested and expected to vest		511		3.3	$	16.08		—
Option Awards exercisable		385		1.5	$	17.80		—

Total unrecognized stock-based compensation expense related to Option Awards was approximately $0.7 million as of February 2, 2024, which is expected to be recognized over a weighted average period of 1.8 years.

The grant date fair value of the Option Award granted during Fiscal 2022 was estimated at the grant date using the Black Scholes option pricing model with the following assumptions:


Risk-free interest rate (1)		4.2	%
Expected dividend yield		0.0	%
Expected volatility (2)		75.5	%
Expected term (in years) (3)		6.0
Grant date fair value per share	$	7.44

(1)

The Risk-free interest rate is based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected term of the stock option award.

(2)

The Expected volatility is estimated based on the historical volatility of the Company’s common stock with a term consistent with the expected term of the stock option award.

(3)

The Expected term (in years) of the stock option award represents the estimated period of time until exercise and is calculated using the simplified method. The simplified method was used to calculate the Expected term (in years) as the Company does not have sufficient historical experience exercise data to provide a reasonable basis upon which to estimate the expected term of the Option Award.