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Stock-Based Compensation | 6 Months Ended
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Aug. 02, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | NOTE 6. STOCK-BASED COMPENSATION The Company expenses the fair value of all stock awards over their 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): • Deferred Awards are in the form of restricted stock units and only require each recipient to complete a service period for the awards to be earned. Deferred Awards generally vest over three years. The fair value of Deferred Awards is based on the closing price of the Company’s common stock on the grant date. Stock-based compensation expense is recognized ratably over the service period and is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. • Performance Awards are in the form of restricted stock units and have, in addition to a service requirement, financial performance criteria and/or stock performance criteria that must be achieved for the awards to be earned. For the Performance Awards granted in Fiscal 2024, a portion have financial performance criteria and a portion have stock performance criteria. Certain Performance Awards granted in Fiscal 2024 vest up to 100% of the specified number of shares, contingent upon the Company’s common stock achieving a specified average per share closing stock price over a specified number of trading days, and other Performance Awards granted in Fiscal 2024 vest based on financial performance criteria. For Performance Awards with financial performance criteria, 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 certain financial measures for the cumulative period comprised of three-consecutive fiscal years beginning with the fiscal year of the grant date. The Performance Awards granted in Fiscal 2023 are also 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 Fiscal 2023 Performance Award TSR modifier can result in an adjustment of 75% to 125% of the Earned Shares, subject to an overall cap of 200% of Target Shares and a modifier limitation to 100% of Target Shares in the event TSR is negative. For Fiscal 2024 Performance Awards with stock performance criteria, the Target Shares earned can range from 0% to 100% based on the Company’s highest average per share common stock closing stock price measured over any 20 consecutive trading-day period for the cumulative period comprised of three-consecutive fiscal years beginning with the fiscal year of the grant date. 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 financial performance or stock price 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 prior to Fiscal 2023, as well as the portion of the Fiscal 2024 Performance Awards with financial performance criteria, are based on the closing price of the Company’s common stock on the grant date. For the portion of the Performance Awards granted in Fiscal 2024 with stock performance criteria and the Performance Awards granted in Fiscal 2023 with a relative TSR modifier, 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 u nless it becomes probable that the outcome will be significantly different, or the performance can be accurately measured. • Option Awards provide the recipient with the option to purchase a set number of shares at a stated exercise price over the term of the contract, which is ten years for all Option Awards currently outstanding. Options are granted with a strike price equal to the stock price on the date of grant and vest over the requisite service period of the award. The fair value of each Option Award is estimated on the grant date using the Black-Scholes option pricing model. The following table provides a summary of the Company’s stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations:
|  | 13 Weeks Ended |  |  | 26 Weeks Ended |
(in thousands) |  | August 2, 2024 |  |  | July 28, 2023 |  |  | August 2, 2024 |  |  | July 28, 2023 |
Deferred awards |  | $ | 943 |  |  | $ | 1,242 |  |  | $ | 1,865 |  |  | $ | 2,221 |
Performance awards (1) |  |  | 385 |  |  |  | (536 | ) |  |  | 585 |  |  |  | (536 | )
Option awards |  |  | 104 |  |  |  | 104 |  |  |  | 208 |  |  |  | 208 |
Total stock-based compensation expense |  | $ | 1,432 |  |  | $ | 810 |  |  | $ | 2,658 |  |  | $ | 1,893 |
(1) Net credit expense for the 13 and 26 weeks ended July 28, 2023 includes a reduction of the accrual for Performance Awards based on actual and projected results relative to performance measures. Deferred Awards The following table provides a summary of the Deferred Awards activity for the 26 weeks ended August 2, 2024:
|  | Deferred Awards |
(in thousands, except per share amounts) |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value per Share |
Unvested Deferred Awards as of February 2, 2024 |  |  | 959 |  |  | $ | 11.44 |
Granted |  |  | 307 |  |  |  | 11.34 |
Vested |  |  | (250 | ) |  |  | 14.78 |
Forfeited or expired |  |  | (75 | ) |  |  | 10.97 |
Unvested Deferred Awards as of August 2, 2024 |  |  | 941 |  |  | $ | 10.56 |
Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $7.0 million as of August 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 the 26 weeks ended August 2, 2024 and July 28, 2023 was $3.7 million and $5.1 million, respectively. The Deferred Awards granted to employees during the 26 weeks ended August 2, 2024 vest over a period of three years. Performance Awards The following table provides a summary of the Performance Awards activity for the 26 weeks ended August 2, 2024:
|  | Performance Awards |
(in thousands, except per share amounts) |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value per Share |
Unvested Performance Awards as of February 2, 2024 |  |  | 607 |  |  | $ | 13.14 |
Granted |  |  | 264 |  |  |  | 10.30 |
Change in estimate - performance |  |  | (57 | ) |  |  | 29.95 |
Vested |  |  | — |  |  |  | — |
Forfeited or expired |  |  | (23 | ) |  |  | 12.87 |
Unvested Performance Awards as of August 2, 2024 |  |  | 791 |  |  | $ | 11.00 |
Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $3.7 million as of August 2, 2024 which is expected to be recognized ratably over a weighted average period of 2.2 years. The Performance Awards granted to employees during the 26 weeks ended August 2, 2024 vest, if earned, after completion of the applicable three-year performance period. Option Awards The following table provides a summary of the Option Awards activity for the 26 weeks ended August 2, 2024:
|  | Option Awards |
(in thousands, except per share amounts) |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value per Share |
Option Awards outstanding as of February 2, 2024 |  |  | 511 |  |  | $ | 16.08 |
Granted |  |  | — |  |  |  | — |
Exercised |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Expired |  |  | (294 | ) |  |  | 18.10 |
Option Awards outstanding as of August 2, 2024 |  |  | 217 |  |  | $ | 13.34 |
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 August 2, 2024:
(in thousands, except contractual life and exercise price amounts) |  | Option Awards |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |
Option Awards vested and expected to vest |  |  | 217 |  |  |  | 7.02 |  |  | $ | 13.34 |  |  | $ | 854 |
Option Awards exercisable |  |  | 91 |  |  |  | 5.30 |  |  | $ | 16.84 |  |  | $ | 213 |
Total unrecognized stock-based compensation expense related to Option Awards expected to vest was approximately $0.5 million as of August 2, 2024, which is expected to be recognized over a weighted average period of 1.3 years.

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