(8) Stockholders’ Equity

Repurchases of common stock

On April 10, 2017, the Company’s Board of Directors approved a program that authorized the purchase of up to $25.0 million in shares of the Company’s common stock. During the second and third quarters of 2017, the Company repurchased 1,201,000 shares of its common stock in the open market at an aggregate cost of $25.0 million. As of February 3, 2018, there were no additional shares which could be repurchased under the 2017 repurchase program. On March 16, 2018, the Board of Directors approved the 2018 repurchase program that authorized the purchase of another $25.0 million in shares of the Company’s common stock.

Dividends

In fiscal 2017, the Company paid four quarterly dividends: $0.06 per common share on March 14, 2017, and $0.08 per common share on June 13, 2017, September 12, 2017 and December 12, 2017. In fiscal 2016, the Company paid four quarterly dividends of $0.06 per common share on March 15, 2016, June 14, 2016, September 13, 2016 and December 13, 2016. On February 13, 2018, the Company’s Board of Directors declared a dividend of $0.08 per common share, which was paid on March 20, 2018 to stockholders of record as of March 6, 2018. Any determination to declare and pay cash dividends for future quarters will be made by the Board of Directors.

Stock-Based Compensation

On April 6, 2012, the Company adopted the Citi Trends, Inc. 2012 Incentive Plan (the “2012 Plan”), which became effective upon approval by the Company’s stockholders on May 23, 2012. The 2012 Plan is a successor plan to the 2005 Citi Trends, Inc. Long-Term Incentive Plan (the “2005 Plan”), which became effective upon the consummation of the Company’s initial public offering in May 2005.

The 2005 Plan provided for the grant of incentive and nonqualified options, nonvested restricted stock and other forms of stock-based compensation to key employees and directors. The 2012 Plan provides for the grant of incentive and nonqualified options, nonvested restricted stock and other forms of stock-based and cash-based compensation to key employees and directors.

Shares of time-based nonvested restricted stock granted to employees vest in either equal installments over three or four years from the date of grant, or over three years at 25% on the first and second anniversaries and 50% on the third anniversary. Shares issued to directors vest one year from the date of grant. The Company records compensation expense for grants of time-based nonvested restricted stock on a straight line basis over the requisite service period of the stock recipients which is equal to the vesting period of the stock. Total compensation cost for such stock is calculated based on the closing market price on the date of grant multiplied by the number of shares granted. The Company expects to recognize $2.2 million in future compensation expense from the grants of time-based restricted stock over the requisite service period of up to three years. Compensation costs for grants of performance-based restricted stock units (“RSUs”) are recorded in full on the date of grant using a lattice model to estimate fair market value. During fiscal 2017, 2016 and 2015, compensation expense arising from time-based nonvested restricted stock grants and performance-based RSUs totaled $1.6 million, $2.9 million and $4.1 million, respectively.

A summary of activity related to time-based nonvested restricted stock grants during fiscal year 2017 is as follows:


	Nonvested	Weighted Average
	Restricted	Grant Date
	Shares	Fair Value
Outstanding as of January 28, 2017	217,968	$	18.89
Granted	118,676		18.71
Vested	(132,133)		16.20
Forfeited	(31,303)		19.11
Outstanding as of February 3, 2018	173,208	$	19.02

In March 2017, the Company granted 23,551 RSUs to two employees. The RSUs had performance vesting criteria which were based upon the closing price of the Company’s stock achieving certain thresholds. The shares vest 25% upon achieving a closing stock price for a 20 consecutive day period of $19.10; $21.70; $24.30; and $26.90, respectively. The awards expire three years from the date of grant. On the date of grant, the Company expensed $306,000 which was the estimated fair market value. One of the two employees resigned after the date of grant and forfeited their shares. Three of these thresholds were achieved in 2017.

In March 2016, the Company granted 24,816 RSUs to two employees. The RSUs had performance vesting criteria which were based upon the closing price of the Company’s stock achieving certain thresholds. The shares vest 25% upon achieving a closing stock price for a 20 consecutive day period of $20.75; $23.50; $26.25; and $29.00, respectively. The awards expire three years from the date of grant. On the date of grant, the Company expensed $238,000 which was the estimated fair market value. Three of these thresholds were achieved in 2017.

In March 2015, the Company granted 16,823 RSUs to two employees. The RSUs had performance vesting criteria which were based upon the closing price of the Company’s stock achieving certain thresholds. The shares vest 25% upon achieving a closing stock price for a 20 consecutive day period of $27.00; $29.25; $31.50; and $33.50, respectively. The awards expire three years from the date of grant. On the date of grant, the Company expensed $331,000 which was the estimated fair market value. None of the thresholds were achieved in 2015, 2016 or 2017.

In fiscal 2016 and 2015, tax deductions in excess of cumulative compensation cost resulting from vestings of restricted shares (“excess tax benefits”) were recorded in additional paid-in-capital and classified as financing cash flows in the Company’s consolidated statements of cash flows. Such increases in excess tax benefits amounted to $0.2 million and $1.3 million in fiscal 2016 and 2015, respectively. Beginning in fiscal 2017, following the implementation of ASU No. 2016-09, such income tax benefits or deficiencies are being recorded as a component of income tax expense in the Company’s consolidated statement of operations. In fiscal 2017, such amount was a $70,000 benefit to income tax expense.