v3.3.1.900

Stock-based Compensation | 12 Months Ended
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Jan. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The DSW Inc. 2014 Long-Term Incentive Plan ("the 2014 Plan") provides for the issuance of equity awards to purchase up to 8.5 million DSW Common Shares. The Company began issuing shares under the 2014 Plan after the DSW Inc. 2005 Equity Incentive Plan expired in the second quarter of fiscal 2015. The 2014 Plan covers stock options, RSUs, PSUs, director stock units ("DSUs") and Stock Appreciation Rights ("SARs"). Eligible recipients include key employees of DSW Inc. and affiliates, as well as directors. Options generally vest 20% per year on a cumulative basis. Options granted under the 2014 Plan generally remain exercisable for a period of 10 years from the date of grant. Stock-Based Compensation Expense- The following table summarizes stock-based compensation expense for the periods presented:
| Fiscal
| 2015 |  | 2014 |  | 2013
| (in thousands)
Stock Options | $ | 5,532 |  |  | $ | 5,827 |  |  | $ | 5,891 |
Restricted Stock Units | 2,953 |  |  | 2,097 |  |  | 1,797 |
Performance-Based Restricted Stock Units | 3,979 |  |  | 1,324 |  |  | 503 |
Director Stock Units | 1,037 |  |  | 1,247 |  |  | 1,151 |
Total | $ | 13,501 |  |  | $ | 10,495 |  |  | $ | 9,342 |
Stock Options- The majority of the stock-based compensation awards are granted on an annual basis in the first quarter of each year. The risk-free interest rate is based on the yield for U.S. Treasury securities for the expected term of the options at the grant date. Expected volatility is based on the historical volatility of the DSW Inc. Common Shares. The expected term of options granted is derived from historical data on DSW Inc.'s stock option exercises. The dividend yield assumption is based on DSW Inc.'s expectation of future dividend payouts. Forfeitures of options are estimated at the grant date based on historical rates of DSW Inc.’s stock option activity and reduce the compensation expense recognized. The following table illustrates the weighted-average assumptions used in the Black-Scholes pricing model for options granted in each of the periods presented:
| Fiscal
Assumptions: | 2015 |  | 2014 |  | 2013
Risk-free interest rate | 1.4% |  | 1.8% |  | 0.7%
Annual volatility of DSW Common Shares | 37.9% |  | 44.5% |  | 53.4%
Expected option term | 5.1 years |  | 5.4 years |  | 4.7 years
Dividend yield | 2.1% |  | 2.3% |  | 1.3%
Other Data: |  |  |  |  |
Weighted average grant date fair value | $8.87 |  | $11.82 |  | $12.85
As of January 30, 2016, the total compensation cost related to unvested options not yet recognized was approximately $14.5 million, with a weighted average expense recognition period remaining of 2.2 years. For the periods presented, the following tables summarize stock option activity, related per share weighted average exercise prices (“WAEP”), weighted average remaining contract life and aggregate intrinsic value (shares and intrinsic value in thousands):
| Fiscal
| 2015 |  | 2014 |  | 2013
| Shares |  | WAEP |  | Shares |  | WAEP |  | Shares |  | WAEP
Outstanding beginning of year | 3,156 |  |  | $ | 20.91 |  |  | 3,347 |  |  | $ | 17.62 |  |  | 3,694 |  |  | $ | 14.50 |
Granted | 1,395 |  |  | $ | 32.47 |  |  | 502 |  |  | $ | 34.49 |  |  | 492 |  |  | $ | 31.75 |
Exercised | (539 | ) |  | $ | 13.83 |  |  | (505 | ) |  | $ | 10.22 |  |  | (748 | ) |  | $ | 10.99 |
Forfeited | (163 | ) |  | $ | 33.34 |  |  | (188 | ) |  | $ | 27.32 |  |  | (91 | ) |  | $ | 21.79 |
Outstanding end of year | 3,849 |  |  | $ | 25.56 |  |  | 3,156 |  |  | $ | 20.91 |  |  | 3,347 |  |  | $ | 17.62 |
Options exercisable end of year | 2,007 |  |  | $ | 20.35 |  |  | 1,682 |  |  | $ | 15.16 |  |  | 1,430 |  |  | $ | 13.08 |
As of January 30, 2016 |  | Shares |  | WAEP |  | Weighted Average Remaining Contract Life |  | Aggregate Intrinsic Value
Options exercisable |  | 2,007 |  |  | $ | 20.35 |  |  | 3.3 years |  | $ | 12,905 |
Options expected to vest |  | 1,639 |  |  | $ | 31.26 |  |  | 8.7 years |  | 612 |
Options vested and expected to vest |  | 3,646 |  |  | $ | 25.25 |  |  | 5.7 years |  | $ | 13,517 |
Year of Grant |  | Range of Exercise Prices |  | Weighted Average Remaining Contract Life |  | Options Outstanding |  | Options Exercisable
| Min |  | Max |  |  | Options Outstanding |  | WAEP |  | Aggregate Intrinsic Value (1) |  | Options Exercisable |  | WAEP |  | Aggregate Intrinsic Value (1)
2006 - expire 2016 |  | $ | 12.93 |  |  | $ | 14.50 |  |  | 0.6 years |  | 92 |  |  | $ | 12.98 |  |  | $ | 1,019 |  |  | 93 |  |  | $ | 12.98 |  |  | $ | 1,020 |
2007 - expire 2017 |  | $ | 18.57 |  |  | $ | 19.94 |  |  | 1.2 years |  | 297 |  |  | $ | 19.84 |  |  | 1,241 |  |  | 297 |  |  | $ | 19.84 |  |  | 1,241 |
2008 - expire 2018 |  | $ | 6.01 |  |  | $ | 9.15 |  |  | 2.2 years |  | 165 |  |  | $ | 6.20 |  |  | 2,941 |  |  | 165 |  |  | $ | 6.20 |  |  | 2,941 |
2009 - expire 2019 |  | $ | 4.65 |  |  | $ | 7.00 |  |  | 3.2 years |  | 136 |  |  | $ | 4.79 |  |  | 2,607 |  |  | 136 |  |  | $ | 4.79 |  |  | 2,607 |
2010 - expire 2020 |  | $ | 12.34 |  |  | $ | 12.38 |  |  | 4.2 years |  | 330 |  |  | $ | 12.37 |  |  | 3,843 |  |  | 330 |  |  | $ | 12.37 |  |  | 3,843 |
2011 - expire 2021 |  | $ | 17.43 |  |  | $ | 22.71 |  |  | 5.1 years |  | 253 |  |  | $ | 17.44 |  |  | 1,662 |  |  | 191 |  |  | $ | 17.44 |  |  | 1,253 |
2012 - expire 2022 |  | $ | 26.66 |  |  | $ | 27.18 |  |  | 4.7 years |  | 466 |  |  | $ | 26.67 |  |  | — |  |  | 331 |  |  | $ | 26.66 |  |  | — |
2013 - expire 2023 |  | $ | 31.68 |  |  | $ | 31.68 |  |  | 5.1 years |  | 361 |  |  | $ | 31.68 |  |  | — |  |  | 219 |  |  | $ | 31.68 |  |  | — |
2014 - expire 2024 |  | $ | 29.74 |  |  | $ | 37.88 |  |  | 6.9 years |  | 433 |  |  | $ | 34.53 |  |  | — |  |  | 151 |  |  | $ | 35.41 |  |  | — |
2015 - expire 2025 |  | $ | 23.21 |  |  | $ | 37.50 |  |  | 8.9 years |  | 1,316 |  |  | $ | 32.17 |  |  | 298 |  |  | 94 |  |  | $ | 37.50 |  |  | — |
Total |  | $ | 4.65 |  |  | $ | 37.88 |  |  | 5.9 years |  | 3,849 |  |  | $ | 25.56 |  |  | $ | 13,611 |  |  | 2,007 |  |  | $ | 20.35 |  |  | $ | 12,905 |
(1) The aggregate intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option at year end. A zero value reflects an exercise price above the closing market price of DSW Class A Common Shares for fiscal 2015. The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the option exercise price. The total intrinsic value of options exercised during fiscal 2015, 2014 and 2013 was $8.9 million, $11.9 million and $20.9 million, respectively. The total fair value of options that vested during fiscal 2015, 2014 and 2013 was $3.7 million, $2.5 million and $3.8 million, respectively. Restricted Stock Units ("RSUs")- Beginning in fiscal 2013, RSUs granted generally cliff vest over three years, and prior to fiscal 2013, RSUs granted cliff vest over four years. RSUs receive dividend equivalents in the form of additional RSUs, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of RSUs is based on the closing market price of DSW Class A Common Shares on the date of the grant. The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the exercise price. The total intrinsic value of RSUs that vested during fiscal 2015, 2014 and 2013 was $3.5 million, $3.7 million and $4.0 million, respectively. The total fair value of RSUs that vested during fiscal 2015, 2014 and 2013 was $2.0 million, $1.4 million and $0.7 million, respectively. As of January 30, 2016, the total compensation cost related to nonvested RSUs not yet recognized was approximately $7.0 million with a weighted average expense recognition period remaining of 1.7 years. The exercise price for all RSUs is zero. For the periods presented, the following tables summarize RSU activity, weighted average grant date fair value (“GDFV”) and aggregate intrinsic value (units and intrinsic value in thousands):
| Fiscal
| 2015 |  | 2014 |  | 2013
| Units |  | GDFV |  | Units |  | GDFV |  | Units |  | GDFV
Outstanding at beginning of year | 320 |  |  | $ | 29.21 |  |  | 377 |  |  | $ | 23.41 |  |  | 436 |  |  | $ | 15.39 |
Granted | 199 |  |  | $ | 30.54 |  |  | 103 |  |  | $ | 34.53 |  |  | 92 |  |  | $ | 35.50 |
Vested | (115 | ) |  | $ | 21.32 |  |  | (114 | ) |  | $ | 14.11 |  |  | (136 | ) |  | $ | 5.51 |
Forfeited | (32 | ) |  | $ | 32.99 |  |  | (46 | ) |  | $ | 29.55 |  |  | (15 | ) |  | $ | 29.46 |
Outstanding at end of year | 372 |  |  | $ | 31.83 |  |  | 320 |  |  | $ | 29.21 |  |  | 377 |  |  | $ | 23.41 |
|  |  |  |  |  | Weighted Average |  | Aggregate
|  |  |  |  |  | Remaining |  | Intrinsic
As of January 30, 2016 |  | Units |  | GDFV |  | Contract Life |  | Value
RSUs expected to vest |  | 307 |  |  | $ | 31.78 |  |  | 1.3 years |  | $ | 7,373 |
Performance-Based Restricted Stock Units ("PSUs")- The Company began granting PSUs in fiscal 2013. These awards cliff vest at the end of a three-year period based upon achievement of pre-established goals as of the end of the first year of the term. PSUs receive dividend equivalents in the form of additional PSUs, which are subject to the same restrictions and forfeiture provisions as the original award. Consistent with RSUs, the grant date fair value of PSUs is based on the closing market price of DSW Class A Common Shares on the date of grant. The total intrinsic value of PSUs that vested during fiscal 2015 was $1.8 million. The total fair value of PSUs that vested during fiscal 2015 was $1.7 million. As of January 30, 2016, the total compensation cost related to nonvested PSUs not yet recognized was approximately $4.0 million with a weighted average expense recognition period remaining of 2.1 years. The weighted average exercise price for all PSUs is zero. For the periods presented, the following tables summarize PSU activity, GDFV and aggregate intrinsic value (units and intrinsic value in thousands):
| Fiscal
| 2015 |  | 2014 |  | 2013
| Units |  | GDFV |  | Units |  | GDFV |  | Units |  | GDFV
Outstanding beginning of year | 173 |  |  | $ | 33.50 |  |  | 69 |  |  | $ | 31.76 |  |  | — |  |  | $ | — |
Granted | 208 |  |  | $ | 33.30 |  |  | 111 |  |  | $ | 34.52 |  |  | 69 |  |  | $ | 31.76 |
Vested | (75 | ) |  | $ | 22.80 |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Forfeited | (13 | ) |  | $ | 35.16 |  |  | (7 | ) |  | $ | 32.74 |  |  | — |  |  | $ | — |
Outstanding end of year | 293 |  |  | $ | 28.70 |  |  | 173 |  |  | $ | 33.50 |  |  | 69 |  |  | $ | 31.76 |
|  |  |  |  |  | Weighted Average |  | Aggregate
|  |  |  |  |  | Remaining |  | Intrinsic
As of January 30, 2016 |  | Units |  | GDFV |  | Contract Life |  | Value
PSUs expected to vest |  | 253 |  |  | $ | 28.70 |  |  | 1.2 years |  | $ | 6,080 |
Director Stock Units- The Company issues stock units to directors who are not employees. Stock units are automatically granted to each non-employee director on the date of each annual meeting of shareholders based on the closing market price of DSW Class A Common Shares. In addition, each director eligible to receive compensation for board service may elect to have the cash portion of such directors’ compensation paid in the form of stock units. Stock units granted to directors vest immediately and are settled upon the director terminating service from the board. For grants beginning in fiscal 2012, directors were given the option to exercise their units at a specified point in the future or upon completion of service. Stock units granted to directors, which are not subject to forfeiture, are considered to be outstanding for the purposes of computing basic earnings per share. The exercise price of the director stock units is zero. The following table summarizes director stock unit activity (units in thousands):
| Fiscal
| 2015 |  | 2014 |  | 2013
Outstanding beginning of year | 360 |  |  | 330 |  |  | 316 |
Granted | 40 |  |  | 52 |  |  | 34 |
Exercised | (95 | ) |  | (22 | ) |  | (20 | )
Outstanding end of year | 305 |  |  | 360 |  |  | 330 |
Executive Equity Modification- On November 3, 2015, DSW announced that the Chief Executive Officer of the Company would retire, effective December 31, 2015. In connection with the retirement, DSW entered into a Retirement and Consulting Agreement, which stated that the executive will receive accelerated vesting of outstanding RSUs, PSUs and stock options. Per ASC Topic 718, Stock Compensation, this acceleration caused a change in the terms or conditions of the share-based payment award and was thus considered a modification. Per ASC Topic 718-10-35-3, a modification of the terms or conditions of an equity award shall be treated as an exchange of the original award for a new award. The effects of a modification should be measured as follows: (a) incremental compensation cost shall be measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, (b) total recognized compensation cost for an equity award shall at least equal the fair value of the award at the grant date unless at the date of the modification the performance or service conditions of the original award are not expected to be satisfied, and (c) a change in compensation cost for an equity award measured at intrinsic value shall be measured by comparing the intrinsic value of the modified award, if any, with the intrinsic value of the original award, if any, immediately before the modification. The modification resulted in a benefit of less than $0.1 million. Stock Appreciation Rights ("SARs")- The 2014 Plan also covers the issuance of SARs. DSW Inc. entered into a SARs agreement with a non-employee on June 16, 2014, wherein DSW Inc. granted a total of 0.5 million SARs in two equal tranches with respect to DSW Class A Common Shares. On April 16, 2015, DSW Inc. provided notice of termination of the agreement with the non-employee resulting in an acceleration of the vesting of the SARs, as outlined in the agreement, and the SARs remain exercisable until June 2016. DSW Inc. will value the SARs at fair value until the expiration or exercise date. During fiscal 2015 and 2014, DSW recorded a benefit of $1.1 million and expense of $1.7 million, respectively. As of January 30, 2016 and January 31, 2015, the net liability was $0.6 million and $1.7 million, respectively. The fair value of the SARs was estimated using the Black-Scholes pricing model with the following assumptions for the periods presented:
Assumptions: | As of January 30, 2016 |  | As of January 31, 2015
Risk-free interest rate | 0.4% |  | 0.6%
Expected volatility of DSW Common Shares | 33.0% |  | 24.9%
Expected term | 0.4 years |  | 2.3 years
Expected dividend yield | 2.5% |  | 2.3%

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51659978&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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