STOCK-BASED COMPENSATION

The Company generally grants time vesting stock awards ("Deferred Awards") and performance-based stock awards ("Performance Awards") to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest over one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest in addition to a service period requirement. With the approval of the Board's Compensation Committee, the Company may settle vested Deferred Awards and Performance Awards to the employee in shares, in a cash amount equal to the market value of such shares at the time all requirements for delivery of the award have been met, or in part shares and cash.

For Performance Awards issued during Fiscal 2016 and Fiscal 2017, an employee may earn from 0% to 200% of their Target Shares based on the achievement of cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, and adjusted return on invested capital achieved at the end of the performance period. For Performance Awards issued during Fiscal 2018 (the “2018 Performance Awards”), an employee may earn from 0% to 250% of their Target Shares based on the cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, adjusted ROIC achieved as of the end of the performance period, and the ranking of our adjusted ROIC relative to that of companies in our peer group as of the end of the performance period. The Performance Awards cliff vest, if earned, after completion of the applicable three year performance period. The fair value of the Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the Company's estimate of the percentage of the aggregate Target Shares expected to be earned.

The following table summarizes the Company’s stock-based compensation expense:



	Fiscal Year Ended
	February 2, 2019		February 3, 2018		January 28, 2017
	(In thousands)
Deferred Awards	$	12,849	$	11,891	$	8,906
Performance Awards	14,566		18,906		19,134
Total stock-based compensation expense⁽¹⁾	$	27,415	$	30,797	$	28,040

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(1) A portion of stock-based compensation is included in cost of sales. Approximately $3.5 million, $4.0 million, and $3.6 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively, were included in cost of sales. All other stock-based compensation is included in selling, general, and administrative expense.

The Company recognized a tax benefit related to stock-based compensation expense of $7.2 million, $8.2 million, and $11.1 million for Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively.

At February 2, 2019, the Company had 756,502 shares available for grant under the Equity Plan.

Changes in the Company’s Unvested Stock Awards during Fiscal 2018, Fiscal 2017, and Fiscal 2016

Deferred Awards



	Fiscal Year Ended
	February 2, 2019				February 3, 2018				January 28, 2017
	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
	(in thousands)				(in thousands)				(in thousands)
Unvested Deferred Awards at beginning of year	420		$	82.30	469		$	61.19	473		$	54.62
Granted	135		124.21		212		110.17		189		72.19
Vested	(197	)	75.65		(202	)	62.30		(163	)	54.35
Forfeited	(59	)	110.63		(59	)	83.25		(30	)	63.88
Unvested Deferred Awards at end of year	299		$	99.98	420		$	82.30	469		$	61.19

Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $15.8 million as of February 2, 2019, which will be recognized over a weighted average period of approximately 1.8 years.

The fair value of Deferred Awards held by the Company's employees that vested during Fiscal 2018, Fiscal 2017, and Fiscal 2016 was approximately $25.3 million, $23.6 million, and $12.2 million, respectively.

Performance Awards



	Fiscal Year Ended
	February 2, 2019					February 3, 2018				January 28, 2017
	Number of Performance Shares⁽¹⁾			Weighted Average Grant Date Fair Value		Number of Performance Shares⁽¹⁾		Weighted Average Grant Date Fair Value		Number of Performance Shares⁽¹⁾		Weighted Average Grant Date Fair Value
	(in thousands)					(in thousands)				(in thousands)
Unvested Performance Awards at beginning of year	544			$	84.11	515		$	68.11	375		$	61.37
Granted	87			123.02		172		113.76		204		75.19
Shares earned in excess of target	347		203	70.09		203		50.97		—		—
Vested shares, including shares earned in excess of target	(513	)		70.09		(301	)	50.97		(54	)	48.26
Forfeited	(113	)		114.06		(45	)	86.80		(10	)	67.11
Unvested Performance Awards at end of year	352			$	90.66	544		$	84.11	515		$	68.11

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(1)For those awards for which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period.

For those awards in which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100%; however, the cumulative expense recognized reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, and adjusted return on invested capital as they occur. Based on the current number of Performance Awards expected to be earned, the total unrecognized stock-based compensation expense related to unvested Performance Awards approximated $9.6 million as of February 2, 2019, which will be recognized over a weighted average period of approximately 1.2 years.

The fair value of Performance Awards held by the Company's employees that vested during Fiscal 2018, Fiscal 2017, and Fiscal 2016 was approximately $69.2 million, $49.1 million, and $4.4 million, respectively.

Stock Options

No stock options were issued during Fiscal 2018, Fiscal 2017, and Fiscal 2016 and at February 2, 2019, there were no stock options outstanding.