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Stock-Based Compensation | 12 Months Ended
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Jan. 28, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-Based Compensation | Note 7 — Stock-Based Compensation Stock-based compensation — Stock-based compensation includes stock option grants, restricted stock unit grants, and other transactions under the Company’s equity plans. Total stock-based compensation expense (a component of compensation and benefits) was approximately $3.2 million, $3.8 million and $2.8 million for fiscal years 2016, 2015 and 2014, respectively. Included in stock-based compensation expense for fiscal 2015 is approximately $600,000 of stock-based compensation expense that resulted from the accelerated vesting of stock options and restricted stock units upon the retirement of the Company’s former Chief Executive Officer. On June 4, 2013, the Company adopted the Kirkland’s, Inc. Amended and Restated 2002 Equity Incentive Plan (the “2002 Plan”), replacing the plan adopted in July 2002. The 2002 Plan provides for the award of restricted stock, restricted stock units (“RSUs”), incentive stock options, non-qualified stock options and stock appreciation rights with respect to shares of common stock to employees, directors, consultants and other individuals who perform services for the Company. The 2002 Plan is authorized to provide awards for up to a maximum of 3,500,000 shares of common stock. As of January 28, 2017, options to purchase 1,191,568 shares of common stock were outstanding under the 2002 Plan at exercise prices ranging from $1.11 to $25.52 per share. As of January 28, 2017, there were 244,654 RSUs outstanding under the 2002 Plan with fair value grant prices ranging from $13.38 to $25.52 per share. Shares reserved for future stock-based grants under the 2002 Plan approximated 873,243 at January 28, 2017. Stock options — The Company allows for the settlement of vested stock options on a net share basis (“net settled stock options”), instead of settlement with a cash payment (“cash settled stock options”), if so desired by the holder. With net settled stock options, the employee does not surrender any cash or shares upon exercise. Rather, the Company withholds the number of shares to cover the option exercise price and the minimum statutory tax withholding obligations from the shares that would otherwise be issued upon exercise. The settlement of vested stock options on a net share basis results in fewer shares issued by the Company. Options issued to employees under the 2002 Plan have maximum contractual terms of 10 years generally vest ratably over 3 or 4 years. As of January 28, 2017, there were 609,194 outstanding in-the-money options. The aggregate intrinsic value of in-the-money options outstanding and options exercisable as of January 28, 2017 were each approximately $2.2 million. The weighted average grant date fair values of options granted during fiscal 2016, fiscal 2015 and fiscal 2014 were $6.48, $12.06 and $9.68, respectively. The intrinsic value of options exercised was $0.3 million in fiscal 2016, $6.1 million in fiscal 2015, and $0.2 million in fiscal 2014. At January 28, 2017, unrecognized stock compensation expense related to the unvested portion of outstanding stock options was approximately $2.8 million, which is expected to be recognized over a weighted average period of 2.0 years. Stock option activity for the year ended January 28, 2017 was as follows:
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (in years) |
Balance at January 30, 2016 |  |  | 1,055,568 |  |  | $ | 14.51 |  |  |  |  |
Options granted |  |  | 201,000 |  |  |  | 13.52 |  |  |  |  |
Options exercised |  |  | (35,000 | ) |  |  | 4.93 |  |  |  |  |
Options forfeited |  |  | (30,000 | ) |  |  | 19.12 |  |  |  |  |
Balance at January 28, 2017 |  |  | 1,191,568 |  |  | $ | 14.52 |  |  |  | 5.8 |
Options Exercisable As of: |  |  |  |  |  |  |  |  |  |  |  |
January 28, 2017 |  |  | 827,709 |  |  | $ | 13.18 |  |  |  | 4.6 |
The fair value of each option is recorded as compensation expense on a straight-line basis over the applicable vesting period. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes option pricing model. The application of this valuation model involves assumptions that are judgmental and highly subjective in the determination of compensation expense. The weighted averages for key assumptions used in determining the fair value of options granted in fiscal years 2016, 2015 and 2014 and a summary of the methodology applied to develop each assumption are as follows:
|  | 52 Weeks Ended January 28, 2017 |  |  | 52 Weeks Ended January 30, 2016 |  |  | 52 Weeks Ended January 31, 2015 |
Expected price volatility |  |  | 48 | % |  |  | 47 | % |  |  | 53 | %
Risk-free interest rate |  |  | 1.68 | % |  |  | 1.80 | % |  |  | 2.10 | %
Expected life |  |  | 6.3 years |  |  |  | 6.3 years |  |  |  | 6.3 years |
Forfeiture rate |  |  | 5 | % |  |  | 5 | % |  |  | 5 | %
Dividend yield |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
Expected price volatility — The expected price volatility is a measure of the amount by which the stock price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption as it is management’s belief that this is the best indicator of future volatility. The Company calculates daily market value changes using the historical volatility of returns for the six years prior to the grant. An increase in the expected volatility will increase compensation expense. Risk-free interest rate — The risk-free interest rate is the U.S. Treasury rate for the week of the grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense. Expected life — The expected life is the period of time over which the options granted are expected to remain outstanding. The Company uses the “simplified” method found in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107 to estimate the expected life of stock option grants. Options granted have a maximum term of ten years. An increase in the expected life will increase compensation expense. Forfeiture rate — The forfeiture rate is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience of similar grants. An increase in the forfeiture rate will decrease compensation expense. The Company’s forfeiture estimate has a minimal effect on expense as the majority of the Company’s stock option awards vest quarterly. Dividend yield — The dividend yield is the estimated dividend yield for the weighted average expected life of the option granted. The Company paid a dividend on its common stock in fiscal 2015. In fiscal 2016 and fiscal 2014, the Company did not pay a dividend on its common stock. The addition or increase of a dividend will decrease compensation expense. Restricted stock units — The Company periodically grants restricted stock units for a fixed number of shares to various employees and directors. The RSUs granted to directors become 100% vested on the first anniversary of the grant date. The RSUs granted to employees prior to fiscal 2016 vest in full on the third anniversary of the grant date, while fiscal 2016 RSU grants vest 25% on the first anniversary of the grant date then vest quarterly thereafter over 4 years. The fair values of the RSUs are equal to the closing price of the Company’s common stock on the date of the grant. The Company granted 132,500, 107,000 and 97,000 RSUs during fiscal 2016, 2015 and 2014, respectively. The weighted average grant date fair values of the RSUs granted during fiscal 2016, 2015 and 2014 were $13.49, $25.52 and $18.46, respectively. Compensation expense related to RSUs is recognized ratably over the requisite service period. Compensation expense for RSUs during fiscal 2016, 2015 and 2014 was approximately $1.7 million, $2.0 million and $1.3 million, respectively. As of January 28, 2017, there was approximately $2.0 million of unrecognized compensation expense related to RSUs which is expected to be recognized over a weighted average period of 1.4 years. RSU activity for the year ended January 28, 2017, was as follows:
|  | Shares |  |  | Weighted Average Grant Date Fair Value |
Non-vested at January 30, 2016 |  |  | 225,885 |  |  | $ | 20.89 |
Granted |  |  | 132,500 |  |  |  | 13.49 |
Vested |  |  | (96,751 | ) |  |  | 19.01 |
Forfeited |  |  | (16,980 | ) |  |  | 17.47 |
Non-vested at January 28, 2017 |  |  | 244,654 |  |  | $ | 19.25 |
Employee stock purchase plan — In July 2002, the Company adopted an Employee Stock Purchase Plan (“ESPP”) which was amended in 2006, 2008 and 2016. Under the ESPP, full-time employees who have completed twelve consecutive months of service are allowed to purchase shares of the Company’s common stock, subject to certain limitations, through payroll deduction, at 85% of the fair market value. The Company’s ESPP was originally authorized to issue up to 500,000 shares of common stock. In June 2016, the shareholders ratified the amendment to the Company’s ESPP to increase the number of shares of common stock authorized to be issued under the ESPP by 125,000 shares with an annual increase thereafter each January 1 commencing on January 1, 2017 by up to an additional 35,000 shares. During fiscal 2016, 2015 and 2014, there were 31,879, 19,423 and 19,062 shares of common stock, respectively, issued to participants under the ESPP. As of January 28, 2017, the amount authorized under the ESPP was 660,000 with approximately 141,290 shares remaining under the authorization.

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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=65895303&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=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: 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 5: 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 6: 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 + Details
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