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Stock-Based Compensation | 12 Months Ended
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Feb. 02, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-Based Compensation | 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 is included as a component of compensation and benefits and was approximately $2.0 million, $2.1 million and $3.2 million for fiscal years 2018, 2017 and 2016, respectively. 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 February 2, 2019, options to purchase 896,345 shares of common stock were outstanding under the 2002 Plan at exercise prices ranging from $2.33 to $25.52 per share. As of February 2, 2019, there were 314,284 RSUs outstanding under the 2002 Plan with fair value grant prices ranging from $8.98 to $15.85 per share. Shares reserved for future stock-based grants under the 2002 Plan was 878,355 at February 2, 2019. 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 and generally vest ratably over 3 or 4 years. As of February 2, 2019, there were 318,536 outstanding in-the-money options. The aggregate intrinsic value of in-the-money options outstanding and options exercisable as of February 2, 2019 was approximately $0.5 million and $0.3 million, respectively. The weighted average grant date fair values of options granted during fiscal 2018, fiscal 2017 and fiscal 2016 were $6.18, $4.23 and $6.48, respectively. The intrinsic value of options exercised was approximately $0.7 million in fiscal 2018, $0.1 million in fiscal 2017, and $0.3 million in fiscal 2016. At February 2, 2019, unrecognized stock compensation expense related to the unvested portion of outstanding stock options was approximately $1.4 million, which is expected to be recognized over a weighted average period of 2.7 years. Stock option activity for the fiscal year ended February 2, 2019 was as follows:
| Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years)
Balance at February 3, 2018 | 1,239,201 |  |  | $ | 13.22 |  |  |
Options granted | 157,700 |  |  | 12.54 |  |  |
Options exercised | (177,526 | ) |  | 8.05 |  |  |
Options forfeited | (319,280 | ) |  | 15.40 |  |  |
Options expired | (3,750 | ) |  | 14.87 |  |  |
Balance at February 2, 2019 | 896,345 |  |  | $ | 13.35 |  |  | 5.3
Options Exercisable As of: |  |  |  |  |
February 2, 2019 | 588,290 |  |  | $ | 14.12 |  |  | 3.6
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 2018, 2017 and 2016 and a summary of the methodology applied to develop each assumption are as follows:
| 52 Weeks Ended February 2, 2019 |  | 53 Weeks Ended February 3, 2018 |  | 52 Weeks Ended January 28, 2017
Expected price volatility | 47 | % |  | 46 | % |  | 48 | %
Risk-free interest rate | 2.79 | % |  | 1.96 | % |  | 1.68 | %
Expected life | 6.3 years |  |  | 6.3 years |  |  | 6.3 years |
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. 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 2016. In fiscal 2017 and fiscal 2018, the Company did not pay a dividend on its common stock. The Company does not pay a regular, reoccurring dividend. The addition or increase of a dividend will decrease compensation expense. The Company currently has no plans to pay additional dividends. Forfeiture rate — The forfeiture rate is the percentage of options granted that were forfeited or canceled before becoming fully vested. The Company accounts for forfeitures of share-based awards as they occur. An increase in the forfeiture rate 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 typically vest 25% annually on the anniversary of the grant date 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 243,734, 148,500 and 132,500 RSUs during fiscal 2018, 2017 and 2016, respectively. The weighted average grant date fair values of the RSUs granted during fiscal 2018, 2017 and 2016 were $10.83, $9.01 and $13.49, respectively. Compensation expense related to RSUs is recognized ratably over the requisite service period. Compensation expense for RSUs during fiscal 2018, 2017 and 2016 was approximately $1.1 million, $0.9 million and $1.7 million, respectively. As of February 2, 2019, there was approximately $2.5 million of unrecognized compensation expense related to RSUs which is expected to be recognized over a weighted average period of 2.0 years. RSU activity for the fiscal year ended February 2, 2019, was as follows:
| Shares |  | Weighted Average Grant Date Fair Value
Non-Vested at February 3, 2018 | 245,700 |  |  | $ | 13.29 |
Granted | 243,734 |  |  | 10.83 |
Vested | (110,400 | ) |  | 15.98 |
Forfeited | (64,750 | ) |  | 12.00 |
Non-Vested at February 2, 2019 | 314,284 |  |  | $ | 10.71 |
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 a 15% discount from 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 optional annual increase thereafter each January 1 commencing on January 1, 2017 by up to an additional 35,000 shares. During fiscal 2018, 2017 and 2016, there were 37,128, 34,963 and 31,879 shares of common stock, respectively, issued to participants under the ESPP. As of February 2, 2019, the amount authorized under the ESPP was 695,000 with approximately 104,198 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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