| SHARE-BASED COMPENSATION |
17. SHARE-BASED COMPENSATION The Company has share-based incentive compensation plans under which certain officers, employees and members of the Board of Directors are participants and may be granted restricted stock, stock performance awards, restricted stock units and stock options. ASC 718, Compensation – Stock Compensation, and ASC 505, Equity, require companies to recognize compensation expense in an amount equal to the fair value of all share-based payments granted to employees over the requisite service period for each award. In certain limited circumstances, the Company’s incentive compensation plan provides for accelerated vesting of the awards, such as in the event of a change in control, qualified retirement, death or disability. The Company has a policy of issuing treasury shares in satisfaction of share-based awards. Share-based compensation expense of $8.1 million, $10.2 million and $13.8 million was recognized in 2020, 2019 and 2018, respectively, as a component of selling and administrative expenses. The following table details the share-based compensation expense by plan for 2020, 2019 and 2018: | | | | | | | | | | ($ thousands) | | 2020 | | 2019 | | 2018 | Expense for share-based compensation plans, net of forfeitures: | | | | | | | | | | Restricted stock | | $ | 6,840 | | $ | 9,597 | | $ | 10,925 | Stock performance awards | | | 147 | | | (502) | | | 1,741 | Restricted stock units | | | 1,109 | | | 1,129 | | | 1,091 | Stock options | | | 1 | | | 22 | | | 48 | Total share-based compensation expense | | $ | 8,097 | | $ | 10,246 | | $ | 13,805 |
The Company issued 471,569, 214,435 and 350,522 shares of common stock in 2020, 2019 and 2018, respectively, for restricted stock grants, stock performance awards issued to employees, stock options exercised and common and restricted stock grants issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement. The Company recognized an excess tax provision of $1.1 million and $0.1 million in 2020 and 2019, respectively, related to restricted stock vestings and dividends, performance share award vestings and stock options exercised. Excess tax benefits of $0.3 million were recognized in 2018. The excess tax provision or benefit for the respective periods were recorded in income tax benefit (provision). Restricted Stock Under the Company’s incentive compensation plans, restricted stock of the Company may be granted at no cost to certain officers, key employees and directors. Plan participants are entitled to cash dividends and voting rights for their respective shares. The restricted stock awards limit the sale or transfer of these shares during the requisite service period. Expense for restricted stock grants is recognized on a straight-line basis separately for each vesting portion of the stock award based upon fair value of the award on the date of grant. The fair value of the restricted stock grants is the quoted market price for the Company’s common stock on the date of grant. The following table summarizes restricted stock activity for 2020, 2019 and 2018: | | | | | | | | Number of | | | | | | Nonvested | | Weighted- | | | Restricted | | Average Grant | | | Shares | | Date Fair Value | Nonvested at February 3, 2018 | | 1,174,801 | | | 27.92 | Granted | | 427,083 | | | 31.88 | Vested | | (291,061) | | | 28.18 | Forfeited | | (61,600) | | | 28.77 | Nonvested at February 2, 2019 | | 1,249,223 | | | 29.17 | Granted | | 463,234 | | | 22.93 | Vested | | (222,562) | | | 30.26 | Forfeited | | (218,100) | | | 28.83 | Nonvested at February 1, 2020 | | 1,271,795 | | | 26.77 | Granted | | 707,931 | | | 6.99 | Vested | | (430,837) | | | 28.27 | Forfeited | | (151,662) | | | 22.19 | Nonvested at January 30, 2021 | | 1,397,227 | | $ | 16.74 |
Of the 707,931 restricted shares granted during 2020, 12,748 shares have a cliff-vesting term of one year and 695,183 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. Of the 463,234 restricted shares granted during 2019, 12,914 shares had a cliff-vesting term of one year and 450,320 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. Of the 427,083 restricted shares granted during 2018, 3,642 shares had a cliff-vesting term of one year, 413,941 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years, and 9,500 shares have a cliff-vesting term of four years. The total grant date fair value of restricted stock awards vested during the years ended January 30, 2021, February 1, 2020 and February 2, 2019, was $4.4 million, $6.7 million and $8.2 million, respectively. As of January 30, 2021, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $5.9 million, which will be amortized over the weighted-average remaining requisite service period of 1.5 years. Performance Share Awards Under the Company’s incentive compensation plans, common stock or cash may be awarded at the end of the performance period at no cost to certain officers and key employees if certain financial goals are met. Under the plan, employees are granted performance share awards at a target number of shares or units, which generally vest over a three-year service period. Vesting of the performance share award granted in 2020 is dependent upon the attainment of certain financial goals during the second half of 2020. At the end of the vesting period, the employee will have earned an amount of shares between 0% and 200% of the targeted award, depending on the attainment of certain financial goals during the service period. If the awards are granted in units, the employee will be given an amount of cash ranging from 0% to 200% of the equivalent market value of the targeted award. Expense for performance share awards is recognized based upon the fair value of the awards on the date of grant and the anticipated number of shares or cash to be awarded on a straight-line basis for each vesting portion of the share award. The following table summarizes performance share award activity for 2020, 2019 and 2018: | | | | | | | | | | Number of Nonvested | | Number of Nonvested | | | | | | Performance Share | | Performance Share | | | | | | Awards at Target | | Awards at Maximum | | Weighted-Average | | | Level | | Level | | Grant Date Fair Value | Nonvested at February 3, 2018 | | 399,627 | | 799,254 | | | 27.45 | Granted | | 155,000 | | 310,000 | | | 31.84 | Vested | | (80,627) | | (161,254) | | | 30.12 | Forfeited | | (16,167) | | (32,334) | | | 26.83 | Nonvested at February 2, 2019 | | 457,833 | | 915,666 | | | 28.49 | Granted | | 180,000 | | 360,000 | | | 23.42 | Vested | | (149,833) | | (299,666) | | | 26.64 | Forfeited | | (12,000) | | (24,000) | | | 28.33 | Nonvested at February 1, 2020 | | 476,000 | | 952,000 | | | 27.16 | Granted | | 87,750 | | 175,500 | | | 7.47 | Vested | | (153,000) | | (306,000) | | | 26.90 | Forfeited | | (25,000) | | (50,000) | | | 18.64 | Nonvested at January 30, 2021 | | 385,750 | | 771,500 | | $ | 23.33 |
As of January 30, 2021, the remaining unrecognized compensation cost related to nonvested performance share awards was $1.0 million, which will be recognized over the remaining service period of two years. Stock Options Stock options are granted to employees at exercise prices equal to the quoted market price of the Company’s stock at the date of grant. Stock options generally vest over four years and have a term of 10 years. Compensation cost for all stock options is recognized over the requisite service period for each award. No dividends are paid on unexercised options. Expense for stock options is recognized on a straight-line basis separately for each vesting portion of the stock option award. The Company granted no stock options during 2020, 2019 and 2018. The following table summarizes stock option activity for 2020: | | | | | | | | | | Weighted- | | | Number of | | Average | | | Options | | Exercise Price | Outstanding at February 1, 2020 | | 35,667 | | $ | 19.70 | Forfeited | | (9,000) | | | 9.89 | Canceled or expired | | (2,000) | | | 13.99 | Outstanding at January 30, 2021 | | 24,667 | | $ | 23.74 | Exercisable at January 30, 2021 | | 24,667 | | $ | 23.74 |
As of January 30, 2021, there are no nonvested options. Restricted Stock Units for Non-Employee Directors Equity-based grants may be made to non-employee directors in the form of restricted stock units (“RSUs”) payable in cash or common stock at no cost to the non-employee director. The RSUs are subject to a vesting requirement (usually one year), earn dividend equivalent units and are payable in cash or common stock on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock. Dividend equivalents are paid on outstanding RSUs at the same rate as dividends on the Company’s common stock, are automatically re-invested in additional RSUs and vest immediately as of the payment date for the dividend. Expense related to the initial grant of RSUs is recognized ratably over the vesting period based upon the fair value of the RSUs. The RSUs payable in cash are remeasured at the end of each period. Expense for the dividend equivalents is recognized at fair value immediately. Gains and losses resulting from changes in the fair value of the RSUs payable in cash subsequent to the vesting period and through the settlement date are recognized in the Company’s consolidated statements of earnings (loss). Refer to Note 6 and Note 15 to the consolidated financial statements for information regarding the deferred compensation plan for non-employee directors. The following table summarizes restricted stock unit activity for the year ended January 30, 2021: | | | | | | | | | | | | | | | | | | | | | | Nonvested | | | Outstanding | | Accrued (3) | | RSUs | | | | | | | | | | | Weighted- | | | Number of | | Number of | | Total | | Total | | Average | | | Vested | | Nonvested | | Number of | | Number of | | Grant Date | | | RSUs | | RSUs | | RSUs (2) | | RSUs | | Fair Value | February 1, 2020 | | 415,157 | | 76,827 | | 491,984 | | 466,375 | | $ | 17.66 | Granted (1) | | 14,983 | | 105,421 | | 120,404 | | 86,408 | | | 10.50 | Vested | | 74,464 | | (74,464) | | — | | 23,676 | | | 18.83 | Settled | | (88,370) | | — | | (88,370) | | (88,370) | | | 9.52 | January 30, 2021 | | 416,234 | | 107,784 | | 524,018 | | 488,089 | | $ | 9.85 |
| (1) | Granted RSUs include 18,420 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 14,983 related to outstanding vested RSUs and 3,437 to outstanding nonvested RSUs. |
| (2) | Total number of RSUs as of January 30, 2021 includes 388,752 RSUs payable in shares and 135,266 RSUs payable in cash. |
| (3) | Accrued RSUs include all fully vested awards and a pro-rata portion of nonvested awards based on the elapsed portion of the vesting period. |
The following table summarizes RSUs granted, vested and settled during 2020, 2019 and 2018: | | | | | | | | | | ($ thousands, except per unit amounts) | | 2020 | | 2019 | | 2018 | Weighted-average grant date fair value of RSUs granted (1) | | $ | 10.12 | | $ | 19.59 | | $ | 34.23 | Fair value of RSUs vested | | $ | 1,125 | | $ | 589 | | $ | 1,340 | RSUs settled | | | 88,370 | | | 4,574 | | | 5,914 |
| (1) | Includes dividend equivalents granted on outstanding RSUs, which vest immediately. |
The following table details the RSU compensation expense and the related income tax provision (benefit) for 2020, 2019 and 2018: | | | | | | | | | | ($ thousands) | | 2020 | | 2019 | | 2018 | Compensation (income) expense | | $ | (613) | | $ | (1,756) | | $ | 287 | Income tax provision (benefit) | | | 158 | | | 452 | | | (74) | Compensation (income) expense, net of tax
| | $ | (455) | | $ | (1,304) | | $ | 213 |
The aggregate fair value of RSUs outstanding and currently vested at January 30, 2021 is $7.9 million and $6.3 million, respectively. The liabilities associated with the accrued RSUs totaled $1.7 million and $2.6 million as of January 30, 2021 and February 1, 2020, respectively.
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