Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.22.1
Stock-Based Compensation
 3 Months Ended
Apr. 30, 2022
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
For a discussion of our stock-based compensation plans, refer to “Note 10 - Stock-Based Compensation Plans” of our Annual Report on Form 10-K for the year ended January 29, 2022. Stock-based compensation expense was $35.8 million and $31.8 million during the 13 weeks ended April 30, 2022 and May 1, 2021, respectively.
Restricted Stock
We issue service-based RSUs to employees and officers and issue PSUs to certain of our officers. We recognize expense based on the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years, on a straight-line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs and PSUs is determined based on our closing stock price on the grant date.
Service-Based RSUs
The following table summarizes the status of service-based RSUs as of April 30, 2022 and changes during the 13 weeks then ended:
Number of Shares Weighted Average
Grant Date
Fair Value
Nonvested at January 29, 2022
 1,096,066  $ 94.16 
Granted 416,729  159.34 
Vested (510,042) 92.86 
Forfeited (40,005) 111.77 
Nonvested at April 30, 2022
 962,748  $ 122.32 
PSUs
The following table summarizes the status of PSUs as of April 30, 2022 and changes during the 13 weeks then ended:
Number of Shares Weighted Average
Grant Date
Fair Value
Nonvested at January 29, 2022
 584,972  $ 91.86 
Granted 198,718  158.47 
Vested (273,454) 89.19 
Forfeited (100,229) 114.41 
Nonvested at April 30, 2022
 410,007  $ 119.50 
Stock Options
Stock options are valued using the Black-Scholes option pricing model and compensation expense is recognized on a straight-line basis over the requisite service period.
On March 19, 2022, we granted a one-time award of options to purchase 2,252,587 shares of our common stock with a fair value of $135.6 million to the Executive Chairman of the Board. The grant of options was subject to the terms and conditions of a five-year Executive Agreement with the Executive Chairman. The option award has a ten-year term and is scheduled to vest in equal installments on each of the first five anniversaries of the grant date, subject to the Executive Chairman’s continued employment with the company through each vesting date. The assumptions used in the Black-Scholes option pricing model for this award are as follows:
Expected term (in years) 6.5
Expected stock price volatility 34.1  %
Dividend yield —  %
Risk-free interest rate 2.15  %
The simplified method was used to estimate the expected term of the options due to our lack of historical option exercise experience and the “plain vanilla” characteristics of the option award. The simplified method results in an expected term equal to the average of the weighted average time-to-vesting and the contractual life of the options. The expected stock price volatility is based on the historical volatility of our common stock over a period matching the expected term of the options granted. The dividend yield reflects that we have never paid cash dividends. The risk-free interest rate represents the yield curve in effect at the time of grant for U.S. Treasury zero-coupon securities with maturities that approximate the expected term of the options.
The following table summarizes information about options outstanding at April 30, 2022 and changes during the 13 weeks then ended:
  Number of Shares Weighted Average Per Share Exercise Price Weighted Average Remaining Term (Years) Aggregate Intrinsic Value
(in millions)
Outstanding at January 29, 2022
 24,541  $ 90.38     
Granted 2,252,587  157.17     
Exercised (370) 76.97     
Outstanding at April 30, 2022
 2,276,758  $ 156.46  9.8 $ 13.6 
Exercisable at April 30, 2022
 24,171  $ 90.59  4.5 $ 1.7