Stein Mart 2012 Annual Report Download - page 54

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-26
The expected volatility is based on the historical volatility of our stock price over assumed expected terms. The risk-free interest rate is
estimated from yields of U.S. Treasury instruments of varying maturities with terms consistent with the expected terms of the options. The
expected term of an option is calculated from a lattice model using historical employee exercise data.
In December 2012, as a result of paying a special cash dividend, all outstanding stock options were modified to decrease the exercise
price and increase the number of options in order to maintain the original grant fair value. No incremental stock compensation expense
resulted from the modification.
Restricted Stock and Performance Share Awards
We have issued restricted stock and performance share awards to eligible Key Employees, Non-Employee Directors, and Advisor
Participants, as defined in the Omnibus Plan. All restricted stock awards have restriction periods tied primarily to employment, and all
performance share awards have vesting tied to internal or market-based performance and service. Shares awarded under the Omnibus
Plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged,
exchanged or otherwise disposed of during the restriction period. Vesting for most awards is based on the service period and vesting
generally occurs between two and three years following the date of grant. Unvested shares are forfeited upon termination of employment.
The total value of share-based compensation expense for restricted stock and performance share awards is based on the closing price of
our common stock on the date of grant, except for market-based performance shares. During 2012, we granted 481,000 performance
shares for which the value was determined using a Monte-Carlo simulation model. Performance share awards provide the right to receive
a share award at the end of a specified period in which a performance goal has been established.
The following table summarizes non-vested stock activity for the year ended February 2, 2013 (shares in thousands):
Weighted- Weighted-
A
verage
A
verage
G
rant
D
ate
G
rant
D
ate
S
hares Fair Value
S
hares Fair Value
Non-vested at January 28, 2012 776 8.90$ 564 10.46$
Granted 486 6.55 481 6.51
Vested (210) 10.86 (276) 9.54
Cancelled or forfeited (56) 8.23 (25) 8.47
Non-vested at February 2, 2013 996 7.38$ 744 8.32$
Total unrecognized compensation cost 3,962$ 3,721$
Weighted-average expected life remaining 1.1 years 0.9 years
Performance Share AwardsRestricted Stock Awards
The total fair value of restricted stock vested was $2.3 million, $1.3 million and $2.2 million for 2012, 2011, and 2010, respectively. The
total fair value of performance awards vested was $2.6 million, $1.1 million and $2.1 million 2012, 2011, and 2010, respectively.
Share-Based Compensation Expense
For the years ended February 2, 2013, January 28, 2012 and January 29, 2011, pre-tax share-based compensation expense was recorded
as follows:
2012 2011 2010
Cost of merchandise sold 3,275$ 2,552$ 2,606$
Sellin
g
,
g
eneral and administrative expenses 2,928 1,269 1,153
Total share-based compensation expense 6,203$ 3,821$ 3,759$
The total tax benefit recognized in the Consolidated Statements of Income related to share-based compensation expense was $2.4 million,
$1.5 million and $1.5 million for 2012, 2011 and 2010, respectively. As a result of the dividend payments to holders of unvested restricted
stock in December 2012, we recognized $0.6 million of additional share-based compensation expense in fiscal 2012.