Long-Term Incentive Compensation
 6 Months Ended
Jul. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Long-Term Incentive Compensation
NOTE 8 | LONG-TERM INCENTIVE COMPENSATION
The Company records the fair value of share-based payments to employees in the Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock, at average cost, upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.
Long-Term Incentive Compensation Plans
On April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace the previous plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made subsequent to that approval have been made under the 2018 Plan. The primary change made by the 2018 Plan was to increase the number of shares of common stock available for equity-based awards by 2.4 million shares.

In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for the purpose of updating the language regarding the recoupment of awards granted under the 2018 Plan.

On March 17, 2020, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, a second amendment to the 2018 Plan, which increased the number of shares of common stock available under the 2018 Plan by 2.5 million shares. On June 10, 2020, stockholders of the Company approved this plan amendment.

The following summarizes long-term incentive compensation expense:
Thirteen Weeks EndedTwenty-Six Weeks Ended
July 30, 2022July 31, 2021July 30, 2022July 31, 2021
(in thousands)
Restricted stock units$1,084 $1,642 $2,277 $3,657 
Stock options88 250 175 550 
Performance-based restricted stock units1,448 989 2,561 1,197 
Total share-based compensation$2,620 $2,881 $5,013 $5,404 
Cash-settled awards3,425 3,097 6,145 4,639 
Total long-term incentive compensation$6,045 $5,978 $11,158 $10,043 
The stock compensation related income tax benefit, excluding consideration of valuation allowances, recognized by the Company during the thirteen and twenty-six weeks ended July 30, 2022 was $0.2 million and $2.9 million, respectively. The stock compensation related income tax benefit, excluding consideration of valuation allowances, recognized by the Company during the thirteen and twenty-six weeks ended July 31, 2021 was $1.6 million and $3.6 million, respectively.
The valuation allowances associated with these tax benefits were $0.2 million and $2.9 million for the thirteen and twenty-six weeks ended July 30, 2022, respectively. The valuation allowances associated with these tax benefits were $1.6 million and $3.6 million for the thirteen and twenty-six weeks ended July 31, 2021, respectively.
Equity Awards
Restricted Stock Units
During the twenty-six weeks ended July 30, 2022, the Company granted restricted stock units (“RSUs”) under the 2018 Plan. The fair value of RSUs is generally determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2022 vest ratably over one year and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.

The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the twenty-six weeks ended July 30, 2022 was as follows:

Number of
Shares
Grant Date
Weighted Average
Fair Value Per Share
(in thousands, except per share amounts)
Unvested - January 29, 2022
3,561 $2.55 
Granted308 $2.76 
Vested(1,762)$2.81 
Forfeited(136)$2.67 
Unvested - July 30, 2022
1,971 $2.34 
The total fair value of RSUs that vested during the twenty-six weeks ended July 30, 2022 and July 31, 2021 was $4.9 million and $8.2 million, respectively. As of July 30, 2022, there was approximately $3.3 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a remaining weighted-average period of approximately 0.8 years.

Stock Options
The Company’s activity with respect to stock options during the twenty-six weeks ended July 30, 2022 was as follows:
Number of
Shares
Grant Date
Weighted Average
Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands, except per share amounts and years)
Outstanding - January 29, 2022
2,973 $5.39 
Granted— $— 
Exercised— $— 
Forfeited or expired(113)$19.06 
Outstanding - July 30, 2022
2,860 $4.86 6.3$— 
Expected to vest at July 30, 2022
277 $2.60 7.0$— 
Exercisable at July 30, 2022
2,580 $5.10 6.2$— 
As of July 30, 2022, there was approximately $0.3 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a remaining weighted average period of approximately 1.0 year.

Performance-Based Restricted Stock Units
During the twenty-six weeks ended July 30, 2022, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the
Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over a three-year vesting period. The performance conditions of the award include adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") targets and total shareholder return ("TSR") of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, fair value of the awards is fixed at the measurement date and is not revised based on actual performance. The number of shares that are expected to vest will change based on estimates of the Company’s Adjusted EBITDA performance in relation to the pre-established targets. The 2022 target grant currently corresponds to approximately 1.9 million shares, with a grant-date fair value of $3.97 per share. As of July 30, 2022, $11.5 million of total unrecognized compensation cost is expected to be recognized on performance-based restricted stock units over a remaining weighted-average period of 2.2 years.

Cash-Settled Awards
Time-Based Cash-Settled Awards
During the twenty-six weeks ended July 30, 2022, the Company granted time-based cash-settled awards to employees that vest ratably over three years. These awards are classified as liabilities and do not vary based on changes in the Company's stock price or performance. The expense related to these awards will be accrued using a straight-line method over this vesting period. As of July 30, 2022, $16.7 million of total unrecognized compensation cost is expected to be recognized on cash-settled awards over a remaining weighted-average period of 1.6 years.

Performance-Based Cash-Settled Awards
In March 2020, the Company granted performance-based cash-settled awards to a limited number of senior executive-level employees. Due to the significant disruption caused by the COVID-19 pandemic on the Company’s business operations, as well as its adverse impact on consumer confidence and demand, the Committee delayed setting performance targets for the 2020 long-term performance-based awards until February 2021. While the 2020 long-term performance awards remain subject to a three-year vesting cliff, these awards are subject to a two-year performance period instead of a three-year performance period. These awards are classified as liabilities, with the amount to be paid out estimated each reporting period. Expense is being recognized in proportion to the completed requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the target amount depending upon performance achieved over a two-year performance period commencing on the first day of the Company’s 2021 fiscal year and ending on the last day of the Company’s 2022 fiscal year. The performance condition of the award is Adjusted EBITDA. The amount of cash earned will change based on estimates of the Company’s Adjusted EBITDA performance in relation to the pre-established targets. As of July 30, 2022, $3.5 million of total unrecognized compensation cost is expected to be recognized on performance-based cash-settled awards over a remaining weighted-average period of 0.7 years.