Share-Based Compensation

12 Months Ended

Jul. 29, 2022

10. Share-Based Compensation

Stock Compensation Plans

The Company’s employee compensation plans are administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”). The Committee is authorized to determine, at time periods within its discretion and subject to the direction of the Board of Directors, which employees will be granted awards, the number of shares covered by any awards granted, and within applicable limits, the terms and provisions relating to the exercise and vesting of any awards.

On November 19, 2020, the Company’s shareholders approved the 2020 Omnibus Incentive Plan (the “2020 Omnibus Plan”) which became effective on that date. The 2020 Omnibus Plan authorizes the following types of awards for employees and non-employee directors: stock options, stock appreciation rights, nonvested stock, restricted stock units, other share-based awards and performance awards. After the effective date of the 2020 Omnibus Plan, no additional awards could be granted under the Company’s 2010 Omnibus Incentive Stock and Incentive Plan (the “Prior Plan”).

The 2020 Omnibus Plan allows the Committee to grant awards for an aggregate of 1,033,441 shares, the number of shares that were available for issuance as of September 24, 2020 (the “Cutoff Date”) pursuant to the Prior Plan, plus the number of shares that became available for issuance pursuant to the terms of the Prior Plan following the Cutoff Date and prior to the effective date. However, this share reserve is increased by shares awarded under this and the Prior Plan which are forfeited, expired, settled for cash and shares withheld by the Company in payment of a tax withholding obligation after the effective date of the 2020 Omnibus Plan. Additionally, this share reserve was decreased by shares granted from the 2020 Omnibus Plan after the effective date. At July 29, 2022, the number of shares authorized for future issuance under the Company’s active plan is 1,052,602. At July 29, 2022, the number of outstanding awards under the 2020 Omnibus Plan and the Prior Plan was 80,356 and 89,176, respectively.

Types of Share-Based Awards

Nonvested Stock Awards

Nonvested stock awards consist of the Company’s common stock, generally accrue dividend equivalents and vest over one to five years. The fair value of the Company’s nonvested stock awards which accrue dividends is equal to the market price of the Company’s stock at the date of the grant. Dividends are forfeited for any nonvested stock awards that do not vest.

The Company’s nonvested stock awards include its long-term performance plans which were established by the Committee for the purpose of rewarding certain officers with shares of the Company’s common stock if the Company achieved certain performance targets. The stock awards under the long-term performance plans are calculated or estimated based on achievement of financial performance measures.

The following table summarizes the performance periods and vesting periods for the Company’s nonvested stock awards under its long-term performance plans at July 29, 2022:

Long-Term Performance Plan (“LTPP”)	Performance Period	Vesting Period (in Years)
2022 LTPP	2022 – 2024	3
2021 LTPP	2021 – 2022	2 or 3

The following table summarizes the shares that have been accrued under the 2022 LTPP and 2021 LTPP at July 29, 2022:


2022 LTPP			8,813
2021 LTPP			30,747

A summary of the Company’s nonvested stock activity as of July 29, 2022, and changes during 2022 are presented in the following table:


Nonvested Stock	Shares			Weighted-Average Grant Date Fair Value
Unvested at July 30, 2021		89,323		$	135.81
Granted		84,670			133.41
Vested		(42,870	)		143.84
Forfeited		(7,181	)		138.94
Unvested at July 29, 2022		123,942		$	131.21

The following table summarizes the total fair value of nonvested stock that vested for each of the three years:

		2022				2021				2020
Total fair value of nonvested stock		$	6,166			$	3,200			$	3,084

Nonvested Stock Units

Beginning in 2017 through 2020, the Company adopted long-term incentive plans that award nonvested stock units based upon relative total shareholder return (“rTSR RSUs”). The number of nonvested stock units that will ultimately be awarded and will vest at the end of the applicable three-year performance period is based on relative total shareholder return, which is defined as increases in the Company’s stock price plus dividends paid during the performance period as compared to the total shareholder return of a group of peer companies determined by the Committee. The number of shares awarded at the end of the performance period for each nonvested stock unit may range from 75% to 125% of the target award. The probability of the actual shares expected to be earned is considered in the grant date valuation; therefore, the expense will not be adjusted to reflect the actual units earned.

The fair value of the nonvested stock units is determined using the Monte-Carlo simulation model, which simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average prices for the 60 consecutive calendar days beginning 30 days prior to and ending 30 days after the first business day of the performance period. This model also incorporates the following ranges of assumptions:

●	The expected volatilities are the historical volatilities of the Company’s stock and the members of the peer group over the period commensurate with the three-year performance period.

●	The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year performance period. The risk-free rate for the nonvested stock units granted in 2020 was 1.6%.

●	The expected dividend yield is assumed to be zero since the award holders are entitled to any dividends paid over the performance period.

Dividends accrue on the nonvested stock units. Dividends will be forfeited for nonvested stock units that do not vest.

Shares accrued for rTSR awards under the 2020 long-term incentive plan at July 29, 2022 were 6,030.

Compensation Expense

The following table highlights the components of share-based compensation expense for each of the three years:

		2022				2021				2020
Total compensation expense		$	8,198			$	8,729			$	6,386

The following table highlights the total unrecognized compensation expense related to the outstanding nonvested stock awards and nonvested stock units and the weighted-average periods over which the expense is expected to be recognized as of July 29, 2022:

	Nonvested Stock Awards
Total unrecognized compensation	$	6,859
Weighted-average period in years		1.76

During 2022, the Company issued 32,461 shares of its common stock resulting from the vesting of share-based compensation awards. Related tax withholding payments on these share-based compensation awards resulted in a net reduction to shareholders’ equity of $2,599.