Note 11. Shareholders’ Equity

Stock Plans

Stock option activity under the Company’s stock option and stock incentive plans is included in the following table (in thousands, except per share amounts):

 

		Time-Based Options								Market-Based Options								Total
		Number of Shares				Weighted Average Exercise Price				Number of Shares				Weighted Average Exercise Price				Number of Shares				Weighted Average Exercise Price
Balance at January 30, 2016			40,874			$	13.59				2,156			$	15.43				43,030			$	13.68
Granted			1,965			$	9.80				—			$	—				1,965			$	9.80
Exercised			(81	)		$	6.93				—			$	—				(81	)		$	6.93
Canceled/Forfeited			(3,160	)		$	21.11				(2,156	)		$	15.43				(5,316	)		$	18.80
Balance at July 30, 2016			39,598			$	12.82				—			$	—				39,598			$	12.82
Vested or expected to vest at July 30, 2016			37,944			$	12.79
Exercisable at July 30, 2016			24,369			$	12.66

For time-based stock options vested and expected to vest at July 30, 2016, the aggregate intrinsic value was $32.1 million and the weighted average remaining contractual term was 5.6 years. For time-based stock options exercisable at July 30, 2016, the aggregate intrinsic value was $24.7 million and the weighted average remaining contractual term was 4.3 years. The aggregate intrinsic value of stock options exercised during the three months ended July 30, 2016 and August 1, 2015 was $0.1 million and $2.5 million, respectively. The aggregate intrinsic value of stock options exercised during the six months ended July 30, 2016 and August 1, 2015 was $0.2 million and $8.8 million, respectively. The market-based stock options automatically expired in April 2016 since the market price conditions were not met within the required five years from date of grant. The Company’s closing stock price of $11.75 as reported on the NASDAQ Global Select Market for all in-the-money options as of July 29, 2016 was used to calculate the aggregate intrinsic value.

As of July 30, 2016, the unamortized compensation expense was $26.8 million for time-based stock options. The unamortized compensation expense for time-based stock options will be amortized on a straight-line basis and is expected to be recognized over a weighted average period of 1.9 years.

Activity related to the non-vested portion of the restricted stock units is included in the following table (in thousands, except for share prices):

 

		Time-Based								Performance-Based								Market-Based								Total
		Number of Shares				Weighted Average Grant Date Fair Value				Number of Shares				Weighted Average Grant Date Fair Value				Number of Shares				Weighted Average Grant Date Fair Value				Number of Shares				Weighted Average Grant Date Fair Value
Balance at January 30, 2016			8,343			$	13.57				977			$	14.43				353			$	12.24				9,673			$	13.61
Granted			7,530			$	9.43				—			$	—				—			$	—				7,530			$	9.43
Vested			(4,988	)		$	14.16				(155	)		$	14.15				—			$	—				(5,143	)		$	14.16
Canceled/Forfeited			(586	)		$	11.30				(822	)		$	14.49				(300	)		$	12.24				(1,708	)		$	13.00
Balance at July 30, 2016			10,299			$	10.38				—			$	—				53			$	12.24				10,352			$	10.39

In connection with the performance-based equity awards granted in fiscal 2016 to each of the Company’s executive officers, a total of 33,616 shares vested on April 1, 2016 based on achieving certain individual strategic goals as evaluated by the Executive Compensation Committee of the Company’s Board of Directors. No shares vested for the achievement of financial performance goals since the financial performance criteria were below the threshold level. The amount of canceled shares reported in the table above includes the unvested shares that were not earned.

The Company recognizes expense from performance-based equity awards when it becomes probable that the performance conditions will be met. Once it becomes probable that a performance-based award will vest, the Company recognizes share-based compensation expense equal to the number of shares expected to vest multiplied by the fair value of the award at the grant date, which is amortized using the accelerated method.

The aggregate intrinsic value of restricted stock units expected to vest as of July 30, 2016 was $107.6 million. The number of restricted stock units that are expected to vest is 9.2 million shares. As of July 30, 2016, unamortized compensation expense related to restricted stock units was $77.1 million. The unamortized compensation expense for restricted stock units will be amortized on a straight-line basis and is expected to be recognized over a weighted average period of 1.5 years.

 

Employee Stock Purchase Plan

During the three and six months ended July 30, 2016, the Company issued no shares under the 2000 Employee Stock Purchase Plan, as amended and restated (the “ESPP”) because it was not eligible to issue shares of its common stock due to the delay in the timely filing of its periodic reports with the Securities and Exchange Commission (“SEC”) for the first quarter of fiscal 2017, the year ended January 30, 2016, and the second and third quarters of fiscal 2016. The Company also canceled the June 2016 ESPP purchase and delayed the opening of the new offering period that would have started in June 2016. As a result, the Company refunded $27.2 million of contribution withholdings to its employees and it recorded an additional $6.8 million of share-based compensation expense representing the acceleration of the remaining unamortized compensation expense related to the June 2016 ESPP purchase period. During the three and six months ended August 1, 2015, a total of 3.2 million shares were issued at a weighted-average price of $11.88 per share under the ESPP. As of July 30, 2016, there was $24.0 million of unrecognized compensation cost related to the ESPP.

Share Repurchase Program

The Company had no repurchases of its common shares during the three and six months ended July 30, 2016. The Company repurchased 14.6 million of its common shares for $193.2 million in cash during the three months ended August 1, 2015 and 16.0 million of its common shares for $215.3 million during the six months ended August 1, 2015. The repurchased shares were retired immediately after the repurchases were completed. The Company records all repurchases, as well as investment purchases and sales, based on trade date. As of July 30, 2016, a total of 241.6 million shares have been repurchased to date under the Company’s share repurchase program for a total $3.1 billion in cash and there was $182.6 million remaining available for future share repurchases. The Company has made no subsequent share repurchases since its third quarter of fiscal 2016.

Dividends

The Company paid the following cash dividends (in thousands, except per share amounts):

 

		Three Months Ended								Six Months Ended
		July 30,				August 1,				July 30,				August 1,
		2016				2015				2016				2015
Cash dividend per share		$	0.06			$	0.06			$	0.12			$	0.12
Total payment to shareholders		$	30,675			$	31,194			$	61,136			$	62,104

Future payment of a regular quarterly cash dividend on the Company’s common shares will be subject to, among other things, the best interests of the Company and its shareholders, the Company’s results of operations, cash balances and future cash requirements, financial condition, statutory requirements under Bermuda law and other factors that the Company’s board of directors may deem relevant. The Company’s dividend payments may change from time to time, and the Company cannot provide assurance that it will continue to declare dividends at all or in any particular amounts. In addition, developments in ongoing litigation could affect the Company’s ability to make a dividend payment on a declared payment date until such time as the Company can meet statutory requirements under Bermuda law.