AMERICAN EAGLE OUTFITTERS INC Stock Compensation Disclosure
11. Share-Based Payments
The Company accounts for share-based compensation under the provisions of ASC 718, Compensation – Stock Compensation ("ASC 718"), which requires the Company to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for Fiscal 2025, Fiscal 2024, and Fiscal 2023 was $39.4 million ($29.3 million, net of tax), $39.6 million ($29.5 million, net of tax), and $51.1 million ($36.2 million, net of tax), respectively.
There was $14.4 million of share-based payment expense, consisting of both time- and performance-based awards, included in gross profit for Fiscal 2025. This is compared to $14.2 million of share-based payment expense included in gross profit for Fiscal 2024.
There was $25.0 million of share-based payment expense, consisting of time and performance-based awards, included in selling, general, and administrative expenses this year. This is compared to $25.4 million of share-based payment expense included in selling, general, and administrative expenses for Fiscal 2024.
ASC 718 requires recognition of compensation cost under a non-substantive vesting period approach for awards containing provisions that accelerate or continue vesting upon retirement. Accordingly, for awards with such provisions, the Company recognizes compensation expense over the period from the grant date to the date that retirement eligibility is achieved, if that is expected to occur during the nominal vesting period. Additionally, for awards granted to retirement-eligible employees, the full compensation cost of an award must be recognized immediately upon grant.
At January 31, 2026, the Company had awards outstanding under two share-based compensation plans, which are described below.
Share-based compensation plans
2023 Stock Award and Incentive Plan ("2023 Plan")
The 2023 Plan was approved by the Company's stockholders on June 7, 2023. The 2023 Plan authorized 10.6 million shares for issuance, in the form of options, stock appreciation rights ("SARS"), restricted stock, restricted stock units, bonus stock and awards, performance awards, dividend equivalents and other stock-based awards. The 2023 Plan allows the Compensation Committee of the Board of Directors to determine which employees receive awards and the terms and conditions of the awards under the 2023 Plan. The 2023 Plan provides for grants to non-employee directors, which are not to exceed in value of $750,000 in any single fiscal year. As of January 31, 2026, approximately 4.8 million shares of restricted stock and approximately 2.1 million shares of common stock had been granted under the 2023 Plan to employees and non-employee directors. Approximately 30% of the restricted stock awards are performance-based and are earned if the pre-established performance goals are met. The remaining 70% of the restricted stock awards are time-based, of which 98% vest ratably over three years and 2% vest over a period of to two years.
2020 Stock Award and Incentive Plan ("2020 Plan" and, together with the 2023 Plan, the "Plans")
The 2020 Plan was approved by the stockholders on April 13, 2020. The 2020 Plan authorized 10.2 million shares for issuance, in the form of options, SARS, restricted stock, restricted stock units, bonus stock and awards, performance awards, dividend equivalents and other stock-based awards. In connection with the adoption of the 2023 Plan, the 2020 Plan terminated on June 7, 2023 with all rights of the awardees and all unexpired awards continuing in force and operation after the termination. Through June 7, 2023, approximately 7.2 million shares of restricted stock and approximately 3.4 million shares of common stock had been granted under the 2020 Plan to employees and directors. Approximately 40% of the restricted stock awards are performance-based and are earned if the established performance goals are met. The remaining 60% of the restricted stock awards are time-based, of which 97% vest ratably over three years and 3% vest over a period of one to two years.
Stock Option Grants
The Company has granted time-based stock options under the Plans. Time-based stock option awards vest over the requisite service period of the award or to an employee’s eligible retirement date, if earlier.
A summary of the Company’s stock option activity for Fiscal 2025 follows:
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Fiscal Year Ending January 31, 2026 |
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Weighted- |
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Weighted- |
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Aggregate |
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Options |
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Exercise Price |
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Term |
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Value |
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(In thousands) |
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(In years) |
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(In thousands) |
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Outstanding - February 1, 2025 |
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4,324 |
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$ |
17.98 |
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Granted |
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1,343 |
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12.59 |
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Exercised (1) |
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(598 |
) |
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15.55 |
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Cancelled |
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(526 |
) |
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21.14 |
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Outstanding - January 31, 2026 |
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4,543 |
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$ |
16.34 |
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3.8 |
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$ |
35,658 |
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Vested and expected to vest - January 31, 2026 |
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4,384 |
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$ |
16.28 |
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3.6 |
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$ |
35,503 |
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Exercisable - January 31, 2026 (2) |
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2,066 |
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$ |
14.50 |
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2.5 |
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$ |
18,213 |
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The weighted-average grant date fair value of stock options granted during Fiscal 2025 and Fiscal 2024 was $4.12 and $10.61, respectively. The aggregate intrinsic value of options exercised during Fiscal 2025 and Fiscal 2024 was $4.4 million and $3.5 million, respectively. Cash received from the exercise of stock options and the actual tax detriment realized from share-based payments was $9.3 million and $1.5 million, respectively, for Fiscal 2025. Cash received from the exercise of stock options and the actual tax benefit realized from share-based payments was $3.8 million and $2.1 million, respectively, for Fiscal 2024.
As of January 31, 2026, there was $0.6 million of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted average period of 1.9 years.
The fair value of stock options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:
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Fiscal Years Ending |
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January 31, |
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February 1, |
Black-Scholes Option Valuation Assumptions |
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2026 |
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2025 |
Risk-free interest rate (1) |
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3.9% |
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4.4% |
Dividend yield |
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3.5% |
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1.9% |
Volatility factor (2) |
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47.5% |
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55.4% |
Weighted-average expected term (3) |
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4.5 years |
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4.5 years |
Restricted Stock Grants
Time-based restricted stock awards are composed of time-based restricted stock units. These awards vest over to three years. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original awards.
Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three-year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original awards.
The grant date fair value of time-based restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant. A Monte Carlo simulation was utilized for performance-based restricted stock awards.
A summary of the activity of the Company’s restricted stock is presented in the following tables:
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Time-Based Restricted Stock Units |
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Performance- |
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Fiscal Year Ending |
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Fiscal Year Ending |
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January 31, 2026 |
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January 31, 2026 |
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(Shares in thousands) |
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Shares |
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Weighted-Average |
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Shares |
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Weighted-Average |
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Non-vested - February 1, 2025 |
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2,360 |
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$ |
18.56 |
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2,218 |
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$ |
18.05 |
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Granted |
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2,109 |
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12.68 |
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1,096 |
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14.53 |
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Vested |
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(1,200 |
) |
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17.38 |
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(563 |
) |
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19.69 |
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Cancelled |
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(275 |
) |
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16.04 |
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(307 |
) |
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18.61 |
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Non-vested - January 31, 2026 |
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2,994 |
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$ |
15.12 |
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2,444 |
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$ |
16.02 |
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As of January 31, 2026, there was $25.6 million of unrecognized compensation expense related to non-vested time-based restricted stock unit awards that is expected to be recognized over a weighted average period of 1.8 years. There was $5.0 million of unrecognized compensation expense related to performance-based restricted stock unit awards that is expected to be recognized over a weighted average period of 1.7 years.
As of January 31, 2026, the Company had 7.3 million shares available for all equity grants.
During Fiscal 2025 and Fiscal 2024, the Company repurchased approximately 0.7 million and 0.6 million shares, respectively, from certain employees at market prices totaling $7.9 million and $13.8 million, respectively. These shares were repurchased for the payment of taxes in connection with the vesting of share-based payments, as permitted under our equity incentive plans.
The aforementioned share repurchases have been recorded as treasury stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 30, 2026 | Showing above |
| 2025 | Mar 20, 2025 | |
| 2024 | Mar 15, 2024 | |
| 2023 | Mar 13, 2023 | |
| 2022 | Mar 14, 2022 | |
| 2021 | Mar 11, 2021 | |
| 2020 | Mar 12, 2020 | |
| 2019 | Mar 14, 2019 | |
| 2018 | Mar 16, 2018 | |
| 2017 | Mar 10, 2017 | |
| 2016 | Mar 10, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.