Stock-based Compensation

6 Months Ended

Sep. 28, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

On August 1, 2019, the Company's shareholders approved the 2019 Long-Term Stock Incentive Plan (the "2019 Incentive Plan"), which replaced the Company's Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan"). The 2019 Incentive Plan provides for 1.2 million of new shares authorized for issuance to the participants, in addition to the approximately 3.0 million shares that remained available for issuance under the 2010 Incentive Plan as of August 1, 2019. In addition, any outstanding awards under the 2010 Incentive Plan or the Company's 1997 Long-Term Stock Incentive Plan (the "1997 Incentive Plan") that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes, will become available for issuance under the 2019 Incentive Plan. The 2019 Incentive Plan became effective August 1, 2019 and no further grants will be made under the 2010 Incentive Plan. Outstanding awards issued prior to August 1, 2019 will continue to remain subject to the terms of the 2010 Incentive Plan or 1997 Incentive Plan, as applicable. Stock-based compensation awards that may be made under the 2019 Incentive Plan include, but are not limited to, (i) stock options, (ii) restricted stock, and (iii) RSUs.

Refer to Note 17 of the Fiscal 2019 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service, performance and market conditions, and payout percentages.

Impact on Results

A summary of total stock-based compensation expense and the related income tax benefits recognized during the three-month and six-month periods ended September 28, 2019 and September 29, 2018 is as follows:



	Three Months Ended							Six Months Ended
	September 28, 2019				September 29, 2018			September 28, 2019				September 29, 2018
	(millions)
Compensation expense	$	27.8		^(a)	$	21.3		$	50.8		^(a)	$	42.8
Income tax benefit	(4.1		)		(3.3		)	(7.7		)		(6.5		)


^(a)	Includes $3.6 million of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations during the second quarter of Fiscal 2020 (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.

The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grants and other factors, including the timing and magnitude of forfeiture and performance goal achievement adjustments, as well as changes to the size and composition of the eligible employee population, stock-based compensation expense recognized during any given fiscal period is not indicative of the level of compensation expense expected to be incurred in future periods.

Stock Options

A summary of stock option activity under all plans during the six months ended September 28, 2019 is as follows:



	Number of Options
	(thousands)
Options outstanding at March 30, 2019	834
Granted	—
Exercised	—
Cancelled/Forfeited	(263	)
Options outstanding at September 28, 2019	571

Restricted Stock Awards and Service-based RSUs

Restricted stock awards were granted to non-employee directors prior to Fiscal 2019. Effective beginning Fiscal 2019, non-employee directors are now granted service-based RSUs in lieu of restricted shares.

The fair values of service-based RSUs granted to certain of the Company's senior executives and other employees, as well as non-employee directors, are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested. The weighted-average grant date fair values of service-based RSU awards granted were $102.65 and $114.27 per share during the six-month periods ended September 28, 2019 and September 29, 2018, respectively.

A summary of restricted stock and service-based RSU activity during the six months ended September 28, 2019 is as follows:



	Number of Shares/Units
	Restricted Stock		Service-based RSUs
	(thousands)
Unvested at March 30, 2019	10		1,112
Granted	—		517
Vested	(6	)	(437	)
Forfeited	—		(53	)
Unvested at September 28, 2019	4		1,139

Performance-based RSUs

The fair values of the Company's performance-based RSUs granted to its senior executives and other key employees are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested. The weighted-average grant date fair values of performance-based RSUs granted were $83.16 and $129.78 per share during the six months ended September 28, 2019 and September 29, 2018, respectively.

A summary of performance-based RSU activity during the six months ended September 28, 2019 is as follows:



	Number of Performance-based RSUs
	(thousands)
Unvested at March 30, 2019	1,011
Granted	289
Change due to performance condition achievement	123
Vested	(482	)
Forfeited	(6	)
Unvested at September 28, 2019	935

Market-based RSUs

The Company grants market-based RSUs, which are based on TSR performance, to its senior executives and other key employees. The Company estimates the fair value of its TSR awards on the date of grant using a Monte Carlo simulation, which models multiple stock price paths of the Company's Class A common stock and that of its peer group to evaluate and determine its ultimate expected relative TSR performance ranking, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested.

The weighted-average grant date fair values of market-based RSUs granted were $90.59 and $177.13 per share during the six months ended September 28, 2019 and September 29, 2018, respectively. The assumptions used to estimate the fair value of TSR awards granted during the six months ended September 28, 2019 and September 29, 2018 were as follows:



	Six Months Ended
	September 28, 2019		September 29, 2018
Expected term (years)	2.6		2.6
Expected volatility	31.4	%	33.5	%
Expected dividend yield	3.2	%	1.9	%
Risk-free interest rate	1.4	%	2.6	%

A summary of market-based RSU activity during the six months ended September 28, 2019 is as follows:



	Number of Market-based RSUs
	(thousands)
Unvested at March 30, 2019	76
Granted	159
Change due to market condition achievement	—
Vested	—
Forfeited	(1	)
Unvested at September 28, 2019	234