Stock-Based Compensation

Our shareholders approved and ratified the 2014 Omnibus Share Incentive Plan (the “2014 Plan”), which allows us to grant equity-based compensation awards, including stock options, restricted stock awards and restricted stock units including performance stock units. We disclosed the significant terms of the 2014 Plan and prior plans in our annual financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2016.

Stock-based compensation expense included in selling, general and administrative expenses related to stock options, restricted stock awards ("RSA"), restricted stock units ("RSUs") and performance stock units ("PSUs") is included in the accompanying Consolidated Statements of Income were as follows (U.S. dollars in millions):



	Quarter ended				Nine months ended
	September 30, 2016		September 25, 2015		September 30, 2016		September 25, 2015
Stock Options	$	0.8	$	1.0	$	2.1	$	3.1
RSUs/PSUs	14.0		3.9		19.7		7.4
RSAs	—		—		0.9		0.7
Total	$	14.8	$	4.9	$	22.7	$	11.2

There were $2.6 million for the nine months ended September 30, 2016 and $1.1 million for the nine months ended September 25, 2015 due to the realization excess share-based payment deductions resulting from stock options exercised through a reduction in taxes currently payable and related effect on cash flows. Excess tax payment deductions occur when the intrinsic value of stock options exercised exceeds the recognized stock-based compensation expense. Proceeds of $10.7 million for the nine months ended September 30, 2016 and $32.6 million for the nine months ended September 25, 2015 were received from the exercise of stock-based options. During the quarter and nine months ended September 30, 2016, stock-based compensation expense of $8.9 million related to the President/COO's transition is included in asset impairment and other charges, net.

8. Stock-Based Compensation (continued)

Stock Option Awards

Under the 2014 Plan and prior plans, 20% of the options usually vest immediately, and the remaining options vest in equal installments over the next four years. Options under the 2014 Plan and prior plans may be exercised over a period not in excess of 10 years from the date of the grant. Prior plan provisions are still applicable to outstanding options and awards under those plans. There were no stock option grants for the nine months ended September 30, 2016 and for the nine months ended September 25, 2015.

The fair value for stock options was estimated at the date of grant using the Black-Scholes option pricing model, which requires us to make certain assumptions. Volatility is estimated based on the historical volatility of our stock over the past five years. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of grant. The dividend yield is estimated over the expected term based on our dividend policy, historical cash dividends and expected future

cash dividends. The expected term of grant was based on the contractual term of the stock option and expected employee exercise and post-vesting employment termination trends. Forfeitures are estimated based on historical experience.

Restricted Stock Awards

A share of “restricted stock” is one of our ordinary shares that has restrictions on transferability until certain vesting conditions are met.

For RSAs awarded under the 2014 Plan, 50% of each award of our restricted stock vested on the date it was granted. The remaining 50% of each award vests upon the six-month anniversary of the date on which the recipient ceases to serve as a member of our Board of Directors. Restricted stock awarded during the nine months ended September 30, 2016 and September 25, 2015 allows directors to retain all of their awards once they cease to serve as a member of our Board of Directors and is considered a nonsubstantive service condition in accordance with the guidance provided by the ASC on “Compensation – Stock Compensation”. Accordingly, it is appropriate to recognize compensation cost immediately for restricted stock awards granted to non-management members of the Board of Directors.

The following table lists restricted stock awards under the 2014 plan for the nine months ended September 30, 2016 and September 25, 2015 (U.S. dollars in millions except share and per share data):

Restricted Stock Units / Performance Stock Units

Under the 2014 Plan, each RSU/PSU represents a contingent right to receive one of our ordinary shares. The PSUs are subject to meeting minimum performance criteria set by the Compensation Committee of our Board of Directors. The actual number of shares the recipient receives is determined based on the results achieved versus performance goals. Those performance goals are based on exceeding a measure of our earnings. Depending on the results achieved, the actual number of shares that an award recipient receives at the end of the period may range from 0% to 100% of the award units granted. Provided such criteria are met, the PSUs will vest in three equal annual installments on each of the next three anniversary dates provided that the recipient remains employed with us. The RSUs will vest 20% on the award date and 20% on each of the next four anniversaries.

RSUs and PSUs do not have the voting rights of ordinary shares, and the shares underlying the RSUs and PSUs are not considered issued and outstanding. However, shares underlying PSUs are included in the calculation of diluted earnings per share to the extent the performance criteria are met.

8. Stock-Based Compensation (continued)

The fair market value for RSUs and PSUs is based on the closing price of our stock on the award date. Forfeitures are estimated based on population of employees and historical experiences.

The following table lists the various RSUs and PSUs awarded under the 2014 Plan for the nine months ended September 30, 2016 and September 25, 2015 (U.S. dollars in millions except share and per share data):



Date of award		Type of award	Units awarded	Price per share
September 2, 2016	⁽¹⁾	RSU	50,000	$	58.94
August 3, 2016		RSU	226,500	59.83
February 24, 2016		PSU	140,000	38.99
February 24, 2016		RSU	50,000	38.99
July 29, 2015		RSU	237,000	40.03
February 18, 2015		PSU	175,000	33.44
February 18, 2015		RSU	50,000	33.44

⁽¹⁾ New grant related to the President/COO transition

RSUs and PSUs are eligible to earn Dividend Equivalent Units ("DEUs") equal to the cash dividend paid to ordinary shareholders. DEUs are subject to the same performance and/or service conditions as the underlying RSUs and PSUs and are forfeitable.

We expense the fair market value of RSUs and PSUs, as determined on the date of award, ratably over the vesting period provided the performance condition, if any, is probable.

Date of award

Shares of
restricted stock
awarded

Price per share

January 4, 2016

January 2, 2015