STOCK-BASED COMPENSATION

Under the Company’s Amended and Restated Equity Incentive Plan (the “Plan”), the Compensation Committee of the Board of Directors may award incentive stock options, stock appreciation rights, restricted stock, unrestricted stock, stock deliverable on a deferred basis (including restricted stock units), and performance-based stock awards.

At the Company's May 13, 2011 shareholders' meeting, the shareholders approved an amendment to the Plan to (i) increase the maximum number of shares of stock available under the existing Plan by 3,725,000 shares from 12,053,392 shares to 15,778,392 shares and (ii)eliminate the Company's ability to grant cash awards and provide tax gross-ups under the Plan. As of January 3, 2015, there were 2,395,041 shares available for grant under the Plan. The Plan makes provision for the treatment of awards upon termination of service or in the case of a merger or similar corporate transaction. Participation in the Plan is limited to members of the Company's board of directors, executive officers and other key employees.

The limit on shares available under the Plan, the individual limits, and other award terms are subject to adjustment to reflect stock splits or stock dividends, combinations, and certain other events. All stock options issued under the Plan expire no later than ten years from the date of grant. The Company believes that the current level of authorized shares is sufficient to satisfy future option exercises.

The Company recorded stock-based compensation cost as follows:



	For the fiscal years ended
(dollars in thousands)	January 3, 2015		December 28, 2013		December 29, 2012
Stock options	$	4,672	$	4,728	$	4,093
Restricted stock:
Time-based awards	7,018		6,732		5,376
Performance-based awards	4,827		4,127		2,395
Stock awards	1,081		453		1,185
Total	$	17,598	$	16,040	$	13,049

All stock-based compensation expense was reflected as a component of selling, general, and administrative expenses, where participants' other compensation expenses are also recorded.

STOCK OPTIONS

Stock options vest in equal annual installments over a four-year period. The Company issues new shares to satisfy stock option exercises.

Changes in the Company's stock options for the fiscal year ended January 3, 2015 were as follows:



	Number of shares		Weighted- average exercise price	Weighted-average remaining contractual terms (years)	Aggregate intrinsic value (in thousands)

Outstanding, December 28, 2013	1,677,741		$35.37

Granted	228,700		$68.73
Exercised	(287,511	)	$31.53
Forfeited	(129,840	)	$49.50
Expired	(2,700	)	$47.85
Outstanding, January 3, 2015	1,486,390		$39.99	6.32	$	68,389

Vested and Expected to Vest, January 3, 2015	1,419,359		$39.20	6.34	$	66,433
Exercisable, January 3, 2015	867,115		$28.58	5.07	$	49,786

The intrinsic value of stock options exercised during the fiscal years ended January 3, 2015, December 28, 2013, and December 29, 2012 was approximately $12.9 million, $30.0 million, and $7.2 million, respectively. At January 3, 2015, there was approximately $7.1 million of unrecognized compensation cost (net of estimated forfeitures) related to stock options which is expected to be recognized over a weighted-average period of approximately 2.4 years.

The table below presents the assumptions used to calculate the fair value of options granted in each of the respective fiscal years:



	For the fiscal years ended
	January 3, 2015			December 28, 2013			December 29, 2012
Expected volatility	30.85		%	33.15		%	34.74		%
Risk-free interest rate	1.82		%	1.15		%	1.37		%
Expected term (years)	6.0			6.0			5.9
Dividend yield	1.11		%	0.91		%	—
Weighted average fair value of options granted	$	19.86		$	20.21		$	15.28

RESTRICTED STOCK AWARDS

Restricted stock awards issued under the Plan vest based upon continued service or performance targets.

The following table summarizes activity related to all restricted stock awards during the fiscal year ended January 3, 2015:



	Restricted stock awards		Weighted-average grant-date fair value
Outstanding, December 28, 2013	786,189		$	44.87
Granted	190,109		$	68.96
Vested	(184,133	)	$	42.24
Forfeited	(117,290	)	$	50.85
Outstanding, January 3, 2015	674,875		$	51.34

Time-based Restricted Stock Awards

Restricted stock awards vest in equal annual installments or cliff vest after a three- or four-year period. During fiscal year 2013, a total of 237,355 shares of restricted stock vested with an weighted-average fair value of $31.40 per share. During fiscal year 2012, a total of 194,455 shares of restricted stock vested with an weighted-average fair value of $27.90 per share. At January 3, 2015, there was approximately $11.3 million of unrecognized compensation cost (net of estimated forfeitures) related to restricted stock which is expected to be recognized over a weighted-average period of approximately 2.4 years.

Performance-based Restricted Stock Awards



Fiscal year	Number of shares granted	Fair market value per share
2012	152,000	$	42.61
2013	118,200	$	59.27
2014	61,200	$	68.49

As of January 3, 2015, the performance targets for the shares granted in 2011 and 2012 were met and these grants will become fully vested in the first quarter of fiscal 2015 if the remaining service requirements are also achieved.

Vesting of shares granted in 2013 and 2014 is contingent upon meeting specific performance targets through fiscal 2015 and 2016, respectively. Currently, the Company believes these targets will be achieved and has recorded compensation expense based on the proration of the total ultimate expected value of the award.

At January 3, 2015, there was approximately $5.2 million of unrecognized compensation cost (net of estimated forfeitures) related to performance-based restricted stock awards which is expected to be recognized over a weighted-average period of approximately 1.6 years.

Stock Awards

During fiscal years 2014, 2013 and 2012, the Company issued fully-vested shares of its common stock to non-management members of the Company's board of directors, as follows:



	Number of shares issued	Fair value per share	Aggregate value (in thousands)
2012	21,708	$49.76	$1,080
2013	16,173	$66.79	$1,080
2014	14,859	$72.72	$1,081

The Company received no proceeds from the issuance of these shares.