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. The Plan was last approved for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, at the Company's May 11, 2016 Shareholders' meeting. As of December 30, 2017, there were 1,100,157 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 grants for the foreseeable future.

The Company recorded stock-based compensation cost as follows:



	For the fiscal years ended
(dollars in thousands)	December 30, 2017		December 31, 2016		January 2, 2016
Stock options	$	4,244	$	4,237	$	4,350
Restricted stock:
Time-based awards	7,532		7,451		6,855
Performance-based awards	4,602		3,974		4,728
Stock awards	1,171		1,185		1,096
Total	$	17,549	$	16,847	$	17,029

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 December 30, 2017 were as follows:



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

Outstanding, December 31, 2016	1,441,210		$52.70

Granted	338,356		$84.29
Exercised	(240,850	)	$35.03
Forfeited	(40,828	)	$83.99
Expired	(3,665	)	$87.46
Outstanding, December 30, 2017	1,494,223		$61.76	5.87	$	83,277

Vested and Expected to Vest, December 30, 2017	1,422,339		$60.53	5.72	$	81,011
Exercisable, December 30, 2017	907,065		$46.77	4.19	$	64,145

The intrinsic value of stock options exercised during the fiscal years ended December 30, 2017, December 31, 2016, and January 2, 2016 was approximately $14.9 million, $9.0 million, and $13.2 million, respectively. At December 30, 2017, there was approximately $7.7 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 2.6 years.

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



	For the fiscal years ended
	December 30, 2017			December 31, 2016			January 2, 2016
Expected volatility	26.20		%	26.95		%	31.65		%
Risk-free interest rate	2.06		%	1.33		%	1.65		%
Expected term (years)	6.0			6.0			6.0
Dividend yield	1.77		%	1.45		%	1.06		%
Weighted average fair value of options granted	$	19.57		$	21.41		$	24.59

RESTRICTED STOCK AWARDS

Restricted stock awards issued under the Plan vest based upon: 1) continued service (time-based) or 2) a combination of continued service and performance targets (performance-based).

The following table summarizes activity related to all restricted stock awards during the fiscal year ended December 30, 2017:



	Restricted stock awards		Weighted-average grant-date fair value
Outstanding, December 31, 2016	405,699		$	81.29
Granted	178,240		$	84.11
Vested	(168,471	)	$	74.00
Forfeited	(17,620	)	$	83.92
Outstanding, December 30, 2017	397,848		$	85.44

During fiscal 2016, a total of 218,335 shares of restricted stock vested with a weighted-average fair value of $62.98 per share. During fiscal 2015, a total of 352,396 shares of restricted stock vested with a weighted-average fair value of $43.20 per share. At December 30, 2017, there was approximately $17.9 million of unrecognized compensation cost (net of estimated forfeitures) related to all restricted stock awards which is expected to be recognized over a weighted-average period of approximately 2.2 years.

Time-based Restricted Stock Awards

Time-based restricted stock awards vest in equal annual installments or cliff vest after a three- or four-year period. During fiscal years 2017, 2016, and 2015, a total of 114,703 shares, 124,135 shares, and 148,396 shares, respectively, of time-based restricted stock vested with a weighted-average fair value of $76.58 per share, $65.80 per share, and $51.67 per share, respectively. At December 30, 2017, there was approximately $12.7 million of unrecognized compensation cost (net of estimated forfeitures) related to time-based restricted stock which is expected to be recognized over a weighted-average period of approximately 2.5 years.

Performance-based Restricted Stock Awards



Fiscal year	Number of shares granted	Weighted-average fair value per share
2015	50,600	$	82.40
2016	53,070	$	90.66
2017	60,952	$	83.84

During the fiscal year ended December 30, 2017, a total of 53,768 performance shares vested with a weighted-average fair value of $68.49 per share. As of December 30, 2017, a total of 158,994 performance shares were unvested with a weighted-average fair value of $85.60 per share. Vesting of these 158,994 performance shares is based on the performance targets for the shares granted in fiscal 2017, 2016, and 2015. As of December 30, 2017, there was approximately $5.2 million of unrecognized compensation cost (net of estimated forfeitures) related to the unvested performance-based restricted stock awards which is expected to be recognized over a weighted-average period of approximately 1.7 years.

The Company estimates that all of the performance targets will be fully achieved and is recognizing compensation cost ratably over the applicable performance periods based on estimated achievement at the end of each reporting period.

Stock Awards

Included in restricted stock awards are grants to non-management members of the Company's Board of Directors. At issuance, these awards were fully vested and issued as shares of the Company's common stock. During fiscal years 2017, 2016, and 2015, such awards were as follows:



	Number of shares issued	Fair value per share	Aggregate value (in thousands)
2015	10,933	$100.21	$1,095
2016	12,758	$101.10	$1,290
2017	13,860	$84.46	$1,171

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