NOTE 15 - SHARE BASED COMPENSATION

Share based compensation expense is recognized as General and Administrative Expenses on the Condensed Consolidated Statements of Income and consists of costs from the Spectrum equity plan. The following is a summary of share based compensation expense for the three nine month periods ended December 30, 2018 and December 31, 2017 for SBH and SB/RH, respectively.


	Three Month Periods Ended
(in millions)	December 30, 2018		December 31, 2017
SBH	$	6.0	$	4.5
SB/RH	$	5.6	$	3.5

The Company recognizes share based compensation expense primarily from the issuance of its Restricted Stock Units (“RSUs”) based on the fair value of the awards, as determined by the market price of the Company’s shares of common stock on the designated grant date and recognized on a straight-line basis over the requisite service period of the awards. Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics over a designated period of time.

During the three month period ended December 30, 2018, the Company provided to certain employees RSU awards issued under a new Long-Term Incentive Plan (“LTIP”), with a 3-year, cliff vesting schedule and having both performance conditions dependent upon achieving specified financial targets (adjusted EBITDA and adjusted free cash flow) and time-based service conditions (70% performance /30% service). LTIP awards are expected to be granted on an annual basis, pending approval from the Company’s Board of Directors. In addition to the LTIP awards, the Company also provided for bridge awards that are one-time awards to certain employees for transitioning to the new LTIP from previous equity incentive compensation plans. Bridge awards vest annually, on November 21, 2019 and November 21, 2020, and have both performance conditions dependent upon achieving specified financial targets (adjusted EBITDA and adjusted free cash flow) and time-based service conditions (60% performance/40% service). Bridge awards are also payable in either RSUs or cash, or both, based upon an employee election. Bridge awards elected to be payable in RSU are recognized as equity awards and included as a component of share-based compensation expense. While the Company has provided for and communicated the LTIP and bridge awards to its employees at the end of the three month period, the awards have not been considered granted or recognized in share-based compensation until beginning in January 2019, subsequent to the balance sheet date of December 30, 2018.

Additionally, the Company regularly issues individual RSU awards under its equity plan to its Board members and individual employees for recognition, incentive, or retention purposes, as considered needed, which are primarily conditional upon time-based service conditions and included as a component of share-based compensation. In addition to RSU awards, Spectrum also provides for a portion of its annual management incentive compensation plan (“MIP”) to be paid in common stock of the Company, in lieu of cash payment, and is recognized as a liability plan. Share based compensation expense associated with the annual MIP was $2.8 million and ($0.3) million for the three month periods ended December 30, 2018 and December 31, 2017, respectively. The remaining unrecognized pre-tax compensation cost for SBH and SB/RH at December 30, 2018 was $7.0 million and $5.9 million, respectively.

NOTE 15 - SHARE BASED COMPENSATION (continued)

The following summary of the activity in Spectrum RSUs during the three month period ended December 30, 2018:

SBH

SB/RH

Weighted

Fair

Weighted

Fair

Average

Value

Average

Value

Grant Date

at Grant

Grant Date

at Grant

(in millions, except per share data)

Units

Fair Value

Date

Units

Fair Value

Date

Time-based grants

0.1

54.80

4.9

0.1

48.99

3.3



	SBH					SB/RH
		Weighted		Fair			Weighted		Fair
		Average		Value			Average		Value
		Grant Date		at Grant			Grant Date		at Grant
(in millions, except per share data)	Shares	Fair Value		Date		Shares	Fair Value		Date
At September 30, 2018	0.6	$	107.71	$	69.0	0.6	$	108.75	$	67.2
Granted	0.1		54.80		4.9	0.1		48.99		3.3
Forfeited	(0.4)		112.79		(51.0)	(0.4)		113.46		(50.7)
Vested	(0.1)		86.42		(11.8)	(0.1)		84.73		(10.6)
At December 30, 2018	0.2	$	107.43	$	11.1	0.2	$	108.89	$	9.2

The Company also has 0.2 million shares of fully vested stock options with a weighted average exercise price of $73.29 that have various expiration dates through November 2026 that remain outstanding and exercisable as of December 30, 2018. There were no stock options granted, exercised, forfeited, or vested during the three month period ended December 30, 2018.