Share-Based Compensation

3 Months Ended

Apr. 02, 2017

As of April 2, 2017, there were 868,221 stock options and 231,309 RSU and RSU MSP Awards outstanding. In addition, there were 762,708 shares available for grant under the 2014 Stock Option and Incentive Plan (the "2014 Plan") as of April 2, 2017.

During the three months ended April 2, 2017, we granted 142,428 stock options compared with 210,633 stock options granted during the three months ended April 3, 2016.

The average fair value of stock options granted during the first three months of 2017 and 2016 was $19.36 and $11.91, respectively, and was estimated using the following weighted-average assumptions:



	April 2, 2017		April 3, 2016
Risk-free interest rate	1.7	%	1.2	%
Expected life (years)	4.5		4.5
Expected stock volatility	35.1	%	36.2	%
Expected dividend yield	0.3	%	0.4	%

For additional information regarding the historical issuance of stock options, refer to our Form 10-K for the year ended December 31, 2016 filed with the SEC on February 21, 2017.

During the three months ended April 2, 2017 and April 3, 2016, we granted 53,855 and 84,578 RSU Awards with approximate fair values of $60.99 and $38.89 per RSU Award, respectively. During the first three months of 2017 and 2016, we granted performance-based RSUs as part of the overall mix of RSU Awards. These performance-based RSUs include metrics for achieving Return on Invested Capital and Adjusted Operating Margin with target payouts ranging from 0% to 200%. Of the 53,855 RSU Awards granted during the three months ended April 2, 2017, 31,369 are performance-based RSU Awards. This compares to 43,016 performance-based RSU Awards granted during the three months ended April 3, 2016.

RSU MSPs totaling 26,726 and 20,130 with per unit discount amounts representing fair values of $20.13 and $12.83 were granted during the three months ended April 2, 2017 and April 3, 2016, respectively.

Compensation expense related to our share-based plans for the three months ended April 2, 2017 and April 3, 2016 was $0.7 million and $1.5 million, respectively. The primary reason for lower expense during 2017 relates to a change in estimate of $0.7 million for anticipated below-threshold achievement of performance-based RSUs granted in February 2015. Compensation expense for both periods was recorded as selling, general and administrative expenses. As of April 2, 2017, there was $11.4 million of total unrecognized compensation costs related to our outstanding share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 2.3 years.

The weighted average contractual term for stock options outstanding and options exercisable as of April 2, 2017 was 6.0 years and 5.3 years, respectively. The aggregate intrinsic value of stock options exercised during the three months ended April 2, 2017 was $0.1 million and the aggregate intrinsic value of stock options outstanding and options exercisable as of April 2, 2017 was $8.6 million and $4.9 million, respectively.

The aggregate intrinsic value of RSU Awards settled during the three months ended April 2, 2017 was $1.5 million and the aggregate intrinsic value of RSU Awards outstanding and RSU Awards vested and deferred as of April 2, 2017 was $9.4 million and $0.2 million, respectively.

The aggregate intrinsic value of RSU MSPs settled during the three months ended April 2, 2017 was $0.3 million and the aggregate intrinsic value of RSU MSPs outstanding as of April 2, 2017 was $1.8 million. There were no vested and deferred RSU MSPs as of April 2, 2017.

As of April 2, 2017, there were 31,072 Cash Settled Stock Unit Awards outstanding compared to 33,320 as of December 31, 2016. During the three months ended April 2, 2017, the aggregate cash used to settle Cash Settled Stock Unit Awards was $0.3 million. As of April 2, 2017, we had $0.8 million of accrued expenses in current liabilities associated with these Cash Settled Stock Unit Awards compared with $1.0 million as of December 31, 2016. Cash Settled Stock Unit Awards related compensation (recoveries) / costs for the three months ended April 2, 2017 and April 3, 2016 was less than $(0.1) million and $0.2 million, respectively, and was recorded as selling, general, and administrative expenses.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details