Stock-Based Compensation

3 Months Ended

Mar. 28, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The Company recognized compensation expense of $6.7 million and related income tax benefits of $2.2 million for grants under its stock-based compensation plans for the 12 weeks ended March 28, 2015. The Company recognized compensation expense of $4.6 million and related income tax benefits of $1.5 million for grants under its stock-based compensation plans for the 12 weeks ended March 22, 2014.

Stock-based compensation expense recognized in the consolidated condensed statements of operations and comprehensive income is based on awards ultimately expected to vest and, as such, has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

The Company estimated the fair value of employee stock options on the date of grant using the Black-Scholes model. The estimated weighted average fair value for each option granted during the 12 weeks ended March 28, 2015 and March 22, 2014 was $6.30 and $6.19, respectively, with the following weighted average assumptions:



	12 Weeks Ended
	March 28, 2015		March 22, 2014
Expected market price volatility ⁽¹⁾	28.8	%	29.6	%
Risk-free interest rate ⁽²⁾	1.3	%	1.1	%
Dividend yield ⁽³⁾	0.9	%	0.9	%
Expected term ⁽⁴⁾	4 years		4 years


⁽¹⁾	Based on historical volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price of the stock over the four years prior to the grant.


⁽²⁾	Represents the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant.


⁽³⁾	Represents the Company’s estimated cash dividend yield for the expected term.


⁽⁴⁾	Represents the period of time that options granted are expected to be outstanding. As part of the determination of the expected term, the Company concluded that all employee groups exhibit similar exercise and post-vesting termination behavior.

The Company issued 1,746,536 and 1,227,651 shares of common stock in connection with new restricted stock grants made and the exercise of stock options during the 12 weeks ended March 28, 2015 and March 22, 2014, respectively. During the 12 weeks ended March 28, 2015 and March 22, 2014, the Company canceled 143,010 and 252,213 shares, respectively, of common stock issued under restricted stock awards as a result of forfeitures.

- 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