8. Share-Based Compensation

2014 Incentive Plan

Effective September 23, 2014, and in connection with the IPO, SFSI adopted the Smart & Final Stores, Inc. 2014 Stock Incentive Plan (the “2014 Incentive Plan”). Effective March 13, 2017, the 2014 Incentive Plan was amended and restated to increase the number of shares that may be issued thereunder. The 2014 Incentive Plan provides for the issuance of equity-based incentive awards not to exceed 9,200,000 shares of Common Stock to eligible employees, consultants and non-employee directors in the form of stock options, restricted stock, other stock-based awards and performance-based cash awards. In addition, a number of shares of Common Stock equal to the number of shares of Common Stock underlying stock options that were previously issued under the 2012 Incentive Plan (as defined below) and that expire, terminate or are cancelled for any reason without being exercised in full will be available for issuance under the 2014 Incentive Plan.

On May 7, 2018, May 14, 2018 and July 30, 2018, the compensation committee of SFSI’s board of directors (the “Compensation Committee”) granted a total of 1,370,576 shares of restricted stock to certain management employees and non-employee directors under the 2014 Incentive Plan. These awards have time-based vesting terms subject to continuous employment with the Company. Except for the shares granted to non-employee directors, which vest in full one year from May 14, 2018, these awards vest in equal tranches of one-third each year over a three-year period on dates established by the Compensation Committee. During the forty weeks ended October 7, 2018, 112,880 shares of restricted stock were surrendered to the Company to cover the grantee’s income tax obligations in connection with the vesting of restricted stock awards.

The following table summarizes the restricted stock award activity under the 2014 Incentive Plan for the forty weeks ended October 7, 2018:


		Weighted-Average
		Grant Date
	Shares	Fair Value
Outstanding at December 31, 2017	1,954,604	$	11.38
Granted	1,370,576		4.97
Forfeited	(25,334)		9.59
Vested	(543,988)		13.04
Outstanding at October 7, 2018	2,755,858	$	7.88

The Company recorded share-based compensation expense related to the restricted stock awards of $2.9 million and $2.6 million for the sixteen weeks ended October 7, 2018 and October 8, 2017, respectively, and $7.8 million and $5.0 million for the forty weeks ended October 7, 2018 and October 8, 2017, respectively. As of October 7, 2018, the unrecognized compensation cost was $12.4 million and related weighted-average period over which restricted stock award expense was expected to be recognized was approximately 1.73 years.

On July 30, 2018, the Committee granted stock options to purchase up to a total of 12,593 shares of Common Stock to a certain management employee under the 2014 Incentive Plan. These awards vest in equal installments of 25% each year over a four-year period from dates established by the Committee subject to continuous employment with the Company.

The following table summarizes the time-based option activity under the 2014 Incentive Plan for the forty weeks ended October 7, 2018 (dollars in thousands except weighted average exercise price):


				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual		Aggregate
	Shares	Exercise Price		Term		Intrinsic Value
Outstanding at December 31, 2017	3,254,544	$	12.89	7.67	years	$	—
Granted	12,593		5.95
Forfeited	(54,652)		12.54
Exercised	—		—
Expired	(14,656)		13.26
Outstanding at October 7, 2018	3,197,829	$	12.86	6.92	years	$	—
Exercisable at October 7, 2018	1,945,169	$	12.65	6.47	years	$	—

Aggregate intrinsic value represents the difference between the closing stock price of the Common Stock and the exercise price of outstanding, in-the-money options. The Company's ticker symbol on the New York Stock Exchange is SFS.

The Company recorded share-based compensation expense for time-based options granted under the 2014 Incentive Plan of $0.7 million and $1.3 million for the sixteen weeks ended October 7, 2018 and October 8, 2017, respectively, and $2.3 million and $2.8 million for the forty weeks ended October 7, 2018 and October 8, 2017, respectively. As of October 7, 2018, the unrecognized compensation cost was $2.2 million and related weighted-average period over which time-based option expense was expected to be recognized was approximately 1.38 years.

2012 Incentive Plan

Effective November 15, 2012, SFSI adopted the SF CC Holdings, Inc. 2012 Stock Incentive Plan (the “2012 Incentive Plan”), which provides for the issuance of equity-based incentive awards not to exceed 11,400,000 shares of Common Stock. Effective upon closing of the IPO, no new awards may be granted under the 2012 Incentive Plan.

The following table summarizes the time-based option activity under the 2012 Incentive Plan for the forty weeks ended October 7, 2018 (dollars in thousands except weighted average exercise price):


				Weighted-
				Average
		Weighted-		Remaining			Aggregate
		Average		Contractual			Intrinsic
	Shares	Exercise Price		Term			Value
Outstanding at December 31, 2017	4,482,570	$	6.58	5.10	years	$	8,809
Forfeited	—		—
Exercised	(110,922)		5.27
Cancelled	—		—
Expired	(67,260)		6.59
Outstanding at October 7, 2018	4,304,388	$	6.62	4.33	years	$	—
Exercisable at October 7, 2018	4,304,388	$	6.62	4.33	years	$	—

The Company recorded share-based compensation expense for time-based options granted under the 2012 Incentive Plan of $0 and $0.3 million for the sixteen weeks ended October 7, 2018 and October 8, 2017, respectively, and $0.1 million and $0.6 million for the forty weeks ended October 7, 2018 and October 8, 2017, respectively. As of October 7, 2018, there was no unrecognized compensation cost.

In connection with the Ares Acquisition on November 15, 2012, certain stock options to purchase shares of common stock of the Predecessor were converted into 3,625,580 stock options to purchase Common Stock (the “Rollover Options”). In the event of a participant’s termination of employment for cause or upon discovery that the participant engaged in detrimental activity, if the Company elected to exercise its repurchase right, it was required to do so within a 180-day period commencing on the later of (i) the date of termination and (ii) the date on which such Rollover Option was exercised. In the event of a participant’s termination of employment for any other reason, the repurchase right was required to be exercised by the Company during the 90-day period following the date of termination.

The following table summarizes the Rollover Option activity for the forty weeks ended October 7, 2018 (dollars in thousands except weighted average exercise price):


				Weighted-
				Average
		Weighted-		Remaining		Aggregate
		Average		Contractual		Intrinsic
	Shares	Exercise Price		Term		Value
Outstanding at December 31, 2017	1,127,920	$	2.50	0.99	years
Forfeited	—		—
Exercised	(524,466)		2.48
Cancelled	—		—
Expired	—		—
Outstanding at October 7, 2018	603,454	$	2.51	0.25	years	$	—
Exercisable at October 7, 2018	603,454	$	2.51	0.25	years	$	—