Share-Based Compensation Plans

Shared-based Employee Compensation: The Stock Compensation Topic of the FASB ASC 718 ("ASC 718") requires that we measure the cost of employee services received in exchange for an equity award, such as stock options, restricted stock awards and restricted stock units, based on the estimated fair value of the award on the grant date. The cost is recognized in the income statement over the vesting period of the award on a straight-line basis with the exception of compensation cost related to awards for retirement eligible employees, which are recognized immediately upon grant. Compensation cost recognized is based on the grant date fair value estimated in accordance with ASC 718.

On September 13, 2010, our stockholders approved the Bob Evans Farms, Inc. 2010 Equity and Cash Incentive Plan (the “2010 Plan”). Upon approval, the 2010 Plan became our primary plan under which new stock-based compensation can be granted. At April 29, 2016, there were awards outstanding under the 2010 Plan, as well as previous equity plans adopted in 2006, 1998 and 1992.

The types of awards that may be granted under the 2010 Plan include: stock options, stock appreciation rights, restricted stock, restricted stock units, cash incentive awards, performance shares, performance units, and other awards. The Compensation Committee of the Board of Directors administers the 2010 Plan, including establishing the terms and conditions of the awards. The 2010 Plan allows the Compensation Committee to make awards to any of our employees, consultants, or nonemployee directors. The 2010 Plan imposes various restrictions on awards, including a maximum life of 10 years for stock options and stock appreciation rights and a minimum exercise price equal to the grant date stock price for stock options and stock appreciation rights. The remaining shares available for issue under the 2006 Equity and Cash Incentive Plan (the “2006 Plan”) became available for issuance under the 2010 Plan effective September 13, 2010.

In 2006, we adopted a performance incentive plan (“PIP”) designed to align the compensation of executive officers and senior management with our financial and operational performance. The PIP provides for awards of cash, whole shares, restricted shares and stock options, generally vesting over three years. All stock-based awards made under the PIP prior to September 11, 2006, were awarded out of, and in accordance with, the 1998 plan. All PIP stock-based awards made from the period September 12, 2006, to June 22, 2010, were awarded out of, and in accordance with, the 2006 Plan. All PIP stock-based awards made subsequent to that date have been awarded out of, and in accordance with, the 2010 Plan.

The 1998 plan provided that the option price for incentive stock options may not be less than the fair market value of the stock at the grant date, and nonqualified stock options shall be determined by the Compensation Committee of the Board of Directors.

The 1992 plan was adopted in connection with our supplemental executive retirement plan (“SERP”), which provides retirement benefits to certain key management employees. In the past, SERP participants could elect to have their awards allocated to their accounts in cash or, when permitted by the Compensation Committee, they could receive an equivalent value of nonqualified stock options. The 1992 plan provided that the option price could not be less than 50 percent of the fair market value of the stock at the date of grant. The last grant of stock options under the 1992 plan was in fiscal 2003. Since fiscal 2003, all SERP awards have been allocated to participants’ accounts in cash.

In fiscal 2016, we granted market-based performance share units ("PSUs"), restricted stock awards ("RSAs") and restricted stock units ("RSUs"). The PSUs granted under the 2010 Plan have market-based vesting conditions, while RSAs and RSUs granted under the 2010 Plan vest ratably, primarily over three years for employees, and one year for nonemployee directors of the Company. The PSUs awarded in the first quarter of fiscal 2016 vest at the end of a three-year performance period if they achieve the market-based vesting conditions. The PSUs were valued using a Monte Carlo simulation with the number of shares that ultimately vest dependent on the Company's total stockholder return, measured against the total stockholder return of a select group of peer companies over a three-year period. The number of shares that ultimately vest can vary from 0% to150% of target depending on the level of achievement of performance criteria. RSAs and RSUs are valued based on the stock closing price on the grant date. During fiscal years 2016, 2015 and 2014, we issued treasury shares to satisfy the vesting of restricted awards and stock option exercises.

Total stock-based compensation expense from continuing operations in fiscal years 2016, 2015 and 2014, was $6,127, $2,967 and $7,105 respectively. The related tax benefit recognized was $2,328, $1,127 and $2,700 in fiscal years 2016, 2015 and 2014, respectively. Expense associated with stock-based compensation is primarily reflected in S,G&A expense.

Stock Options

The following table summarizes option-related activity for fiscal 2016:



Options	Shares Subject to Options		Weighted-Average Exercise Price
Outstanding, Beginning of Year	48,032		$	31.79
Granted	—		—
Exercised	(9,585	)	26.32
Forfeited or expired	(407	)	23.22
Outstanding, End of Year	38,040		$	33.26



	Shares	Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding	38,040	$	33.26	2.38	$	467
Options exercisable	38,040	$	33.26	2.38	$	467

As of April 29, 2016, there was no remaining unrecognized compensation cost related to outstanding stock options. The total intrinsic value of options exercised during fiscal years 2016, 2015 and 2014 was $195, $567 and $8,124, respectively. Cash received from the exercise of options was $214, $534 and $13,432 for fiscal years 2016, 2015 and 2014, respectively.

Cash flows resulting from the tax benefits of tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) are classified as financing cash flows. In fiscal years 2016, 2015 and 2014, excess tax benefits of $1,661, $228 and $1,756, respectively, were classified as financing cash flows in the Consolidated Statements of Cash Flows.

Restricted Stock

A summary of the status of our non-vested restricted stock awards and restricted stock units as of April 29, 2016, and changes during fiscal 2016 is presented below:



Restricted Stock Awards	Shares		Weighted-Average Grant Date Fair Value
Non-vested, Beginning of Year	155,949		$	41.39
Granted	12,078		46.63
Vested	(66,573	)	43.95
Forfeited	(11,799	)	35.76
Non-vested, End of Year	89,655		$	40.93



Restricted Stock Units	Shares		Weighted-Average Grant Date Fair Value
Non-vested, Beginning of Year	88,867		$	45.40
Granted	119,291		46.34
Vested	(57,059	)	46.89
Forfeited	(5,981	)	47.38
Non-vested, End of Year	145,118		$	45.51

At April 29, 2016, there was $5,085 of unrecognized compensation cost related to non-vested restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 1.69 and 1.83 years for non-vested RSAs and RSUs, respectively. The total fair value of awards granted during fiscal years 2016, 2015 and 2014 was $6,092, $4,649 and $9,340, respectively. The total fair value of awards that vested during fiscal years 2016, 2015 and 2014 was $5,601, $10,136 and $7,813, respectively.

In addition to the shares subject to outstanding options and unvested restricted stock units and performance share units, approximately 3.4 million shares were available for grant under the 2010 Plan at April 29, 2016.

Performance Share Units



Performance Share Units	Shares		Weighted-Average Grant Date Fair Value
Non-vested, Beginning of Year	—		$	—
Granted	70,270		54.76
Vested	—		—
Forfeited	(8,524	)	54.76
Non-vested, End of Year	61,746		$	54.76

At April 29, 2016, there was $2,363 of unrecognized compensation cost related to non-vested PSUs. This cost is expected to be recognized over a weighted-average period of 1.99 years. The total fair value of PSU awards granted during fiscal 2016 was $3,848. The weighted-average assumptions used for PSUs in the Monte Carlo simulation during fiscal 2016 was as follows:



	Fiscal 2016 PSU grants
Grant date market price	$	48.95
Fair value	$	54.76
Assumptions:
Price volatility	29.4		%
Risk-free interest rate	1.03		%
Average volatility of peer companies	32.6		%
Average correlation coefficient of peer companies	0.846