STOCKHOLDERS' EQUITY

3 Months Ended

Apr. 01, 2016

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

At the end of the first quarter of 2016, there were 1.2 million shares reserved for issuance under all incentive plans. Under the current stock incentive plans, we pay non-employee directors annual retainer fees and, at their election, meeting fees in the form of stock units. Employee and director stock units are included in common stock outstanding on the date of vesting, and stock options are included in common stock outstanding upon exercise by the participant. The fair value of employee stock options and units is amortized over the respective vesting period representing the requisite service period, generally three, four or six years for stock units and four years for stock options. Director stock units are expensed in the period in which they are granted, as these vest immediately.

During the three months ended April 1, 2016, we initiated a performance-based restricted stock unit ("performance units") program that will vest in one-third tranches to be evaluated on the anniversary of the first, second and third performance cycles. Each evaluation period will be based on the achievement of our total shareholder return ("TSR") relative to the TSR of the S&P Mid Cap 400 index. The issuance of the vested shares will be on the final vesting date of year three. The granted units will be adjusted based on the specific payout percentage of the grant agreement. The fair value of each tranche related to the performance units were estimated at the grant date using the Monte Carlo Simulation pricing model.

During the three months ended April 1, 2016, we granted 395,602 stock units to employees, with a weighted-average grant-date fair value of $17.2 million. During the three months endedApril 1, 2016, we granted 85,839 performance units to employees, with a weighted-average grant-date fair value of $1.8 million. During the three months ended April 1, 2016, we granted directors 10,168 stock units, with a weighted-average grant-date fair value of $0.5 million. We exclude antidilutive stock options and units from the calculation of weighted-average shares for diluted earnings per share. For the first quarter of 2016 and 2015, the antidilutive stock options and units were immaterial.