Stock-Based Compensation

Under the Equity Incentive Plan, amended and restated February 15, 2017 and approved by the stockholders of the Company on May 10, 2017 (the “EIP”), the Company may grant stock options (both incentive and nonqualified), stock appreciation rights, restricted stock and performance awards to key employees associated with the Company’s Class A stock. For shares granted prior to May 10, 2017, the EIP provides that the maximum number of shares available for grants is 15 percent of the outstanding Class A Stock, adjusted for EIP activity over the preceding 5 years. For shares granted after May 10, 2017, the amended EIP provides that the maximum number of shares available for grants is 4.7 million. The Company has no plans to issue additional shares under the provision that was in effect prior to May 10, 2017. Under the provision that was in effect for shares granted after May 10, 2017, shares available for future grants at year-end 2017 were 4.5 million. The Company issues shares out of treasury stock to satisfy stock-based awards. The Company presently has no intent to repurchase additional shares for the purpose of satisfying stock-based awards.

The Company recognized stock-based compensation cost of $9.1 million in 2017, $10.2 million in 2016 and $7.9 million in 2015, as well as related tax benefits of $4.2 million in 2017, $3.9 million in 2016 and $3.0 million in 2015.

Restricted Stock

Restricted stock, which typically vests over four years, is issued to certain key employees and is subject to forfeiture until the end of an established restriction period. The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.

A summary of the status of nonvested restricted stock under the EIP as of year-end 2017 and changes during this period is presented as follows below (in thousands of shares except per share data):



	Restricted Stock		Weighted Average Grant Date Fair Value
Nonvested at year-end 2016	653		$	16.58
Granted	209		21.97
Vested	(242	)	16.93
Forfeited	(180	)	17.04
Nonvested at year-end 2017	440		$	18.76

As of year-end 2017, unrecognized compensation cost related to unvested restricted stock totaled $6.2 million. The weighted average period over which this cost is expected to be recognized is approximately 1.7 years. The weighted average grant date fair value per share of restricted stock granted during 2017, 2016 and 2015 was $21.97, $17.08 and $15.85, respectively. The total fair value of restricted stock, which vested during 2017, 2016 and 2015, was $5.8 million, $6.4 million and $5.4 million, respectively.

Performance Shares

During 2017, 2016, and 2015, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers. The payment of performance shares, which will be satisfied with the issuance of shares out of treasury stock, is contingent upon the achievement of specific gross profit and operating earnings performance goals over a stated period of time.

2017 Grant

For the 2017 performance share grant (“2017 grant”), the total target number of performance shares granted is 387,000, of which 304,000 shares are eligible to earn up to the maximum number of performance shares of 609,000, which assumes 200% of the target shares originally granted. Target shares of 203,000 may be earned upon achievement of two financial goals (“financial measure performance shares”) and target shares of 101,000 may be earned based on the Company’s total shareholder return (“TSR”) relative to the S&P SmallCap 600 Index (“TSR performance shares”). These financial measure performance and TSR performance shares have a three-year performance period through December 31, 2019 and if earned, will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2020, if not forfeited by the recipient. No dividends are paid on financial measure and TSR performance shares. The 2017 grant also included 83,000 single financial measure performance shares, which have one performance measure with a one-year performance period. These single financial measure performance shares vest over four years and earn dividends, which are not paid until the awards vest.

The financial measure performance shares have a weighted average grant date fair value of $21.07. For each of the two financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2017, 2018, and 2019 goals. Accordingly, the Company remeasures the fair value of the 2017 financial measure performance shares each reporting period until the 2019 goals are set, after which the fair value will be fixed for the remaining performance period. As of year-end 2017, the current fair value for financial measure performance shares is $26.40. The total nonvested shares at maximum level (200%) related to financial measure performance awards at year-end is 279,000.

The TSR performance shares have an estimated fair value of $20.16, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free rate. The total nonvested shares at maximum level (200%) related to TSR performance awards at year-end 2017 is 139,000.

2016 Grant

For the 2016 performance share grant (“2016 grant”), the total target number of performance shares granted is 332,000, and the maximum number of performance shares that may be earned is 663,000, which assumes 200% of the target shares originally granted. Target shares of 249,000 may be earned upon the achievement of three financial goals (“financial measure performance shares”) and target shares of 83,000 may be earned based on the Company’s total shareholder return relative to the S&P SmallCap 600 Index (“TSR performance shares”). These financial measure performance and TSR performance shares have a three-year performance period through December 31, 2018, and if earned, will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2019, if not forfeited by the recipient. No dividends are paid on financial measure and TSR performance shares.

The financial measure performance shares have a weighted average grant date fair value of $15.85. For each of the three financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2016, 2017 and 2018 goals. Accordingly, the Company remeasures the fair value of the 2016 financial measure performance shares each reporting period until the 2018 goals are set, after which the fair value will be fixed for the remaining performance period. As of year-end 2017, the current fair value for financial measure performance shares is $26.40. The total nonvested shares at maximum level (200%) related to financial measure performance awards at year-end 2017 is 370,000.

The TSR performance shares have an estimated fair value of $19.73, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate. The total nonvested shares at maximum level (200%) related to TSR performance awards at year-end 2017 is 123,000.

2015 Grant

For the 2015 performance share grant (“2015 grant”), the total target number of performance shares granted is 375,000, and the maximum number of performance shares that may be earned is 750,000, which assumes 200% of the target shares originally granted. Target shares of 250,000 may be earned upon the achievement of two financial goals (“financial measure performance shares”) and target shares of 125,000 may be earned based on the Company’s total shareholder return relative to the S&P SmallCap 600 Index (“TSR performance shares”). No dividends are paid on financial measure or TSR performance shares.

The 2015 financial measure performance shares, which have a weighted average grant date fair value of $16.31, had a one-year performance measure through fiscal 2015 and will vest after the completion of an additional two-year service period. Based upon the level of achievement of specific financial performance goals for the 2015 grant, participants had the ability to receive up to 200% of the target number of shares originally granted. On February 17, 2016, the Compensation Committee approved the actual performance achievement of the financial measure performance shares for the 2015 grant. Actual performance resulted in participants achieving 115% of target. These financial measure performance shares will cliff-vest after the approval of the Compensation Committee, which will be no later than March 15, 2018, if not forfeited by the recipient. The total nonvested shares related to 2015 financial measure performance awards at year-end 2017 is 250,000.

The 2015 TSR performance shares have a three-year performance measure with vesting at the end of the performance period. TSR performance shares have an estimated fair value of $16.01, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate. Based upon the level of achievement of the Company’s TSR relative to the S&P SmallCap 600 Index for the 2015 grant, participants had the ability to receive up to 200% of the target number of shares originally granted. On February 14, 2018, the Compensation Committee approved the actual achievement of the TSR performance shares for the 2015 grant. Actual performance resulted in participants achieving 200% of target. These TSR performance shares will cliff-vest after the approval of the Compensation Committee, which will be no later than March 15, 2018, if not forfeited by the recipient. The total nonvested shares at maximum level (200%) related to TSR performance awards at year-end 2017 is 217,000.

A summary of the status of all nonvested performance shares at target for 2017 is presented as follows below (in thousands of shares except per share data). Forfeitures primarily relate to the retirement of the Company’s former President and Chief Executive Officer in the second quarter of 2017.



	Financial Measure Performance Shares				TSR Performance Shares
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested at year-end 2016	499		$	19.17	208		$	17.49
Granted	286		21.32		101		20.16
Vested	—		—		—		—
Forfeited	(193	)	20.51		(69	)	19.04
Nonvested at year-end 2017	592		$	22.32	240		$	18.17

As of year-end 2017, unrecognized compensation cost related to all unvested financial measure performance shares and TSR performance shares totaled $3.7 million and $1.2 million, respectively. The weighted average period over which the costs are expected to be recognized is approximately 1.8 years for financial measure performance shares and 1.7 years for TSR performance shares.