12. Share-based Compensation

In fiscal 2016, 2015 and 2014, a total of 885, 1,096 and 583 shares of fully vested unrestricted stock, respectively, were granted to certain non-employee Directors of the Company. Accordingly, compensation expense related to the 2016, 2015 and 2014 unrestricted stock was recognized on the date of grant.

In fiscal 2016, 2015 and 2014, the Company granted a total of 6,675, 4,875 and 4,700 stock appreciation rights, respectively, under the 2010 Plan to the Company’s non-employee Directors. Such stock appreciation rights were fully vested upon grant, expire on the earlier of the eighth anniversary of the grant date or the second anniversary of the date that the Director ceases to be a member of the Board of Directors and must be settled in stock at the time of exercise. Accordingly, compensation expense related to the stock appreciation rights was recognized on the date of grant.

All Share-Based Awards issued to employees were granted with an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant and are subject to a five-year cliff-vesting schedule under which the awards become fully vested or exercisable after five years from the date of grant and expire ten years after the grant date. Share-Based Awards and shares of unrestricted stock granted to the Company’s non-employee Directors were fully vested as of the date of grant. Prior to fiscal 2009, non-employee Director Share-Based Award grants expired ten years from the grant date. Beginning in fiscal 2009, non-employee Director Share-Based Award grants expire on the earlier of the eighth anniversary of the grant date or the second anniversary of the date that the Director ceases to be a member of the Board of Directors

US GAAP requires that share-based compensation cost be measured at the grant date based on the value of the award and be recognized as expense over the requisite service period, which is generally the vesting period. Determining the fair value of Share-Based Awards at the grant date requires judgment, including estimating expected dividends, share price volatility and the amount of Share-Based Awards that are expected to be forfeited. The fair value of each Share-Based Award is estimated on the date of grant using the Black-Scholes option pricing model.

Compensation expense for all Share-Based Awards is recognized ratably over the related vesting period.

The Company recognizes compensation expense for restricted stock grants over the related vesting period. The fair value for each restricted and unrestricted stock grant is determined by using the closing price of the Company’s stock on the date of the grant.

On April 21, 2016, the Company entered into an Amended Employment Agreement with Mr. Croatti which extended the term of Mr. Croatti’s existing Employment Agreement, dated as of April 5, 2010, that expired on April 5, 2016. The Amended Employment Agreement provides for the employment of Mr. Croatti for a term of four years, subject to earlier termination as set forth in the Amended Employment Agreement.

Also on April 21, 2016, the Company entered into an Award Agreement with Mr. Croatti pursuant to which the Company granted 140,000 Performance Restricted Shares to Mr. Croatti, of which all remain unvested as of August 27, 2016. The number of Performance Restricted Shares to be earned will depend on whether and the extent to which the Company achieves certain Performance Criteria. The threshold, target and maximum numbers of Performance Restricted Shares eligible to be earned under the Award Agreement are 100,000, 120,000 and 140,000, respectively. The Performance Restricted Shares earned upon achievement of the Performance Criteria will vest in two equal amounts on the third and fourth anniversaries of the grant date provided that Mr. Croatti continues to be employed by the Company on each such date. In the event that Mr. Croatti’s employment is terminated without cause or by reason of death or disability prior to the vesting of the Performance Restricted Shares, all of the Performance Restricted Shares that have been or will be earned upon achievement of the Performance Criteria through the end of the fiscal year during which such termination occurred will become fully vested

The fair value of the Performance Restricted Shares was the closing price on April 21, 2016, which was $111.13.

Compensation expense for all share-based compensation, which includes Share-Based Awards and restricted stock grants, for the five fiscal years subsequent to August 27, 2016, is expected to be as follows (in thousands):

	Share-Based Awards		Restricted Stock		Total
2017	$	2,576	$	4,101	$	6,677
2018		2,165		4,214		6,379
2019		1,484		3,380		4,864
2020		652		1,181		1,833
2021		83		—		83
Total	$	6,960	$	12,876	$	19,836

As of August 27, 2016, the total compensation cost not yet recognized related to non-vested Share-Based Awards and restricted stock was approximately $19.8 million. The weighted average periods over which compensation cost for Share-Based Awards and restricted stock will be recognized are 2.2 years and 3.2 years, respectively.

The following table summarizes the Share-Based Award activity for the fiscal year ended August 27, 2016:

	Number of Shares			Weighted Average Exercise Price
Outstanding, August 29, 2015		645,001		$	73.72

Granted		95,875			104.55
Exercised		(111,935	)		46.35
Forfeited		(18,250	)		87.35

Outstanding, August 27, 2016		610,691		$	83.17

Exercisable, August 27, 2016		125,441		$	64.67