Share-Based Compensation

9 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company's share-based compensation consists of stock-settled stock appreciation rights (SARs), restricted stock unit awards with a service condition (time-based RSUs), restricted stock unit awards with a performance condition (performance-based RSUs), restricted stock unit awards with a market condition (market-based RSUs) and an employee stock purchase plan.

The Company recognizes expense related to the fair value of SARs and employee stock purchase plan using the Black-Scholes model to estimate the fair value of awards on the date of grant. SARs grant the right to receive shares of the Company's stock equivalent to the increase in stock value of a specified number of shares over a specified period of time, divided by the stock price at the time of exercise. The fair value of time-based RSUs and performance-based RSUs are measured on the grant date based on the market value of the Company's common stock. The market-based RSUs must achieve the total shareholder return (TSR) measures in order for the awards to vest, and the grant date fair value of the awards is calculated using a Monte Carlo simulation model.

The Company recognizes compensation expense for all share-based compensation awards, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. Expense for performance-based RSUs is recognized based on the probability of achievement of the performance criteria. The compensation cost for market-based RSUs is recognized over the related service period, even if the market condition is never satisfied.

The Company granted a total of 943,445 time-based RSUs, 443,565 market-based RSUs and 90,000 performance-based RSUs during the first three quarters of 2017, but did not grant any SARs. Grants for the third quarter of 2017 included 248,565 market-based RSUs and 229,445 time-based RSUs granted to the Company's newly appointed President and CEO.

Share-based compensation expense under the stock incentive plans is included in the Company’s Condensed Consolidated Statements of Operations as follows:



	Fiscal quarter ended				Three fiscal quarters ended
(In thousands)	December 31, 2016		January 2, 2016		December 31, 2016		January 2, 2016
Cost of sales	$	142	$	103	$	398	$	347
Selling, general and administrative	1,391		832		3,573		2,291
Research, development and engineering	285		188		656		613
Total share-based compensation expense	$	1,818	$	1,123	$	4,627	$	3,251

The Company does not capitalize share-based compensation costs. As of December 31, 2016, the Company had $10.6 million of total unrecognized share-based compensation costs, net of estimated forfeitures, which are expected to be recognized over a weighted average period of 1.8 years.