Stock-based compensation

3 Months Ended

Apr. 02, 2016

Share-based Compensation [Abstract]

Stock-based compensation

Stock-based compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value estimated in accordance with the provisions of the FASB ASC 718-10. Compensation expense is recognized on a straight-line basis over the options’ or other awards’ estimated lives for fixed awards with ratable vesting provisions.

Under the Company’s 2012 Incentive Plan (“2012 Plan”), the Company's principal stock compensation plan as of May 9, 2012, the Company reserved up to a maximum of 3,200 shares of common stock for issuance upon the grant or exercise of stock options, restricted stock, restricted stock units (“RSUs”) and other types of awards, to directors and key employees through 2022. Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years with a 10-year contractual term. Restricted stock and RSUs are granted with a price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years.

The Company did not grant any options for the three months endedApril 2, 2016 and April 4, 2015. The Company recognized stock-based compensation costs related to stock options of $10 ($6 net of taxes) and $155 ($98 net of taxes) for the three months endedApril 2, 2016 and April 4, 2015, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. Pre-tax unrecognized compensation expense for stock options granted to employees and outside directors, net of estimated forfeitures, was $23 as of April 2, 2016, and will be recognized as expense over a weighted-average period of approximately 0.89 years.

The fair value of the option award is estimated on the date of grant using the Black-Scholes-Merton valuation model. Expected volatility is based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate option exercise and forfeiture rates within the valuation model.

The Company granted 182 RSUs at a weighted-average grant-date fair value of $184.88 per unit for the three months endedApril 2, 2016. The Company granted 158 RSUs at a weighted average grant-date fair value of $182.99 per unit for the three months endedApril 4, 2015. The Company recognized stock-based compensation costs related to the issuance of RSUs of $9,049 ($5,491 net of taxes) and $8,281 ($5,246 net of taxes) for the three months endedApril 2, 2016 and April 4, 2015, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. Pre-tax unrecognized compensation expense for unvested RSUs granted to employees, net of estimated forfeitures, was $45,129 as of April 2, 2016, and will be recognized as expense over a weighted-average period of approximately 2.28 years.