Share Based Compensation

9 Months Ended

Sep. 28, 2024

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Share Based Compensation

Share-Based Compensation

Share-based compensation includes stock options, restricted stock units, performance-based restricted share units, and transactions under the Company's Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is recognized based on grant date fair value of all stock options, restricted stock units, and performance-based restricted share units. Share-based compensation expense is also recognized for the value of the 15% discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the market value on the first day of the purchase period or the market value on the purchase date, whichever is lower, and the employee’s purchase price.

There were no significant modifications to the Company’s share-based compensation plans during the fiscal nine months ended September 28, 2024.

Share-based compensation expense was $10.0 million and $15.0 million for the third quarter of fiscal 2024 and 2023, respectively, and $35.1 million and $45.2 million for the first nine months of fiscal 2024 and 2023, respectively.

Stock Options

The following table summarizes information concerning stock option grants during the first nine months of fiscal 2024:

	Fiscal Nine Months Ended
	September 28, 2024
Stock options granted	136,299
Weighted average exercise price	$	233.85
Weighted average grant date fair value per option	$	58.63

As of September 28, 2024, total unrecognized compensation expense related to non-vested stock options was approximately $10.1 million with a remaining weighted average expense recognition period of 2.0 years.

Restricted Stock Units and Performance-Based Restricted Share Units

The following table summarizes information concerning restricted stock unit and performance-based restricted share unit grants during the first nine months of fiscal 2024:

	Fiscal Nine Months Ended
	September 28, 2024
Restricted Stock Unit Activity
Awards granted	230,789
Weighted average grant date fair value per share	$	226.94
Performance-Based Restricted Share Unit Activity
Awards granted (a)	57,364
Weighted average grant date fair value per share - awards granted	$	235.54
Performance adjustment (b)	80,723
Weighted average grant date fair value per share - performance adjustment	$	120.37

(a) Assumes 100% target level achievement of the relative performance targets.

(b) Shares adjusted for performance-based restricted share unit awards settled during the first three months of fiscal 2024 based on actual achievement of performance targets.

In the first nine months of fiscal 2024, the Company granted performance-based restricted share unit awards that are subject to the achievement of specified performance goals. The performance metrics for the units are growth in net sales and growth in earnings per diluted share and also include a relative total shareholder return modifier. The number of performance-based restricted share units presented in the foregoing table represent the shares that can be achieved at the performance metric target value. The actual number of shares that will be issued under the performance-based restricted share unit awards, which may be higher or lower than the target, will be determined by the level of achievement of the performance goals and the relative total shareholder return modifier. If the performance targets are achieved, the units will be issued based on the achievement level, inclusive of the relative total shareholder return modifier, and the grant date fair value will cliff vest in full on the third anniversary of the date of the grant, subject to continued employment.

As of September 28, 2024, total unrecognized compensation expense related to non-vested restricted stock units and non-vested performance-based restricted share units was approximately $77.1 million with a remaining weighted average expense recognition period of 2.0 years.