16. Stock-Based Compensation

On October 23, 2013, the Company’s shareholders approved the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan replaced the 2008 Unifi, Inc. Long-Term Incentive Plan (“2008 LTIP”). No additional awards will be granted under the 2008 LTIP; however, prior awards outstanding under the 2008 LTIP remain subject to that plan’s provisions. The 2013 Plan authorized the issuance of 1,000 shares of common stock, subject to certain increases in the event outstanding awards under the 2008 LTIP or 2013 Plan expire, are forfeited or otherwise terminate unexercised.

As of June 26, 2016, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2013 Plan	1,000
Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP or 2013 Plan	290
Less: Awards granted to employees	(258	)
Less: Awards granted to non-employee directors	(70	)
Available for issuance under the 2013 Plan	962

Stock options

During fiscal 2016, 2015 and 2014, the Company granted stock options to purchase 82, 150 and 97 shares of stock, respectively, to certain key employees. The stock options vest ratably over the required three-year service period and have ten-year contractual terms. For the fiscal 2016, 2015 and 2014, the weighted average exercise price of the options granted was $32.36, $27.38 and $22.31 per share, respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $20.27, $17.31 and $14.66 per share, respectively.

For options granted, the valuation models used the following assumptions:

	For the Fiscal Year Ended
	June 26, 2016		June 28, 2015		June 29, 2014
Expected term (years)		7.6		7.3		7.4
Risk-free interest rate		2.1%		2.2%		2.1%
Volatility		60.5%		62.6%		65.9%
Dividend yield		—		—		—

The Company uses historical data to estimate the expected term and volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the options.

A summary of stock option activity for fiscal 2016 is as follows:

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 28, 2015		934		$	12.63
Granted		82		$	32.36
Exercised		(41	)	$	14.33
Cancelled or forfeited		(255	)	$	13.98
Expired		—		$	—
Outstanding at June 26, 2016		720		$	14.32		4.9	$	9,109
Vested and expected to vest as of June 26, 2016		715		$	14.23		4.9	$	9,105
Exercisable at June 26, 2016		615		$	11.80		4.3	$	9,059

As of June 26, 2016, all options subject to a market condition were vested.

At June 26, 2016, the remaining unrecognized compensation cost related to the unvested stock options was $607, which is expected to be recognized over a weighted average period of 1.8 years.

For fiscal 2016, 2015 and 2014, the total intrinsic value of options exercised was $598, $190 and $12,963, respectively. The amount of cash received from the exercise of options was $181, $95 and $3,136 for fiscal 2016, 2015 and 2014, respectively. The tax benefit realized from stock options exercised was $155, $73 and $4,934 for fiscal 2016, 2015 and 2014, respectively.

Restricted stock units

During fiscal 2016 and 2014, the Company granted 20 and 22 restricted stock units (“RSUs”), respectively, to certain key employees. The employee RSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such employee RSUs have vested and been distributed to the grantee in the form of Company stock. The employee RSUs vest over a three-year period, and will be converted into an equivalent number of shares of stock (for distribution to the grantee) on each vesting date, unless the grantee has elected to defer the receipt of the shares of stock until separation from service. If, after the first anniversary of the grant date and prior to the final vesting date, the grantee has a separation from service without cause for any reason other than the employee’s resignation, the remaining unvested employee RSUs will become fully vested and will be converted to an equivalent number of shares of stock and issued to the grantee. The Company estimated the fair value of the employee RSUs granted during fiscal 2016 and 2014 to be $27.46 and $22.08 per employee RSU, respectively.

During fiscal 2016, 2015 and 2014, the Company granted 28, 17 and 25 RSUs, respectively, to the Company’s non-employee directors. The director RSUs became fully vested on the grant date. The director RSUs convey no rights of ownership in shares of Company stock until such director RSUs have been distributed to the grantee in the form of Company stock. The vested director RSUs will be converted into an equivalent number of shares of Company common stock and distributed to the grantee following the grantee’s termination of service as a member of the Board. The grantee may elect to defer receipt of the shares of stock in accordance with the deferral options provided under the Unifi, Inc. Director Deferred Compensation Plan. The Company estimated the fair value of the director RSUs granted during fiscal 2016, 2015 and 2014 to be $28.08, $28.58 and $23.23 per director RSU, respectively.

The Company estimates the fair value of RSUs based on the market price of the Company’s common stock at the award grant date.

A summary of the RSU activity for fiscal 2016 is as follows:

	Non-vested			Weighted Average Grant Date Fair Value		Vested			Total			Weighted Average Grant Date Fair Value
Outstanding at June 28, 2015		20		$	18.35		167			187		$	15.35
Granted		48		$	27.82		—			48		$	27.82
Vested		(45	)	$	24.06		45			—		$	24.06
Converted		—		$	—		(19	)		(19	)	$	16.37
Cancelled or forfeited		(2	)	$	22.08		(31	)		(33	)	$	14.28
Outstanding at June 26, 2016		21		$	27.20		162			183		$	18.70

At June 26, 2016, the number of RSUs vested and expected to vest was 183, with an aggregate intrinsic value of $4,815. The aggregate intrinsic value of the 162 vested RSUs at June 26, 2016 was $4,263.

The remaining unrecognized compensation cost related to the unvested RSUs at June 26, 2016 is $382, which is expected to be recognized over a weighted average period of 1.4 years.

For fiscal 2016, 2015 and 2014, the total intrinsic value of RSUs converted was $553, $958 and $696, respectively. The tax benefit realized from the conversion of RSUs was $221, $373 and $275 for fiscal 2016, 2015 and 2014, respectively.

Summary

The total cost charged against income related to all stock-based compensation arrangements was as follows:

	For the Fiscal Year Ended
	June 26, 2016		June 28, 2015		June 29, 2014
Stock options	$	1,379	$	1,955	$	1,001
RSUs		961		676		938
Total compensation cost	$	2,340	$	2,631	$	1,939

The total income tax benefit recognized for stock-based compensation was $592, $623 and $513 for fiscal 2016, 2015 and 2014, respectively.

As of June 26, 2016, total unrecognized compensation costs related to all unvested stock-based compensation arrangements was $989. The weighted average period over which these costs are expected to be recognized is 1.7 years.