STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

(12) STOCK-BASED COMPENSATION

The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock. At December 31, 2022, 1,722,643 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in

capitalization. The Company’s policy is to issue shares upon exercise of stock options or vesting of restricted stock units or issuance of restricted stock from treasury shares held by the Company.

Under the stock option plans, the exercise price of each option equals the market price at the time of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three years or on the fifth anniversary of the grant. Expiration of grants is seven to ten years from the date of grant. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant. The Company recorded $41,850, $28,720, and $14,874 of compensation expense (included in selling, general and administrative expenses) in the 2022, 2021, and 2020 fiscal years for all share-based compensation programs, respectively. The associated tax benefits recorded in the 2022, 2021, and 2020 fiscal years was $10,463, $7,180, and $3,719, respectively.

(12) STOCK-BASED COMPENSATION – CONTINUED

At December 31, 2022, the amount of unrecognized stock option compensation expense, to be recognized over a weighted average period of 2.37 years, was approximately $6,814. Compensation expense for stock options was $3,120 in 2022, $2,538 in 2021, and $2,628 in 2020.

The Company uses a binomial option pricing model to value its stock options. The fair value of each option grant made in 2022, 2021 and 2020 was estimated using the following assumptions:

	2022		2021		2020
Expected volatility	32.36	%	33.01	%	33.72	%
Risk-free interest rate	3.75	%	1.26	%	0.43	%
Expected life from vesting date	5.4 yrs		4.0 yrs		4.0 yrs
Dividend yield	1.10	%	1.20	%	1.24	%

Following is a summary of the stock option activity during 2020, 2021 and 2022:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
Outstanding at December 28, 2019	488,560	$	133.13
Granted	66,231		168.80
Exercised	(147,014)		125.43
Forfeited	(8,212)		137.49
Outstanding at December 26, 2020	399,565	$	141.79	4.88	$	12,103
Options vested or expected to vest at December 26, 2020	389,633	$	141.56	4.81		11,890
Options exercisable at December 26, 2020	254,498	$	138.64	3.38		8,510

The weighted average per share fair value of options granted during 2020 was $45.49.

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
Outstanding at December 26, 2020	399,565	$	141.79
Granted	47,223		252.89
Exercised	(169,908)		135.76
Forfeited	(416)		132.84
Outstanding at December 25, 2021	276,464	$	164.48	5.88	$	22,586
Options vested or expected to vest at December 25, 2021	268,338	$	163.42	5.80		22,188
Options exercisable at December 25, 2021	154,860	$	142.15	4.00		15,896

The weighted average per share fair value of options granted during 2021 was $67.81.

(12) STOCK-BASED COMPENSATION – CONTINUED

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
Outstanding at December 25, 2021	276,464	$	164.48
Granted	40,564		332.63
Exercised	(121,163)		139.89
Forfeited	(175)		104.47
Outstanding at December 31, 2022	195,690	$	214.62	7.53	$	22,644
Options vested or expected to vest at December 31, 2022	189,267	$	212.69	7.48		22,261
Options exercisable at December 31, 2022	90,556	$	172.08	6.40		14,276

The weighted average per share fair value of options granted during 2022 was $104.01.

In accordance with shareholder-approved plans, the Human Resource Committee of the Board of Directors may grant stock under various stock‑based compensation arrangements, including restricted stock awards, restricted stock units, performance based restricted stock units, and stock issued in lieu of cash bonuses. Under such arrangements, stock or cash (as applicable) is issued without direct cost to the employee. The restricted stock units are settled in Company stock when the restriction period ends. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant. All cash-settled restricted stock units are marked-to-market and presented within other accrued expenses and noncurrent liabilities in the Consolidated Balance Sheets. During fiscal 2022, 2021 and 2020, the Company granted restricted stock units to directors and certain management employees as follows (which are not included in the above stock plan activity tables):

	2022		2021		2020
Restricted stock units granted		60,901		216,971		85,251
Weighted‑average per share price on grant date	$	313.75	$	236.28	$	161.73
Recognized compensation expense	$	22,664	$	16,147	$	9,081

During the second half of 2021, the Company granted 159,982 restricted stock units, worth $36,916, to certain employees of Prospera. These restricted stock units vest in equal installments over four years and require the employees to continue employment over those four years. As such, the related compensation expense will be incurred over the vesting period.

At December 31, 2022 the amount of deferred stock‑based compensation granted, to be recognized over a weighted‑average period of 2.73 years, was approximately $50,422.

Performance-based restricted stock units (“PSU”) awards consist of shares of the Company’s stock which are payable upon the determination that the Company achieve certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSUs granted in 2022 and 2021 have a performance period of three years. The fair value of each PSU granted is equal to the fair market value of the Company’s common stock on the date of grant. PSUs granted generally have a three years period cliff vesting schedule; however, according to the grant agreements, if certain conditions are met, the employee (or beneficiary) will receive a prorated amount of the award based on active employment during the service period.

During fiscal 2022, 2021 and 2020, the Company granted PSU awards as follows (which are not included in the above stock plan activity tables):

	2022		2021		2020
Shares granted		33,736		41,060		35,181
Weighted‑average per share price on grant date	$	215.15	$	230.40	$	125.41
Recognized compensation expense	$	16,066	$	10,035	$	3,165