11. STOCK PLANS AND STOCK BASED COMPENSATION

The Company has stock-based compensation plans under which employees and non-employee directors may be granted stock-based awards such as stock options, restricted stock and PSUs.

During 2014, 2013 and 2012, the primary share-based awards and their general terms and conditions are as follows:


•	Stock options, which entitle the holder to purchase a specified number of shares of common stock at an exercise price equal to the closing market price of common stock on the date of grant; vest incrementally, typically over 3 to 4 years; and generally expire 7 to 10 years from date of grant.


•	Restricted stock, which entitle the holder to receive at no cost, a specified number of shares of common stock that vests incrementally, typically over 3 to 4 years. With respect to restricted stock units, recipients are entitled to cash dividends and to vote their respective shares upon grant.


•	PSUs, which entitle the holder to receive at no cost, a specified number of shares of common stock within a range of shares from zero to a specified maximum. Payout of this award is contingent upon achievement of certain performance and market conditions.

In May 2007, the Company's shareholders approved the 2007 Incentive Plan, which was amended in 2009, 2011 and 2013 (2007 Plan). The 2007 Plan provided no further awards to be granted under preexisting stock option and incentive plans; provided, however, that any shares that have been forfeited or canceled in accordance with the terms of the applicable award under a preexisting plan may be subsequently awarded in accordance with the terms of the preexisting plan. The 2007 Plan allows a maximum of 18.7 million shares to be awarded, of which restricted stock grants and performance based stock awards count as 2.3 shares and stock options count as 1.0 share. Any stock options and other share-based awards that were granted under prior plans and were outstanding in May 2007, continue in accordance with the terms of the respective plans.

At December 27, 2014, approximately 19.9 million shares were authorized for future grants under the Company's share-based compensation plans. The Company settles employee share-based compensation awards with newly issued shares. The following table provides the financial statement line items in which stock-based compensation is reflected:



	Fiscal Year Ended
	December 27, 2014			December 28, 2013			December 29, 2012
	(in thousands)
Stock-based compensation expense included in:
Cost of revenue	$	5,382		$	5,381		$	5,470
Selling, general and administrative	25,653			19,161			16,385
Stock-based compensation expense, before income taxes	31,035			24,542			21,855
Provision for income taxes	(11,006		)	(8,658		)	(7,793		)
After-tax effect of stock-based compensation expense	$	20,029		$	15,884		$	14,062

The Company capitalized no stock-based compensation related costs for the fiscal years 2014, 2013 and 2012.

The Company's pool of excess tax benefits, which is computed in accordance with the long form method, was $10.8 million as of December 27, 2014, $7.3 million as of December 28, 2013 and $9.6 million as of December 29, 2012. During the fiscal year 2014, the Company recorded a tax benefit of $4.3 million to additional paid-in capital related to the exercise of stock options and vesting of restricted shares and restricted stock units, compared to a tax benefit of $1.1 million in 2013. Additionally, in the fiscal year 2014, the windfall tax benefit was reduced by $1.6 million due to the utilization of foreign tax credits.

Stock Options

The following table summarizes stock option activities under the Company's stock-based compensation plans:



	Number of shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts)
Options outstanding as of December 28, 2013	3,768,733		$	40.81
Options granted	568,615		$	57.82
Options exercised	(1,733,293	)	$	42.46
Options canceled	(50,820	)	$	45.03
Options outstanding as of December 27, 2014	2,553,235		$	43.39	3.9	$	53,383
Options exercisable as of December 27, 2014	1,149,763		$	39.92	2.3	$	28,034
Options expected to vest as of December 27, 2014	1,200,470		$	45.95	5.1	$	22,016

The fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:



	Fiscal Year Ended
	December 27, 2014		December 28, 2013		December 29, 2012
Expected life (in years)	4.2		4.2		4.5
Expected volatility	30	%	33	%	35	%
Risk-free interest rate	1.55	%	0.80	%	0.84	%
Expected dividend yield	—		—		—

The weighted-average grant date fair value of stock options granted was $15.19, $11.17 and $10.94 for the fiscal years 2014, 2013 and 2012, respectively.

As of December 27, 2014, the unrecognized compensation cost related to unvested stock options expected to vest was $11.5 million. This unrecognized compensation will be recognized over an estimated weighted-average amortization period of 2.4 years.

The total intrinsic value of options exercised during the fiscal years ending December 27, 2014, December 28, 2013 and December 29, 2012 was $30.5 million, $24.7 million and $5.1 million, respectively, with intrinsic value defined as the difference between the market price on the date of exercise and the grant date price.

Restricted Stock and Restricted Stock Units

The following table summarizes the restricted stock activity for the fiscal year 2014:



	Restricted Stock		Weighted Average Grant Date Fair Value
	(in thousands)
December 28, 2013	1,096,550		$	36.44
Granted	479,104		58.87
Vested	(362,770	)	38.21
Canceled	(25,034	)	41.51
December 27, 2014	1,187,850		$	46.83

As of December 27, 2014, the unrecognized compensation cost related to shares of unvested restricted stock and restricted stock units expected to vest was $40.0 million, which is expected to be recognized over an estimated weighted-average amortization period of 2.2 years. The total fair value of restricted stock and restricted stock unit grants that vested during the fiscal years 2014, 2013 and 2012 was $13.9 million, $15.1 million and $10.4 million, respectively.

Performance Based Stock Award Program

In the fiscal years 2014 and 2013, the Company issued PSUs to certain corporate officers. The number of shares of common stock issued for each PSU is adjusted based on a performance condition linked to the Company's financial performance. Certain awards are further adjusted based on a market condition, which is calculated based on the Company's stock performance relative to a peer group over the three-year vesting period. The fair value of the market condition is reflected in the fair value of the award at grant date.

The Company utilizes a Monte Carlo simulation valuation model to value these awards. Information pertaining to the Company’s PSUs and the related estimated weighted-average assumptions used to calculate their fair value were as follows:



	Fiscal Year Ended
	December 27, 2014		December 28, 2013
PSUs granted	214,823		163,847
Weighted average per share fair value	$67.82		$44.47
Key Assumptions:
Expected volatility	29	%	32	%
Risk-free interest rate	0.63	%	0.38	%
Expected dividend yield	—	%	—	%
20 trading day average stock price on grant date	13.1	%	6.9	%

In April 2014, the Company also issued 5,800 PSUs using a fair value per share of $61.25. These PSUs vest upon the achievement of certain revenue growth targets.

The maximum amount of common shares to be issued upon vesting of these PSUs is approximately 763,000. For the fiscal years 2014 and 2013, the Company recognized stock-based compensation related to these PSUs of $8.5 million and $2.2 million, respectively