(10) Share-based Compensation

At its discretion, the Company grants share option awards, nonvested share awards and nonvested share unit awards to certain employees, as defined by ASC 718, Compensation—Stock Compensation, under the Company’s 2007 Equity and Performance Incentive Plan, as amended and restated on June 14, 2011 (the “Plan”), and accounts for its share-based compensation in accordance with ASC 718. The Company recognized $0.5 million and $1.0 million in share-based compensation expense for the 13 and 26 weeks ended June 28, 2015, respectively, compared to $0.5 million and $1.0 million in share-based compensation expense for the 13 and 26 weeks ended June 29, 2014, respectively.

Share Option Awards

Share option awards granted by the Company generally vest and become exercisable in four equal annual installments of 25% per year with a maximum life of ten years. The exercise price of share option awards is equal to the quoted market price of the Company’s common stock on the date of grant. In the first half of fiscal 2015 and 2014, the Company granted 10,000 and 18,000 share option awards, respectively. The weighted-average grant-date fair value per option for share option awards granted in the first half of fiscal 2015 and 2014 was $6.22 and $4.80, respectively.

The fair value of each share option award on the date of grant is estimated using the Black-Scholes method based on the following weighted-average assumptions:


	13 Weeks Ended						26 Weeks Ended
	June 28, 2015			June 29, 2014			June 28, 2015			June 29, 2014
Risk-free interest rate		1.9	%		1.8	%		1.9	%		1.8	%
Expected term		5.8 years			5.8 years			5.8 years			5.8 years
Expected volatility		57.0	%		57.0	%		57.0	%		57.0	%
Expected dividend yield		2.7	%		3.3	%		2.7	%		3.3	%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s current dividend rate and future expectations.

A summary of the status of the Company’s share option awards is presented below:


	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at December 28, 2014		729,905	$	15.73

Granted		10,000		14.66
Exercised		(7,925)		6.12
Forfeited or Expired		(2,800)		19.12

Outstanding at June 28, 2015		729,180	$	15.80		2.60	$	1,907,777

Exercisable at June 28, 2015		678,055	$	16.00		2.10	$	1,785,624

Vested and Expected to Vest at June 28, 2015		728,669	$	15.80		2.60	$	1,907,219

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based upon the Company’s closing stock price of $14.42 as of June 28, 2015, which would have been received by the share option award holders had all share option award holders exercised their share option awards as of that date.

The total intrinsic value of share option awards exercised for the 26 weeks ended June 28, 2015 and June 29, 2014 was approximately $0.1 million and $0.1 million, respectively. The total cash received from employees as a result of employee share option award exercises for the 26 weeks ended June 28, 2015 and June 29, 2014 was approximately $49,000 and $55,000, respectively. The actual tax benefit realized for the expected tax deduction from share option award exercises of share-based compensation awards in the 26 weeks ended June 28, 2015 and June 29, 2014 totaled $24,000 and $41,000, respectively.

As of June 28, 2015, there was $0.3 million of total unrecognized compensation expense related to nonvested share option awards granted. That expense is expected to be recognized over a weighted-average period of 2.2 years.

Nonvested Share Awards and Nonvested Share Unit Awards

Nonvested share awards and nonvested share unit awards granted by the Company have historically vested from the date of grant in four equal annual installments of 25% per year. In accordance with the Company’s Director Compensation Program, as amended on July 24, 2014, nonvested share awards and nonvested share unit awards granted by the Company to non-employee directors vest 100% on the first anniversary of the grant date. This one-year vesting for non-employee directors became effective for nonvested share awards and nonvested share unit awards granted in fiscal 2015.

Nonvested share awards are delivered to the recipient upon their vesting. With respect to nonvested share unit awards, vested shares will be delivered to the recipient on the tenth business day of January following the year in which the recipient’s service to the Company is terminated. The total fair value of nonvested share awards which vested during the first half of fiscal 2015 and 2014 was $1.7 million and $2.1 million, respectively. The total fair value of nonvested share unit awards vested during the first half of fiscal 2015 and 2014 was $0.1 million and $0.1 million, respectively.

The Company granted 152,140 and 152,920 nonvested share awards in the first half of fiscal 2015 and 2014, respectively. The weighted-average grant-date fair value per share of the Company’s nonvested share awards granted in the first half of fiscal 2015 and 2014 was $12.65 and $15.14, respectively.

In the first half of fiscal 2015 and 2014, the Company granted 21,000 and 12,000 nonvested share unit awards, respectively. The weighted-average grant-date fair value per share of the Company’s nonvested share unit awards granted in the first half of fiscal 2015 and 2014 was $14.66 and $11.93, respectively. The weighted-average grant-date fair value of nonvested share awards and nonvested share unit awards is the quoted market price of the Company’s common stock on the date of grant.

The following table details the Company’s nonvested share awards activity for the 26 weeks ended June 28, 2015:


	Shares		Weighted- Average Grant-Date Fair Value
Balance as of December 28, 2014		336,765	$	13.47

Granted		152,140		12.65
Vested		(132,475)		12.57
Forfeited		(3,965)		14.10

Balance as of June 28, 2015		352,465	$	13.45

To satisfy employee minimum statutory tax withholding requirements for nonvested share awards that vest, the Company withholds and retires a portion of the vesting common shares, unless an employee elects to pay cash. In the first half of fiscal 2015, the Company withheld 52,621 common shares with a total value of $0.7 million. This amount is presented as a cash outflow from financing activities in the accompanying interim unaudited condensed consolidated statement of cash flows.

As of June 28, 2015, there was $4.1 million and $0.5 million of total unrecognized compensation expense related to nonvested share awards and nonvested share unit awards, respectively. That expense is expected to be recognized over a weighted-average period of 2.8 years and 1.6 years for nonvested share awards and nonvested share unit awards, respectively.