Stock Incentives:

Effective October 20, 2004, a total of 8,000,000 shares of common stock (as adjusted for the fiscal 2005 2-for-1 stock split) was reserved for future issuance pursuant to the Company's Incentive Compensation Plan, and as a result of an amendment approved by shareholders on October 21, 2009 an additional 2,481,494 shares were reserved. On October 15, 2014, the Company's shareholders approved the 2014 Omnibus Incentive Plan, which constituted a complete amendment and restatement of the Company's Incentive Compensation Plan and under which 3,760,000 shares of common stock were reserved for future issuance (plus any shares remaining available for issuance under the Incentive Compensation Plan as of that date). On October 25, 2017 the Company's shareholders approved the 2017 Omnibus Incentive Plan which constituted a complete amendment and restatement of the Company's 2014 Omnibus Incentive Plan and under which 4,700,000 shares of common stock were reserved for future issuance (plus 494.315 shares remaining available for future issuance under the 2014 Omnibus Incentive Plan as of August 22, 2017, along with any other shares under the 2014 Omnibus Incentive Plan that become available for future issuance). Similar to the Incentive Compensation Plan and the 2014 Omnibus Incentive Plan, in accordance with the 2017 Omnibus Incentive Plan, the Company can issue to eligible participants stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash bonus awards subject to certain annual limitations. The plan also allows participants to defer the payment of awards and the Company to issue directors’ fees in stock. Stock-based compensation vests in accordance with the applicable plan and award agreements but can be accelerated under certain circumstances by the Compensation Committee in the case of death, disability, retirement or a change in control.

Stock-based compensation expense is calculated by estimating the fair value of incentive stock awards granted and amortizing the estimated value over the awards’ vesting periods. During fiscal 2018, 2017 and 2016, the Company recognized stock-based compensation expense of approximately $6.7 million, $4.9 million and $5.1 million, respectively.

The fair value of each option is estimated using the Black-Scholes option pricing model, and the assumptions are based on historical data and industry valuation practices and methodology. The exercise price of each stock option is equal to the market value of the stock on the grant date. The assumptions used to determine fair value are as follows:



Options Granted During	2018			2017			2016
Grant Date Fair Value	$	4.64		$	3.84		$	3.72
(Since options are only granted once per year, the grant date fair value equals the weighted average grant date fair value.)
Assumptions:
Risk-free Interest Rate	1.8		%	1.2		%	1.7		%
Expected Volatility	30.7		%	29.3		%	25.1		%
Expected Dividend Yield	2.7		%	2.9		%	2.5		%
Expected Term (in Years)	5.5			5.5			5.5

Information on the options outstanding is as follows:



	Options		Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance, June 28, 2015	2,176,850		$	18.86
Granted During the Year	501,990		19.90
Exercised During the Year	(697,309	)	17.77
Expired During the Year	(136,988	)	19.88
Balance, July 3, 2016	1,844,543		$	19.48
Granted During the Year	496,880		19.15
Exercised During the Year	(414,176	)	18.76
Balance, July 2, 2017	1,927,247		$	19.55
Granted During the Year	416,210		20.47
Exercised During the Year	(184,530	)	20.44
Balance, July 1, 2018	2,158,927		$	19.64	6.90	$	—
Exercisable, July 1, 2018	743,847		$	19.37	4.65	$	—

The total intrinsic value of options exercised during fiscal year 2018 was $0.5 million. The exercise of options resulted in cash receipts of $3.8 million in fiscal 2018. The total intrinsic value of options exercised during fiscal 2017 was $1.5 million. The exercise of options resulted in cash receipts of $7.8 million in fiscal 2017. The total intrinsic value of options exercised during fiscal 2016 was $2.0 million. The exercise of options resulted in cash receipts of $12.4 million in fiscal 2016.



Options Outstanding (as of July 1, 2018)
Fiscal Year	Grant Date	Date Exercisable	Expiration Date	Exercise Price		Options Outstanding
2014	8/20/2013	8/20/2016	8/31/2018	$	20.82	200,327
2015	10/21/2014	10/21/2017	10/21/2024	$	18.83	543,520
2016	8/18/2015	8/18/2018	8/18/2025	$	19.90	501,990
2017	8/22/2016	8/22/2019	8/22/2026	$	19.15	496,880
2018	8/21/2017	8/21/2020	8/21/2027	$	20.47	416,210

Below is a summary of the status of the Company’s nonvested shares as of July 1, 2018, and changes during the year then ended:



	Deferred Stock / RSU				Restricted Stock				Stock Options				Performance Shares
	Shares		Wtd. Avg. Grant Date Fair Value		Shares		Wtd. Avg. Grant Date Fair Value		Shares		Wtd. Avg. Grant Date Fair Value		Shares		Wtd. Avg. Grant Date Fair Value
Nonvested shares/units, July 2, 2017	105,974		$	19.32	699,635		$	19.47	1,556,040		$	3.79	220,381		$	19.48
Granted	13,476		20.39		148,930		20.52		416,210		4.64		—		21.19
Cancelled	(3,989	)	20.47		(11,940	)	19.51		—		—		—		—
Vested	(36,640	)	19.15		(141,370	)	18.83		(557,170	)	3.81		(113,941	)	19.29
Nonvested shares/units, July 1, 2018	78,821		$	19.52	695,255		$	19.87	1,415,080		$	4.03	106,440		$	19.90

As of July 1, 2018, there was $5.2 million of total unrecognized compensation cost related to nonvested stock-based compensation. That cost is expected to be recognized over a weighted average period of 1.4 years. The total fair value of shares vested during fiscal 2018 and 2017 was $7.7 million and $7.4 million, respectively.

During fiscal years 2018, 2017 and 2016, the Company issued 148,930, 160,130 and 143,760 shares of restricted stock, respectively. For restricted stock issued prior to October 15, 2014, the restricted stock vests on the fifth anniversary date of the grant provided the recipient is still employed by the Company. For restricted stock issued after October 15, 2014, the restricted stock vests on the third anniversary date of the grant provided the recipient is still employed by the Company. The aggregate market value on the date of issue was approximately $3.1 million, $3.1 million and $2.9 million in fiscal 2018, 2017 and 2016, respectively, and has been recorded within the Shareholders’ Investment section of the Consolidated Balance Sheets, and is being amortized over the five-year vesting period (issuances prior to October 15, 2014) or the three-year vesting period (issuances after October 15, 2014).

The Company issued 46,120, 45,307 and 39,049 deferred shares to its directors in lieu of directors' fees in fiscal 2018, 2017 and 2016, respectively, under this provision of the plans. Prior to January 1, 2017, the Company accounted for certain deferred shares issued to directors as liability classified awards, rather than equity classified awards. At January 1, 2017, the liability balance was $4.8 million. During the third quarter of fiscal 2017, the Company determined that equity classification is appropriate and recorded correcting entries to adjust the deferred shares balance and reclassify it from Accrued Liabilities to Additional Paid-In Capital. The correcting entries did not have a material impact on the Consolidated Financial Statements.

The Company issued 13,476, 15,131 and 20,177 shares of deferred shares / RSU's to its officers and key employees in fiscal 2018, 2017 and 2016, respectively. The aggregate market value on the date of grant was approximately $0.3 million, $0.3 million and $0.4 million, respectively. For deferred stock issued prior to October 15, 2014, the deferred stock vests on the fifth anniversary date of the grant provided the recipient is still employed by the Company. For restricted stock units (RSU) issued after October 15, 2014, the restricted stock units vest on the third anniversary date of the grant provided the recipient is still employed by the Company.

The Company granted no performance share units in 2018 and 2017. The Company granted 120,451 performance share units in fiscal 2016. A maximum of two shares of Briggs & Stratton common stock per performance share unit may be awarded to recipients if certain performance targets are met at the end of the vesting period. The aggregate market value on the date of grant was approximately $2.4 million in fiscal 2016. The performance share units vest based on Company-specific performance goals. The performance share units are valued at the Company's share price on the date of grant multiplied by the probability of achieving payout. Expense for each of the awards granted is recognized ratably over the three-year vesting period.

The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense:



	2018			2017			2016
Stock Options:
Pretax compensation expense	$	2,060		$	1,862		$	1,763
Tax benefit	(576		)	(698		)	(661		)
Stock option expense, net of tax	$	1,484		$	1,164		$	1,102
Restricted Stock:
Pretax compensation expense	$	3,302		$	3,291		$	2,750
Tax benefit	(924		)	(1,234		)	(1,031		)
Restricted stock expense, net of tax	$	2,378		$	2,057		$	1,719
Deferred Stock:
Pretax compensation expense	$	1,046		$	585		$	102
Tax benefit	(292		)	(220		)	(38		)
Deferred stock expense, net of tax	$	754		$	365		$	64
Performance Shares:
Pretax compensation expense	$	267		$	(815	)	$	494
Tax expense (benefit)	(75		)	306			(185		)
Performance Share expense, net of tax	$	192		$	(509	)	$	309
Total Stock-Based Compensation:
Pretax compensation expense	$	6,675		$	4,923		$	5,109
Tax benefit	(1,867		)	(1,846		)	(1,915		)
Total stock-based compensation, net of tax	$	4,808		$	3,077		$	3,194