15.STOCK-BASED COMPENSATION

Effective January 15, 2009, our board of directors adopted the Equity Incentive Plan for the purpose of providing additional incentive to selected employees, directors and consultants whose contributions are essential to the growth and success of our business. The Equity Incentive Plan provides that we may grant options, share appreciation rights, restricted shares, deferred shares, performance shares, unrestricted shares, other share-based awards or any combination of the foregoing awards. Awards under the Equity Incentive Plan, as amended July 20, 2016, are limited to 16,562,730 shares of our common stock, subject to adjustment as provided in the Equity Incentive Plan document. The Equity Incentive Plan provides for board of directors’ discretion in determining vesting periods, contractual lives and option exercise prices for each award issuance under the Equity Incentive Plan. Pursuant to the First Amended and Restated Stockholders’ Agreement by and among the Company and its Stockholders and the individual award agreements, transfer of shares awarded under the Equity Incentive Plan is restricted.

The table below reflects certain recent restricted stock activity as well as other information related to awards of restricted stock that were granted under the Equity Incentive Plan. Restricted shares granted under the Equity Incentive Plan vest over a three- or four-year period with equal proportions of the shares vesting at the annual anniversary date of the grant in each of the three or four years in the vesting period. Fair values were estimated at the grant dates using estimates of enterprise value and applying applicable liquidity discounts.

	Fiscal Year to Date Ended
	July 2, 2016				July 4, 2015
						Weighted
						Average
			Weighted			Grant
			Average			Date
			Grant Date			Fair
			Fair value			value
	Shares		per Share		Shares	per Share
Total Restricted Shares:
Balance at beginning of fiscal year	4,538,684		$	1.99	4,104,722	$	1.51
Granted	224,378		10.66		286,020	1.52
Forfeited	(98,543	)	1.01		—	—
Repurchased	(243,839	)	0.89		—	—
Balance at end of period	4,420,680		$	2.49	4,390,742	$	1.51
Vested Restricted Shares:
Balance at beginning of fiscal year	2,913,207		$	1.72	1,857,157	$	1.85
Granted	62,616		1.52		279,457	2.53
Repurchased	(243,839	)	0.89		—	—
Balance at end of period	2,731,984		$	1.76	2,136,614	$	1.94
Unvested shares at end of period	1,688,696		$	3.67	2,254,128	$	1.10
Shares available for grant	986,210				1,062,646

Compensation expense, included in selling, general and administrative expenses, associated with all outstanding stock awards, including credits for stock forfeitures, was $9,114 and $11,853 for 2nd Quarter 2016 and the year to date period ended July 2, 2016, respectively, and, was $6,665 and $7,217 for 2nd Quarter 2015 and the year to date period ended July 4, 2015, respectively. As of July 2, 2016, total unrecognized compensation cost was approximately $11,527 related to unvested stock-based compensation arrangements granted under the Equity Incentive Plan. This cost is expected to be recognized on a weighted average over the next 1.62 years.

From time to time, we repurchase vested stock of terminated employees. During the year to date period ended July 2, 2016, we repurchased terminated employees’ vested stock with cash of $1,577; no such purchases were made during the year to date period ended July 4, 2015. Shares repurchased were retired upon repurchase. As of July 2, 2016 and January 2, 2016, our liability to holders of those grants was $19,384 and $17,393, respectively. Such liability is included in other accrued liabilities in the unaudited Condensed Consolidated Balance Sheets as stockholders may resign at will or through termination which would result in our call of the stock.

Restricted stock issued under the Equity Incentive Plan provides us with the right, but not the obligation to repurchase all or any portion of the vested equity interests in the event that the employee’s employment is terminated for any reason. Due to the IPO of at least 25% of our common stock, the call right has been terminated. In the past, we have exercised this right in every instance of employee employment termination since inception of the Equity Incentive Plan. The purchase price for each equity interest was a value per equity interest determined pursuant to a valuation made in good faith by our board of directors and based on a reasonable valuation method. The exercise of this right had prevented the holders from bearing the risks and rewards of ownership in cases where employment was terminated shortly after vesting. Therefore, we determined that liability classification of these awards is appropriate until the point that the shares have been vested for six months, a sufficient period of time to allow the holder to fully bear the risks and rewards of ownership. At this point, the award is reclassified from liabilities to equity.

Under liability classification, we are required to recognize a liability based on the stock award’s fair value at each reporting date with reference to its vesting schedule. The fair value of the restricted stock was $10.24 as of January 2, 2016, and increased to $17.65 as of July 2, 2016. As such, additional compensation expense was recorded and the liability recognized was adjusted.