15. Stock-Based Compensation

The Company maintains stock incentive plans whereby stock option grants or awards of restricted stock may be made to certain officers, directors and key employees. The plans, which are shareholder approved, permit the award of up to 1,350,000 shares of the Company’s common stock, of which 139,921 shares were still available for grant at March 28, 2015. When options are exercised, new shares of the Company’s common stock are issued. Stock options may not be granted below 100% of the fair market value of the Company’s common stock at the date of grant and generally expire seven years from the date of grant. Stock options and awards of restricted stock typically vest over a one to five year period as determined by the plan administrator (the Compensation Committee of the Board of Directors, which consists of independent directors). The stock incentive plans provide for accelerated vesting of stock options and removal of restrictions on restricted stock awards upon a change in control (as defined in the plans).

The Company applies the fair value recognition provisions of FASB ASC 718, Compensation—Stock Compensation ("ASC 718"). Stock option compensation expense, including restricted stock, decreased income before income taxes by approximately $1.7 million, $2.4 million and $1.3 million for fiscal years 2015, 2014 and 2013, respectively. As of March 28, 2015, total unrecognized compensation cost related to stock options was approximately $1.6 million and the related weighted-average period over which it is expected to be recognized is approximately 2.85 years.

The following table summarizes the option activity within the Company’s stock-based compensation plans for the fiscal years 2015, 2014 and 2013:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at April 1, 2012	407,500		$	32.62
Granted	72,200		46.59
Exercised	(77,000	)	28.55
Canceled or expired	(3,000	)	45.00
Options outstanding at March 30, 2013	399,700		$	35.83	4.18	$	4,691
Granted	64,450		52.99
Exercised	(9,500	)	37.66
Canceled or expired	(10,750	)	48.28
Options outstanding at March 29, 2014	443,900		$	37.98	3.67	$	18,047
Granted	80,730		78.35
Exercised	(14,375	)	34.76
Canceled or expired	(3,275	)	51.13
Options outstanding at March 28, 2015	506,980		$	44.42	3.29	$	15,836

Exercisable at March 30, 2013	179,925		$	34.15	3.58	$	2,414
Exercisable at March 29, 2014	259,625		$	34.56	3.03	$	11,445
Exercisable at March 28, 2015	347,750		$	36.17	2.36	$	13,537

The weighted-average estimated fair value of employee stock options granted during fiscal years 2015, 2014 and 2013 were $30.11, $21.44 and $19.89, respectively. The total intrinsic value of options exercised during fiscal years 2015, 2014 and 2013 was $593,000, $257,000 and $1.2 million, respectively.

The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock options. The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include actual and projected employee stock option exercise behaviors, the Company’s expected stock price volatility over the expected term of the awards, risk-free interest rate and expected dividends. The fair values of options granted were estimated at the date of grant using the following weighted average assumptions:



	Fiscal Year
	2015		2014		2013
Volatility	42.4	%	47.7	%	51.5	%
Risk-free interest rate	1.5	%	1.2	%	0.6	%
Dividend yield	—	%	—	%	—	%
Expected option life in years	4.87		4.52		4.62

The Company estimates the expected term of options granted by using the simplified method as prescribed by SEC Staff Accounting Bulletin ("SAB") No. 107 and SAB 110. The Company uses the simplified method as the Company does not have sufficient historical share option exercise data due to the limited number of shares granted under the programs as well as changes in the Company's business and grantee population due to the acquisitions of Fleetwood and Palm Harbor, rendering existing historical experience less reliable in formulating expectations for current grants. The Company estimates the expected volatility of its common stock taking into consideration its historical stock price movement and its expected future stock price trends based on known or anticipated events. The Company bases the risk-free interest rate that it uses in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option-pricing model. The Company is required to estimate future forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation cost only for those awards that are expected to vest. The Company recognizes stock-based compensation expense using the straight-line attribution method.