(13) Stock Options, Other Stock Awards and Warrants

Hasbro has reserved 12,801 shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the "plans"). These awards generally vest and are expensed in equal annual amounts over three to five years. The plans provide that options be granted at exercise prices not less than the market value of the underlying common stock on the date the option is granted and options are adjusted for such changes as stock splits and stock dividends. Options are exercisable for periods of no more than seven years after date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the case of performance based contingent stock and restricted stock unit grants, shares are issued out of available treasury shares. The Company's current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options.

Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 28, 2014, December 29, 2013 and December 30, 2012 was $36,152, $21,272 and $19,434, respectively, and was recorded as follows:

	2014		2013		2012

Cost of sales	$	395		152		146
Product development		3,874		1,767		1,854
Selling, distribution and administration		31,883		19,353		17,434
		36,152		21,272		19,434
Income tax benefit		11,745		7,065		6,392
	$	24,407		14,207		13,042

Restricted Stock Units

The Company on occasion will issue restricted stock or grant restricted stock units to certain key employees. These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally between three and five years. During 2014, 2013 and 2012, the Company recognized compensation expense, net of forfeitures, on these awards of $15,643, $8,732 and $2,328, respectively. At December 28, 2014, the amount of total unrecognized compensation cost related to restricted stock units is $34,146 and the weighted average period over which this will be expensed is 29 months.

In October 2012, as part of an Amended and Restated Employment Agreement, the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014. As of May 2013, both tranches met the accounting definition for grant date and, as such, are being expensed from 2013 through 2017. Expenses related to 2014 and 2013 are included in the aforementioned recognized and unrecognized compensation costs related to restricted stock units. 119 shares of this award are considered granted in 2013 while the remaining 119 shares were granted in February 2014. These awards provide the recipient with the ability to earn shares of the Company's common stock based on the Company's achievement of four stated stock price hurdles and continued employment through December 31, 2017. At the completion of the service period, the recipient will receive one quarter of the award for each stock price hurdle achieved after April 24, 2013. The four stock price hurdles are $45, $52, $56 and $60 which must be met for a period of at least thirty days using the average closing price over such period. In August 2014, the Amended and Restated Employment Agreement was further amended to include additional requirements. Specifically, if the third and fourth stock price hurdles are achieved, the number of shares ultimately issued will be dependent on the average stock price for the thirty day period immediately prior to December 31, 2017. This amendment did not result in any incremental fair value to the award which is used to record compensation expense for the award.

The Company used a Monte Carlo simulation valuation model to determine the fair value of these awards. The following inputs were used in the simulation that resulted in an average grant date fair value for this award of $35.56:

	Inputs
Grant date stock price	$	47.28
Stock price volatility		26.12	%
Risk-free interest rate		0.65	%
Dividend yield		3.38	%

Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2014, 2013 and 2012 is as follows:

	2014			2013			2012

Outstanding at beginning of year		702			296			232
Granted		281			451			92
Forfeited		(39	)		(44	)		(27	)
Vested		(7	)		(1	)		(1	)
Outstanding at end of year		937			702			296

Weighted average grant-date fair value:
Granted	$	52.06			45.16			36.01
Forfeited	$	44.44			40.40			40.80
Vested	$	41.19			33.62			32.90
Outstanding at end of year	$	45.74			43.10			39.53

Stock Performance Awards

In 2014, 2013 and 2012, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the "Stock Performance Awards"). These awards provide the recipients with the ability to earn shares of the Company's common stock based on the Company's achievement of stated cumulative diluted earnings per share and cumulative net revenue targets over the three fiscal years ended December 2016, December 2015, and December 2014 for the 2014, 2013 and 2012 awards, respectively. Each Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets. The ultimate amount of the award may vary, depending on actual results. Awards may vary from 0% to 200% of the target number of shares.

In October 2012, as part of the Amended and Restated Employment Agreement with the Company's Chief Executive Officer, the stock performance awards for the Chief Executive Officer for 2014 and 2013 could be adjusted at the time of vesting dependent on the Company's total shareholder return compared to the Standard & Poor's 500 return for the applicable performance period. As part of the amendment to this agreement in August 2014, this adjustment was eliminated. The fair value of the award used to record compensation expense was not impacted by this amendment.

Information with respect to Stock Performance Awards for 2014, 2013 and 2012 is as follows:

	2014			2013			2012

Outstanding at beginning of year		943			1,019			1,627
Granted		322			358			695
Forfeited		(32	)		(101	)		(144	)
Cancelled		(578	)		(333	)		(682	)
Vested		-			-			(477	)
Outstanding at end of year		655			943			1,019

Weighted average grant-date fair value:
Granted	$	52.11			47.21			36.14
Forfeited	$	43.21			40.24			37.54
Cancelled	$	36.14			45.66			33.76
Vested	$	-			-			22.31
Outstanding at end of year	$	49.57			40.24			39.57

Shares cancelled in 2014, 2013 and 2012 represent the cancellation of the Stock Performance Awards granted during 2012, 2011 and 2010, respectively, based on failure to meet the targets set forth by the agreement.

During 2014, 2013 and 2012, the Company recognized $11,315, $815 and $3,628, respectively, of expense relating to these awards. Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period. On a periodic basis the Company reviews the actual and forecasted performance of the Company against the stated targets for each award. The total expense is adjusted upward or downward based on the expected amount of shares to be issued as defined in the agreement. If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed. In the fourth quarter of 2013, it was determined that it was no longer probable that the minimum targets would be met for certain Stock Performance Awards grants and, as a result, all previously recognized expense totaling $7,046 related to these awards was reversed. At December 28, 2014, the amount of total unrecognized compensation cost related to these awards is approximately $18,310 and the weighted average period over which this will be expensed is 20 months.

Stock Options

Information with respect to stock options for the three years ended December 28, 2014 is as follows:

	2014			2013			2012

Outstanding at beginning of year		5,543			9,283			11,004
Granted		684			776			1,730
Exercised		(1,951	)		(4,377	)		(3,126	)
Expired or forfeited		(90	)		(139	)		(325	)
Outstanding at end of year		4,186			5,543			9,283

Exercisable at end of year		2,374			3,144			6,094

Weighted average exercise price:
Granted	$	52.11			47.21			36.14
Exercised	$	31.07			26.99			21.23
Expired or forfeited	$	39.85			39.59			35.19
Outstanding at end of year	$	41.68			36.63			31.25
Exercisable at end of year	$	38.90			33.22			27.84

With respect to the 4,186 outstanding options and 2,374 options exercisable at December 28, 2014, the weighted average remaining contractual life of these options was 3.98 years and 3.17 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 28, 2014 was $57,627 and $39,264, respectively. Substantially all unvested outstanding options are expected to vest.

The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. The weighted average fair value of options granted in fiscal 2014, 2013 and 2012 was $8.40, $6.94 and $6.29, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2014, 2013 and 2012:

	2014	2013	2012
Risk-free interest rate	1.42%	0.62%	0.69%
Expected dividend yield	3.30%	3.39%	3.99%
Expected volatility	26%	26%	31%
Expected option life	5 years	5 years	5 years

The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, of the options exercised in fiscal 2014, 2013 and 2012 were $44,890, $89,534 and $49,225, respectively.

At December 28, 2014, the amount of total unrecognized compensation cost related to stock options was $6,599 and the weighted average period over which this will be expensed is 21 months.

Non-Employee Awards

In 2014, 2013 and 2012, the Company granted 34, 33 and 44 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 26 shares from the 2014 grant, 28 shares from the 2013 grant and 33 shares from the 2012 grant has been deferred to the date upon which the respective director ceases to be a member of the Company's Board of Directors. These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant. In connection with these grants, compensation cost of $1,834 was recorded in selling, distribution and administration expense in the year ended December 28, 2014 and $1,560 in each year in the two-year period ended December 29, 2013.

Cash-Settled Restricted Stock Units

In 2011 and 2010, the Company granted awards to certain employees consisting of cash settled restricted stock units. Under these awards, the recipients are granted restricted stock units that vest over three years. At the end of the vesting period, the fair value of those units based on Hasbro's stock price will be paid in cash to the recipient. The Company accounted for these awards as a liability which was marked to market through the consolidated statements of operations based on the current market price and lapsed portion of the vesting period. In 2014, 2013 and 2012, the Company recognized expense of $(113), $1,316 and $1,348, respectively related to these awards.