Stock Options, Other Stock Awards and Warrants

12 Months Ended

Dec. 31, 2017

Stock Options, Other Stock Awards and Warrants [Abstract]

Stock Options, Other Stock Awards and Warrants

(13)Stock Options, Other Stock Awards and Warrants

The Company has reserved 10,127shares 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 and share awards 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 31, 2017, December 25, 2016and December 27, 2015 was $56,032, $61,624 and $53,880, respectively, and was recorded as follows:

	2017		2016		2015
Cost of sales	$	—		200		366
Product development		3,312		3,248		3,527
Selling, distribution and administration		52,720		58,176		49,987
		56,032		61,624		53,880
Income tax benefit		9,574		20,298		13,489
	$	46,458		41,326		40,391

The following table represents total stock compensation expense by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of the Company’s Board of Directors, for the years ended December 31, 2017, December 25, 2016and December 27, 2015:

	2017		2016		2015
Stock performance awards	$	27,522		34,248		27,960
Restricted stock units		20,573		19,908		19,052
Stock options		6,342		5,838		5,419
Non-employee awards		1,595		1,630		1,449
		56,032		61,624		53,880
Income tax benefit		9,574		20,298		13,489
	$	46,458		41,326		40,391

Stock Performance Awards

In 2017, 2016and 2015, 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 operating performance targets over the three fiscal years ended December 2019, December 2018, and December 2017for the 2017, 2016and 2015awards, 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.For certain employees, the Stock Performance Awards also include an additional return on invested capital target in addition to the diluted earnings per share and revenue targets. The ultimate amount of the award may vary from 0% to 200% of the target number of shares, depending on the cumulative results achieved.

Information with respect to Stock Performance Awards for 2017, 2016and 2015is as follows:

		2017		2016		2015
Outstanding at beginning of year			1,074		992		655
	Granted		428		529		362
	Forfeited		(28)		(23)		(25)
	Vested		(574)		(424)		—
Outstanding at end of year			900		1,074		992
Weighted average grant-date fair value:
	Granted	$	99.58		74.69		61.85
	Forfeited	$	74.86		61.86		53.45
	Vested	$	52.21		47.21		—
Outstanding at end of year		$	77.27		62.19		53.17

Shares granted in 2017 include 227 shares related to the 2015 award, reflecting increases in the ultimate amount of shares to be issued based on the Company’s cumulative results achieved during the performance period.These shares are excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2017. Similarly, shares granted in 2016 included276additional shares related to the 2014 award, and shares granted in 2015 included 90 additional shares related to the 2013 award. These shares were excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2016 and 2015.

During 2017, 2016 and 2015, the Company recognized $27,522, $34,248 and $27,960, respectively, of expense relating to Stock Performance 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 respective stock performance award 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.At December 31, 2017, the amount of total unrecognized compensation cost related to these awards is approximately $23,068and the weighted average period over which this will be expensed is 19 months.

Restricted Stock Units

The Company, as part of its annual equity grant to executive officers and certain other employees, issues restricted stock or grants restricted stock units. 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 2017, 2016 and 2015, the Company recognized compensation expense, net of forfeitures, on these awards of $20,573, $19,908 and $19,052, respectively. At December 31, 2017, the amount of total unrecognized compensation cost related to restricted stock units is $21,526 and the weighted average period over which this will be expensed is 22months.

In October 2012, as part of an Amended and Restated Employment Agreement, (the “Agreement”), the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014, which were expensed from 2013 through 2017. 468 shares of this award were considered granted in 2013 while the remaining 119 shares were granted in February 2014. These awards provided 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. Per the agreement terms, at the completion of the service period, the recipient was toreceive one quarter of the award for each stock price hurdle achieved after April 24, 2013. The four stock price hurdles were $45, $52, $56 and $60 which were required to be maintained for a period of at least thirty days using the average closing price over such period. In August 2014, the Agreement was further amended to include additional requirements. Specifically, if the third and fourth stock price hurdles were achieved, the number of shares ultimately issued was 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 wasused to record compensation expense for the award. AtDecember 31, 2017, all requirements of the Agreement were met and 587 shares were issued.

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 2017, 2016and 2015is as follows:

		2017		2016		2015
Outstanding at beginning of year			795		955		937
	Granted		203		245		254
	Forfeited		(41)		(41)		(52)
	Vested		(321)		(364)		(184)
Outstanding at end of year			636		795		955
Weighted average grant-date fair value:
	Granted	$	98.88		75.23		62.95
	Forfeited	$	68.01		59.37		51.57
	Vested	$	57.58		43.89		39.87
Outstanding at end of year		$	75.13		61.65		51.22

Stock Options

Information with respect to stock options for each of the three fiscal years ended December 31, 2017is as follows:

		2017		2016		2015
Outstanding at beginning of year			2,768		3,445		4,186
	Granted		458		492		549
	Exercised		(597)		(1,143)		(1,280)
	Expired or forfeited		(50)		(26)		(10)
Outstanding at end of year			2,579		2,768		3,445
Exercisable at end of year			1,661		1,708		2,208
Weighted average exercise price:
	Granted	$	98.80		74.42		61.77
	Exercised	$	49.31		41.75		37.54
	Expired or forfeited	$	57.33		56.43		46.38
Outstanding at end of year		$	62.12		53.21		46.41
Exercisable at end of year		$	50.02		45.50		41.36

With respect to the 2,579 outstanding options and 1,661 options exercisable at December 31, 2017, the weighted average remaining contractual life of these options was 3.69 years and 2.71 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 31, 2017was $77,657and $67,818, 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 2017, 2016 and 2015 was $18.25, $13.01and $9.29, 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 2017, 2016 and 2015:

	2017	2016	2015
Risk-free interest rate	1.85%	1.16%	1.34%
Expected dividend yield	2.31%	2.74%	2.98%
Expected volatility	24%	26%	23%
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 2017, 2016and 2015were $31,406, $47,992 and $41,906, respectively.

At December 31, 2017, the amount of total unrecognized compensation cost related to stock options was $8,228 and the weighted average period over which this will be expensed is 22 months.

Non-Employee Awards

In 2017, 2016 and 2015, the Company granted 16, 23 and 20 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 10 shares from the 2017grant, 16 shares from the 2016grant and 16 shares from the 2015grant 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 $1,595 was recorded in selling, distribution and administration expense in the year ended December 31, 2017, $1,630 in the year ended December 25, 2016and $1,449in the year ended December 27, 2015.