Share-Based Compensation

Performance-Based Restricted Stock Units. Our Board of Directors has approved a performance-based equity compensation arrangement for our executive officers. This performance-based arrangement provides for the grant of performance-based restricted stock units that represent a possible future issuance of restricted shares of our common stock based on our pre-tax income target for the applicable fiscal year. The actual number of restricted shares to be issued to each executive officer will be determined when our final financial information becomes available after the applicable fiscal year and will be between zero shares and 52,920 shares in the aggregate for fiscal 2018. The restricted shares issued will fully vest two years after the last day of the fiscal year on which the performance is based. We are recording the compensation expense for the outstanding performance share units and then-converted restricted stock over the life of the awards.

The following table represents the restricted stock activity for fiscal 2017 and 2018:



	Shares		Weighted- Average Grant Date Fair Value
Outstanding at beginning of fiscal 2017	37,309		$	40.89
Granted	28,853		43.10
Vested	(37,309	)	40.89
Forfeited or expired	—		—
Outstanding at end of fiscal 2017	28,853		$	43.10
Granted	35,075		47.50
Vested	—		—
Forfeited or expired	(12,785	)	46.02
Outstanding at end of fiscal 2018	51,143		$	45.39

The weighted average grant date fair value of performance-based restricted shares issued in fiscal 2018 was $47.50, fiscal 2017 was $43.10 and fiscal 2016 was $40.89. We recorded compensation expense on performance-based restricted stock of approximately $0.7 million for fiscal 2018, $1.4 million for fiscal 2017 and $1.2 million for fiscal 2016, substantially all of which was recorded in selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Income. There were no performance-based restricted stock units that vested in fiscal 2018. The total fair value of performance-based restricted stock units vested in fiscal 2017 was $1.5 million compared to $2.0 million in fiscal 2016.

Until the performance-based restricted stock units result in the issuance of restricted stock, the amount of expense recorded each period is dependent upon our estimate of the number of shares that will ultimately be issued and our then current common stock price. Upon issuance of restricted stock, we record compensation expense over the remaining vesting period using the award date closing price. Unrecognized compensation expense related to non-vested restricted stock and non-vested restricted share units as of April 1, 2018 was $0.5 million and is expected to be recognized over a weighted average period of 0.7 years.

Prior to the adoption of ASU 2016-09 in fiscal 2018, the benefits of tax deductions that varied from the recognized compensation costs from share-based compensation were recorded as a change in additional paid-in capital rather than a reduction in earnings. The amount of excess tax benefit recognized and recorded in additional paid-in capital resulting from share-based compensation cost was $0.1 million in fiscal 2017 and nominal in fiscal 2016.

Restricted Stock Awards. As part of their retainer, our non-employee directors receive restricted stock for their Board services. The restricted stock awards are expensed over the requisite vesting period, which begins on the date of issuance and ends on the date of the next Annual Meeting of Shareholders, based on the market value on the date of grant. The following table represents the Board’s restricted stock activity for fiscal 2017 and 2018:



	Shares		Weighted- Average Grant Date Fair Value
Outstanding at beginning of fiscal 2017	6,804		$	36.00
Granted	8,092		43.24
Vested	(6,804	)	36.00
Forfeited or expired	—		—
Outstanding at end of fiscal 2017	8,092		$	43.24
Granted	8,484		41.25
Vested	(8,092	)	43.24
Forfeited or expired	—		—
Outstanding at end of fiscal 2018	8,484		$	41.25

Annual expense related to the value of restricted stock was $0.3 million in fiscal 2018, $0.3 million in fiscal 2017 and $0.2 million in fiscal 2016, all of which was recorded in SG&A expense in the Consolidated Statements of Income. Unrecognized compensation expense related to non-vested restricted stock awards as of April 1, 2018 was $0.1 million and is expected to be recognized over a weighted average period of 0.4 years.