Share-Based Arrangements

9 Months Ended

Sep. 30, 2016

SHARE-BASED ARRANGEMENTS

General

The Company accounts for stock options, restricted stock awards, restricted stock units and performance shares as equity awards and measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the statement of operations. The Company also has an employee stock purchase plan which is accounted for as a liability award.

Compensation expense for stock options, restricted stock awards and restricted stock units is recognized on a straight-line basis over the vesting period of the awards. Share-based compensation expense recorded for the three-month and nine-month fiscal periods ended September 30, 2016, was $1.1 million and $4.7 million, respectively. Share-based compensation expense recorded for the three-month and nine-month fiscal periods ended October 2, 2015, was $1.3 million and $5.3 million, respectively.

During the first quarter of 2015, the Company issued stock awards with market and performance based conditions, bringing the total of these shares to 8,238, assuming a 100% achievement level. The Company measures the cost of these awards based on their grant date fair value to the extent of the probable number of shares to be earned upon vesting. Amortization of this cost is recorded on a straight-line basis over the requisite service period. Throughout the course of the requisite service period, the Company monitors the level of achievement compared to the target and adjusts the number of shares expected to be earned, and the related compensation expense recorded thereafter, to reflect the updated most probable outcome. Compensation expense for these awards for the three-month and nine-month fiscal periods ended September 30, 2016, and October 2, 2015, was not material.

Stock option activity was as follows:



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2016				September 30, 2016
	Options		Weighted - average exercise price		Options		Weighted - average exercise price
Options outstanding at beginning of period	1,130,475			$35.41	1,040,036			$33.22
Granted	—		—		230,197			$42.86
Exercised	(59,634	)		$29.05	(185,512	)		$30.09
Forfeited or expired	(12,776	)		$40.38	(26,656	)		$39.18
Options outstanding at September 30, 2016	1,058,065			$35.71	1,058,065			$35.71

13. SHARE-BASED ARRANGEMENTS (CONTINUED)

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table indicates the weighted-average assumptions used in estimating fair value:



	For the Nine Months Ended
	September 30, 2016			October 2, 2015
Expected option term (years)	5.2			5.1
Expected volatility	26.0		%	29.0		%
Risk-free interest rate	1.2		%	1.6		%
Expected dividend yield	1.8		%	1.6		%
Per share fair value of options granted		$8.63			$9.28

Restricted Stock Award and Restricted Stock Unit activity was as follows:



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2016				September 30, 2016
	Restricted Stock		Weighted- average grant date fair value		Restricted Stock		Weighted- average grant date fair value
Restricted Stock outstanding at beginning of period	178,331			$40.17	183,543			$37.80
Granted	—		—		81,019			$42.61
Vested	(1,449	)		$42.77	(84,007	)		$37.88
Forfeited or expired	(3,354	)		$39.85	(7,027	)		$39.77
Restricted Stock outstanding at September 30, 2016	173,528			$40.16	173,528			$40.16

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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