Share-Based Arrangements

3 Months Ended

Mar. 31, 2017

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 fiscal periods ended March 31, 2017, and April 1, 2016, was $1.4 million and $1.5 million, respectively.

During the first quarter of 2016, the Company issued stock awards with market and performance based conditions, bringing the total of these shares to 8,979, 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 fiscal periods ended March 31, 2017, and April 1, 2016, was not material.

Stock option activity was as follows:



	For the Three Months Ended
	March 31, 2017
	Options		Weighted - average exercise price
Options outstanding at beginning of period	958,679		$	36.18
Granted	226,315		$	51.97
Exercised	(58,141	)	$	31.26
Forfeited or expired	(39,217	)	$	43.90
Options outstanding at March 31, 2017	1,087,636		$	39.45

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 Three Months Ended
	March 31, 2017			April 1, 2016
Expected option term (years)	5.0			5.2
Expected volatility	19.9		%	26.0		%
Risk-free interest rate	1.9		%	1.2		%
Expected dividend yield	1.6		%	1.8		%
Per share fair value of options granted		$8.61			$8.63

12. SHARE-BASED ARRANGEMENTS (CONTINUED)

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



	For the Three Months Ended
	March 31, 2017
	Restricted Stock		Weighted- average grant date fair value
Restricted Stock outstanding at beginning of period	167,674		$	40.27
Granted	49,735		$	51.79
Vested	(46,085	)	$	38.88
Forfeited or expired	(8,914	)	$	42.56
Restricted Stock outstanding at March 31, 2017	162,410		$	44.07

- 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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