Stock-Based Awards

The Company has certain stock-based compensation plans under which it grants stock-based awards, including stock options, restricted share units, and performance share units to attract, retain, and reward talented employees, officers and directors, and to align stockholder and employee interests.

Compensation expense for stock-based awards is based on fair value at the measurement date and fluctuates over time as a result of the vesting period of the stock-based awards and the Company’s performance, as measured by criteria set forth in the performance-based awards. This expense is included in general and administrative expenses in the condensed consolidated statements of operations and the amount of expense ultimately recognized depends on the number of awards that actually vest. Accordingly, stock-based compensation expense may vary from fiscal year to fiscal year.

The performance criteria for target awards are based on the Company’s fiscal year operating earnings (adjusted for certain amounts) as a percentage of contract revenues and its fiscal year operating cash flow level. Additionally, certain awards include three-year performance goals that, if met, result in supplemental shares awarded. For performance-based restricted share units (“Performance RSUs”), the Company evaluates compensation expense quarterly and recognizes expense for performance-based awards only if it determines it is probable that performance criteria for the awards will be met.

Stock-based compensation expense and the related tax benefit during the three and nine months ended April 29, 2017 and April 23, 2016 were as follows (dollars in thousands):



	For the Three Months Ended				For the Nine Months Ended
	April 29, 2017		April 23, 2016		April 29, 2017		April 23, 2016
Stock-based compensation	$	4,915	$	3,892	$	15,930	$	12,600
Related tax benefit for stock-based compensation	$	1,943	$	1,467	$	6,126	$	4,809

During the nine months ended April 29, 2017, the Company recognized approximately $6.2 million in stock-based compensation expense in connection with certain performance-based target awards related to the fiscal 2017 performance criteria. In addition, during the nine months ended April 29, 2017, the Company recognized approximately $1.6 million in stock-based compensation expense in connection with supplemental shares for the three-year performance period ending July 29, 2017. In a period the Company determines it is no longer probable that it will achieve certain performance criteria for the awards, it would reverse the stock-based compensation expense that it had previously recognized associated with the portion of Performance RSUs that will not vest.

As of April 29, 2017, the Company had unrecognized compensation expense related to stock options, time-based restricted share units (“RSUs”), and target Performance RSUs (based on the Company’s estimate of performance goal achievement) of $3.2 million, $9.5 million, and $21.2 million, respectively. This expense will be recognized over a weighted-average number of years of 2.7, 2.7, and 2.1, respectively, based on the average remaining service periods for the awards. As of April 29, 2017, the Company may recognize an additional $7.4 million in compensation expense in future periods if the maximum amount of Performance RSUs is earned based on certain performance measures being met.

Stock Options

The following table summarizes stock option award activity during the nine months ended April 29, 2017:



	Stock Options
	Shares		Weighted Average Exercise Price
Outstanding as of July 30, 2016	737,267		$	20.99
Granted	36,914		$	78.46
Options exercised	(101,411	)	$	14.14
Canceled	(1,000	)	$	6.83
Outstanding as of April 29, 2017	671,770		$	25.21

Exercisable options as of April 29, 2017	540,798		$	18.32

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the nine months ended April 29, 2017:



	Restricted Stock
	RSUs				Performance RSUs
	Share Units		Weighted Average Grant Price		Share Units		Weighted Average Grant Price
Outstanding as of July 30, 2016	251,264		$	42.56	625,971		$	47.66
Granted	64,546		$	78.70	274,282		$	79.29
Share units vested	(114,297	)	$	35.42	(287,593	)	$	40.53
Forfeited or canceled	(3,935	)	$	46.63	(56,854	)	$	42.67
Outstanding as of April 29, 2017	197,578		$	58.42	555,806		$	67.46

The total amount of granted Performance RSUs presented above consists of 198,140 target shares and 76,142 supplemental shares. During the nine months ended April 29, 2017, the Company canceled 49,797 supplemental shares of Performance RSUs outstanding as of July 30, 2016, as a result of the fiscal 2016 performance criteria for attaining those supplemental shares not being met. The total amount of Performance RSUs outstanding as of April 29, 2017 consists of 415,729 target shares and 140,077 supplemental shares.