Note 5 - Stock-based Compensation

3 Months Ended

Apr. 03, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 5 – STOCK-BASED COMPENSATION

Stock Option

Awards

In accordance with accounting standards, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award.

All outstanding stock options vested prior to the end of 2013, and therefore there was no stock option compensation expense in the first quarter of 2015 or 2016.

As of April 3, 2016, there were 87,500 stock options outstanding and exercisable, at an average exercise price of $8.75 per share. There were no stock options granted in 2016 or 2015. There were no exercises or forfeitures of stock options in the first quarter of 2016. The aggregate intrinsic value of the outstanding and exercisable stock options was $0.8 million as of April 3, 2016.

Restricted Stock Awards

During the three months ended April 3, 2016 and April 5, 2015, the Company granted restricted stock awards for 242,000 and 579,000 shares of common stock, respectively. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a two to three-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, certain awards (or a portion thereof) could vest earlier upon the attainment of certain performance criteria, in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock grants was $1.0 million and $4.5 million for the three months ended April 3, 2016 and April 5, 2015, respectively. Accounting standards require that the Company estimate forfeitures for restricted stock and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

The following table summarizes restricted stock outstanding as of April 3, 2016, as well as activity during the three months then ended:

	Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at January 3, 2016		1,470,000	$	17.92
Granted		242,000		17.16
Vested		974,000		18.53
Forfeited or canceled		160,000		16.71
Outstanding at April 3, 2016		578,000	$	16.91

As of April 3, 2016, the unrecognized total compensation cost related to unvested restricted stock was $7.0 million. That cost is expected to be recognized by the end of 2019.

Performance Share Awards

In 2016, the Company issued awards of performance shares to certain employees. These awards will vest based on the achievement of certain performance-based goals over a performance period of one to three years, subject to the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company's election. The number of shares that may be issued in settlement of the performance shares to the award recipients may be greater (up to 200%) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

The following table summarizes the performance shares outstanding as of April 3, 2016, as well as the activity during the three months then ended:

	Shares
Outstanding at January 3, 2016		0
Granted		418,200
Exercised		0
Forfeited or canceled		0
Outstanding at April 3, 2016		418,200

The weighted average grant date fair value of the performance shares awarded in the first quarter of 2016 was $17.44 per share. Compensation expense related to the performance shares for the three months ended April 3, 2016 was $0.3 million. Unrecognized compensation expense related to these performance shares was approximately $6.6 million as of April 3, 2016.