Stock-Based Awards

As of December 28, 2014, the Company was authorized to grant stock-based compensation under its 2010 Incentive Compensation Plan (the “2010 Incentive Plan”), which became effective April 27, 2010, and replaced the 1991 Executive Stock Incentive Plan (the “1991 Incentive Plan”). In addition, through April 30, 2014, the Company maintained its 2004 Non-Employee Directors’ Stock Incentive Plan (the “2004 Directors’ Plan”).

In 2013, the Company redesigned its long-term incentive compensation program, eliminating annual grants of stock options and restricted stock units and long-term performance awards payable solely in cash for executives. In their place, executives have the opportunity to earn cash and shares of Class A Common Stock at the end of three-year cycles based on the achievement of financial goals tied to a financial metric and stock price performance relative to companies in the Standard & Poor’s 500 Stock Index, with the majority of the target award to be settled in the Company’s Class A Common Stock.

We recognize stock-based compensation expense for these stock-settled long-term performance awards, stock-settled and cash-settled restricted stock units, stock options and stock appreciation rights (together, “Stock-Based Awards”). Stock-based compensation expense was $8.9 million in 2014, $8.8 million in 2013 and $4.5 million in 2012.

Stock-based compensation expense is recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Awards under the 1991 Incentive Plan, 2010 Incentive Plan and 2004 Directors’ Plan generally vest over a stated vesting period or upon the retirement of an employee or director, as the case may be.

The 2004 Director’s Plan provided for the issuance of up to 500,000 shares of Class A Common Stock in the form of stock options or restricted stock awards. Restricted stock has never been awarded under the 2004 Directors’ Plan. Prior to 2012, under our 2004 Directors’ Plan, each non-employee director of our Company received annual grants of non-qualified stock options with 10-year terms to purchase 4,000 shares of Class A Common Stock from our Company at the average market price of such shares on the date of grants. These annual grants were replaced with annual grants of cash-settled phantom stock units in 2012, and, accordingly, no grants of stock options were made under this plan in 2012 or 2013. Under its terms, the 2004 Directors’ Plan terminated as of April 30, 2014.

Our pool of excess tax benefits (“APIC Pool”) available to absorb tax deficiencies was approximately $26 million as of December 28, 2014.

Stock Options

The 1991 Incentive Plan provided, and the 2010 Incentive Plan provides, for grants of both incentive and non-qualified stock options at an exercise price equal to the market value of our Class A Common Stock on the date of grant. Stock options have generally been granted with a 3-year vesting period and a 10-year term and vest in equal annual installments. Due to a change in the Company’s long-term incentive compensation, no grants of stock options were made in 2014.

Our 2004 Directors’ Plan provided for grants of stock options to non-employee directors at an exercise price equal to the market value of our Class A Common Stock on the date of grant. Prior to 2012, stock options were granted with a 1-year vesting period and a 10-year term. No grants of stock options were made in 2014 or 2013. Our Company’s directors are considered employees for purposes of stock-based compensation.

Changes in our Company’s stock options in 2014 were as follows:



	December 28, 2014
(Shares in thousands)	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value $(000s)
Options outstanding at beginning of year	9,749		$	20	4	$	23,273
Granted	—		—
Exercised	(169	)	7
Forfeited/Expired	(1,410	)	34
Options outstanding at end of period	8,170		$	18	3	$	16,234
Options expected to vest at end of period	8,157		$	18	3	$	16,234
Options exercisable at end of period	7,877		$	18	3	$	14,508

The total intrinsic value for stock options exercised was $1.5 million in 2014, $5.3 million in 2013 and $0.9 million in 2012.

The fair value of the stock options granted was estimated on the date of grant using a Black-Scholes valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of stock options granted was determined using the average of the vesting period and term. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life, ending on the date of grant, and calculated on a monthly basis. The fair value for stock options granted with different vesting periods and on different dates is calculated separately. There were no stock option grants in 2013 or 2014.

Restricted Stock Units

The 1991 Incentive Plan provided, and the 2010 Incentive Plan provides, for grants of other stock-based awards, including restricted stock units.

In 2014, we granted stock-settled restricted stock units with a 5-year vesting period and in 2014, 2013 and 2012, we granted stock-settled restricted stock units with a 3-year vesting period. Each restricted stock unit represents our obligation to deliver to the holder one share of Class A Common Stock upon vesting. The fair value of stock-settled restricted stock units is the average market price on the grant date. Changes in our Company’s stock-settled restricted stock units in 2014 were as follows:



	December 28, 2014
(Shares in thousands)	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Unvested stock-settled restricted stock units at beginning of period	1,193		$	9
Granted	389		15
Vested	(405	)	10
Forfeited	(118	)	11
Unvested stock-settled restricted stock units at end of period	1,059		$	10
Unvested stock-settled restricted stock units expected to vest at end of period	997		$	10

The intrinsic value of stock-settled restricted stock units vested was $5.8 million in 2014, $1.9 million in 2013 and $1.2 million in 2012.

In 2010, we granted cash-settled restricted stock units with a 3-year vesting period that vested in February 2013. Cash-settled restricted stock units were classified as liability awards because we incurred a liability, payable in cash, based on our stock price. The cash-settled restricted stock unit was measured at its fair value at the end of each reporting period and, therefore, fluctuated based on the fluctuations in our stock price.

The intrinsic value of cash-settled restricted stock units vested was $1.5 million in 2013 and $3.7 million in 2012. There were no cash-settled restricted stock units granted or that remained unvested in 2014.

Long-Term Incentive Compensation

The 1991 Incentive Plan provided, and the 2010 Incentive Plan provides, for grants of cash and stock-settled awards to key executives payable at the end of a multi-year performance period. There were payments of approximately $1 million in 2014, $9 million in 2013 and $12 million in 2012.

Awards granted for the three-year performance period beginning in 2012 are based on the achievement of specified goals under two financial performance measures. These awards were classified as liability awards because we incurred a liability payable in cash.

Awards granted for the cycles beginning in 2013 and 2014 are based on relative Total Shareholder Return (“TSR”), which is calculated at stock appreciation plus reinvested dividends, payable in Class A Common Stock and another performance measure, payable in Class A Common Stock and cash. Awards payable in stock are classified within equity; awards payable in cash are classified as a liability. The fair value of TSR awards is determined at the date of grant using a market calculation simulation.

Unrecognized Compensation Expense

As of December 28, 2014, unrecognized compensation expense related to the unvested portion of our Stock-Based Awards was approximately $12.5 million and is expected to be recognized over a weighted-average period of 1.51 years.

Reserved Shares

We generally issue shares for the exercise of stock options and stock-settled restricted stock units from unissued reserved shares.

Shares of Class A Common Stock reserved for issuance were as follows:



(In thousands)	December 28, 2014	December 29, 2013
Stock options, stock–settled restricted stock units and stock-settled performance awards
Stock options and stock-settled restricted stock units	9,228	10,965
Stock-settled performance awards⁽¹⁾	2,827	1,908
Outstanding	12,055	12,873
Available	8,408	3,161
Employee Stock Purchase Plan⁽²⁾
Available	6,410	6,410
401(k) Company stock match⁽³⁾
Available	3,045	3,045
Total Outstanding	12,055	12,873
Total Available	17,863	12,616


(1)	The number of shares actually earned at the end of the multi-year performance period will vary, based on actual performance, from 0% to 200% of the target number of performance awards granted. The maximum number of shares that would be issued is included in the table above.


(2)	We have not had an offering under the Employee Stock Purchase Plan since 2010.


(3)	Effective 2014, we no longer offer a Company stock match under the Company’s 401(k) plan.