Stock-based compensation

9 Months Ended

Sep. 28, 2013

Share-based Compensation [Abstract]

Stock-based compensation

Stock-based compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value estimated in accordance with the provisions of the Financial Accounting Standards Board Accounting Standards Codification topic (“ASC”) 718-10. Compensation expense is recognized on a straight-line basis over the options’ or other awards’ estimated lives for fixed awards with ratable vesting provisions.

Under the Company’s 2012 Incentive Plan (“2012 Plan”), the Company's principal stock compensation plan as of May 9, 2012, the Company reserved up to a maximum of 3,200 shares of common stock for issuance upon the grant or exercise of stock options, restricted stock, restricted stock units (“RSUs”) and other types of awards, to directors and key employees through 2022. Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years with a 10-year contractual term. Restricted stock and RSUs are granted with a price equal to the market price of the Company’s common stock on the date of the grant and generally vest between three and five years.

The Company did not grant any options for the three or nine months endedSeptember 28, 2013. The Company granted 83 options to employees at a weighted-average grant-date fair value of $28.71 per share for the nine months endedSeptember 29, 2012. The Company recognized stock-based compensation costs related to stock options of $251 ($159 net of taxes) and $516 ($327 net of taxes) for the three months endedSeptember 28, 2013 and September 29, 2012, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. The Company recognized stock-based compensation costs related to stock options of $1,107 ($701 net of taxes) and $1,648 ($1,044 net of taxes) for the nine months endedSeptember 28, 2013 and September 29, 2012, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. Pre-tax unrecognized compensation expense for stock options granted to employees and outside directors, net of estimated forfeitures, was $1,250 as of September 28, 2013, and will be recognized as expense over a weighted-average period of approximately 1.4 years.

The fair value of the option award is estimated on the date of grant using the Black-Scholes-Merton valuation model. Expected volatility is based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate option exercise and forfeiture rates within the valuation model.

The Company granted 2 RSU's at a weighted-average grant-date fair value of $115.79 per unit for the three months endedSeptember 28, 2013. The Company did not grant any RSU's for the three months endedSeptember 29, 2012. The Company granted 301 and 261 RSUs at a weighted-average grant-date fair value of $110.14 and $65.98 per unit for the nine months endedSeptember 28, 2013 and September 29, 2012, respectively. The Company recognized stock-based compensation costs related to the issuance of RSUs of $4,085 ($2,588 net of taxes) and $2,294 ($1,453 net of taxes) for the three months endedSeptember 28, 2013 and September 29, 2012, respectively, which has been allocated to selling, general and administrative expenses and cost of sales. The Company recognized stock-based compensation costs related to the issuance of RSUs of $12,727 ($8,063 net of taxes) and $9,542 ($6,045 net of taxes) for the nine months endedSeptember 28, 2013 and September 29, 2012, respectively, which has been allocated to selling, general and administrative expenses and cost of sales. Pre-tax unrecognized compensation expense for unvested RSUs granted to employees, net of estimated forfeitures, was $34,332 as of September 28, 2013, and will be recognized as expense over a weighted-average period of approximately 2.8 years.

The Company did not grant any restricted stock awards for the three and nine months endedSeptember 28, 2013 or September 29, 2012. Compensation expense for restricted stock awards for the three and nine months endedSeptember 28, 2013 and September 29, 2012, respectively, was not significant.