(1)

Share-based Payment Arrangements

As of September 24, 2016, the Company had two employee equity incentive plans, the 2002 employee stock option and stock incentive plan (the “ESOSIP”) and the 2011 equity incentive plan (the “2011 EIP”). No further grants can be made under the ESOSIP. The Company also has a stock compensation plan for members of its Board of Directors, the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated as of May 17, 2016, the “2013 DSCP”). 6,000,000 shares of the Company’s common stock were authorized for issuance under the 2011 EIP and 115,000 shares of the Company’s common stock were authorized for issuance under the 2013 DSCP. The ESOSIP, 2011 EIP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):


	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 24, 2016			September 26, 2015			September 24, 2016			September 26, 2015
Total cost of the Plans during the period	$	2,718		$	4,939		$	652		$	1,696

Amount of related income tax benefit recognized during the period		(1,128	)		(1,721	)		(292	)		(451	)

Net cost of the Plans during the period	$	1,590		$	3,218		$	360		$	1,245

Included in income tax benefits recognized in the thirty-nine-week periods ended September 24, 2016 and September 26, 2015 were income tax benefits of $261,000 and $348,000, respectively, recognized on disqualifying dispositions of the Company’s common stock by employees who obtained shares of common stock through exercises of incentive stock options.

As of September 24, 2016, there were 86,572 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 5,159,100 shares of the Company’s common stock reserved for issuance in the aggregate under the ESOSIP and 2011 EIP.

Restricted Stock Units

The following table summarizes information regarding the Company’s outstanding restricted stock unit (“RSU”) awards under the Plans:


	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 26, 2015		444,157		$	51.10
Granted		79,810		$	51.58
Vested		(81,344	)	$	53.08
Forfeited		(64,523	)	$	52.99

Outstanding at September 24, 2016		378,100		$	50.46

During the thirty-nine-week period ended September 24, 2016, the Company granted RSUs with a performance condition. RSUs with a performance condition granted on January 29, 2016 may vest on January 31 of 2019, 2020 and 2021 based on growth in operating income and diluted earnings per share from continuing operations as compared to the results from the 2015 fiscal year. Outstanding RSUs at both December 26, 2015 and September 24, 2016 include RSUs with a performance condition and RSUs with a market condition, as further described below.

RSUs with a performance condition vest over a 5 year period from the date of grant based on growth in operating income and diluted earnings per share as compared to a base year, being the year immediately preceding the year of grant. At the time of grant, the target number of common shares available for issuance under the January 29, 2016 and January 27, 2015 grants equals 100% of the number of RSUs granted, and the maximum number of common shares available for issuance under the January 29, 2016 and January 27, 2015 grants equals 200% of the number of RSUs granted. In the event actual results exceed the target, the number of shares that will be granted will exceed the number of RSUs granted. The maximum number of common shares available for issuance under grants made prior to 2015 equals 100% of the number of RSUs granted. The fair value of an RSU with a performance condition was determined based on the market value of the Company’s common stock on the date of grant, discounted for lack of marketability for a minimum post-vesting holding requirement. The discount rate due to lack of marketability used for RSU award grants with a performance condition for all periods was 7%. With respect to RSU awards with a performance condition, the Company reports compensation expense over the life of the award based on an estimated number of units that will vest over the life of the award, multiplied by the fair value of an RSU.

On May 1, 2015, the Company granted 20,000 RSUs that vest based on a market condition. These RSUs may vest on April 30 of 2019, 2020 and 2021 based on the Company’s total shareholder return (“TSR”) compound annual growth rate over the vesting periods, adjusted to reflect dividends (if any) paid during such periods and capital adjustments as may be necessary. The target number of common shares available for issuance under the May 1, 2015 grant equals 100% of the number of RSUs granted, and the maximum number of common shares available for issuance under the May 1, 2015 grant equals 150% of the number of RSUs granted. In the event actual results exceed the target TSR compound annual growth rate, the number of shares that will be granted will exceed the number of RSUs granted. The fair value of this RSU award was determined at the time of grant based on the expected achievement of the market condition at the end of each vesting period. With respect to these RSU awards with a market condition, compensation expense is recognized ratably over the requisite service period under an award based on the fair market value of the award at the time of grant, regardless of whether the market condition is satisfied. Previously recognized compensation cost would be reversed, however, if the employee terminated employment prior to completing such requisite service period.

The Company recognized approximately $1,322,000 and $3,446,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 24, 2016 and September 26, 2015, respectively. As of September 24, 2016, there was a maximum of $26.6 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 2.9 years. With respect to RSU awards with a performance condition, the amount of future compensation expense to be recognized will be determined based on future operating results.

Stock Options

The following table summarizes information regarding the Company’s outstanding stock options under the Plans:


						Weighted Average
	Number of			Weighted Average Exercise Price		Remaining Contractual		Aggregate Intrinsic
	Options			per Share		Term (years)		Value (000s)

Options outstanding at December 26, 2015		637,221		$	47.24
Exercised		(99,092	)	$	46.01
Forfeited		(6,600	)	$	53.51

Options outstanding at September 24, 2016		531,529		$	47.39		4.5	$	10,161

Options exercisable at September 24, 2016		439,029		$	45.99		4.2	$	9,008

The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 24, 2016 and September 26, 2015 was $1,938,000 and $2,542,000, respectively.

As of September 24, 2016, there was $600,000 of total unrecognized compensation cost related to non-vested stock options granted under the Plans. The unrecognized compensation cost related to these non-vested options is expected to be recognized over a weighted average period of 1.0 year.

Non-vested Restricted Stock

The following table summarizes information regarding the Company’s outstanding shares of non-vested restricted stock under the Plans:


	Number of			Weighted Average Grant Date
	Shares			Fair Value

Outstanding at December 26, 2015		18,060		$	54.36
Granted		26,033		$	58.53
Vested		(13,684	)	$	52.48

Outstanding at September 24, 2016		30,409		$	58.77

The fair value of each share of non-vested restricted stock issued under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant. Shares of non-vested restricted stock are generally subject to vesting in three equal annual installments or 100% on the first, third or fifth anniversary of the date of the grant.

As of September 24, 2016, there was $1,228,000 of total unrecognized compensation cost related to non-vested shares of restricted stock granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock is expected to be recognized over a weighted average period of 1.7 years.