(2) Share-based Payment Arrangements

As of September 30, 2017, 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 30, 2017			September 24, 2016			September 30, 2017			September 24, 2016
Total cost of the Plans during the period	$	3,660		$	2,718		$	1,423		$	652
Amount of related income tax benefit recognized during the period		(2,492	)		(1,128	)		(678	)		(292	)

Net cost of the Plans during the period	$	1,168		$	1,590		$	745		$	360

Included in income tax benefits recognized in the thirty-nine-week periods ended September 30, 2017 and September 24, 2016 were income tax benefits of $310,000 and $261,000, 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. Also included in income tax benefits recognized in the thirty-nine-week period ended September 30, 2017 were excess tax benefits from stock-based awards of $868,000, as required by the Company’s adoption of Accounting Standards Update 2016-09 during the first fiscal quarter of 2017. See Note 11, Recent Accounting Pronouncements, for further information.

As of September 30, 2017, there were 78,682 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 4,725,200 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 with either a performance condition or a market condition under the Plans:


	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016		378,238		$	50.46
Granted		67,769		$	76.85
Forfeited		(58,779	)	$	46.00

Outstanding at September 30, 2017		387,228		$	55.75

During the thirty-nine-week period ended September 30, 2017, the Company granted RSUs with a performance condition. RSUs with a performance condition granted on February 2, 2017 may vest on January 31 of 2020, 2021 and 2022 based on growth in operating income and diluted earnings per share from continuing operations attributable to Landstar System, Inc. and subsidiary as compared to the results from the 2016 fiscal year. Outstanding RSUs at both December 31, 2016 and September 30, 2017 include RSUs with a performance condition and RSUs with a market condition, as further described in the Company’s 2016 Annual Report on Form 10-K.

The Company recognized approximately $2,254,000 and $1,322,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 30, 2017 and September 24, 2016, respectively. As of September 30, 2017, there was a maximum of $32.1 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 2.8 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:


	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Options outstanding at December 31, 2016		372,561		$	48.24
Exercised		(134,461	)	$	46.38
Forfeited		(1,200	)	$	55.67

Options outstanding at September 30, 2017		236,900		$	49.25		4.0	$	11,940

Options exercisable at September 30, 2017		217,000		$	48.59		3.9	$	11,081

The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 30, 2017 and September 24, 2016 was $5,303,000 and $1,938,000, respectively.

As of September 30, 2017, there was $91,000 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 during 2017.

Non-vested Restricted Stock and Deferred Stock Units

The following table summarizes information regarding the Company’s outstanding shares of non-vested restricted stock and Deferred Stock Units (defined below) under the Plans:


	Number of Shares and Deferred Stock Units			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2016		28,409		$	58.91
Granted		42,123		$	84.26
Vested		(16,227	)	$	61.50

Non-vested at September 30, 2017		54,305		$	77.80

The fair value of each share of non-vested restricted stock issued and Deferred Stock Unit granted under the Plans are 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 either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100% on the first anniversary of the date of the grant. For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company. Deferred Stock Units become vested 100% on the first anniversary of the date of the grant. Deferred Stock Units do not represent actual ownership in shares of the Company’s common stock and the recipient will not have voting rights or other incidents of ownership until the shares are issued. However, Deferred Stock Units do contain the right to receive dividend equivalent payments prior to settlement into shares.

As of September 30, 2017, there was $3,353,000 of total unrecognized compensation cost related to non-vested shares of restricted stock and Deferred Stock Units granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 3.0 years.