5.	Stock-Based Compensation

Our 2008 Stock Option and Stock Incentive Plan (the “Plan”) was approved by our shareholders on May 20, 2009. Under the terms of the Plan, our Board of Directors may grant up to 2,000,000 shares of common stock in the form of shares of restricted stock, incentive stock options and non-qualified stock options or combinations thereof to officers, directors, employees, consultants and advisors. Grants under the Plan must be made within ten years of the date the Plan was approved and stock options are exercisable upon the terms set forth in the grant agreement approved by the Board of Directors, but in no event more than ten years from the date of grant. Restricted stock vests in accordance with the terms set forth in each restricted stock agreement. At July 1, 2017, 1,400,533 shares were available for grant under the Plan.

We grant restricted stock to certain employees and members of our Board of Directors. The value of restricted stock issued is based on the fair value of our common stock on the grant date. Vesting of restricted stock is conditional based on continued employment or service for a specified period and, in certain circumstances, the attainment of financial goals. We retain the restricted stock, and any dividends paid thereon, until the vesting conditions have been met. For awards with a service condition only, compensation cost related to the stock is recognized on a straight-line basis over the vesting period. For awards that have a service condition and require the attainment of financial goals, compensation cost related to the stock is calculated based upon the probable outcome of the performance conditions and is recognized over the performance period. Compensation cost related to restricted stock was $1.3 million and $1.0 million for the twenty-six weeks ended July 1, 2017 and June 25, 2016, respectively.

The following table summarizes our restricted stock activity for the twenty-six weeks ended July 1, 2017:


	Shares			Weighted Average Price
Balance at December 31, 2016		145,363		$	49.22
Granted		60,356		$	78.32
Vested		(45,942	)	$	53.35
Cancelled		(276	)	$	52.19

Balance at July 1, 2017		159,501		$	59.04

As of July 1, 2017, there was approximately $8.1 million of unrecognized compensation cost related to nonvested restricted stock, which is expected to be recognized over a weighted-average period of approximately 2.7 years.

Cash flows resulting from tax deductions in excess of the tax effect of compensation cost recognized in the financial statements are classified as operating cash flows. In accordance with ASU No. 2016-09 (see Note 11), the excess tax benefit generated from restricted shares which vested in the twenty-six weeks ended July 1, 2017 was $0.3 million and was credited to income tax expense. The excess tax benefit generated from restricted shares which vested in the twenty-six weeks ended June 25, 2016 was $0.2 million and was credited to additional paid-incapital.

We grant stock options to certain employees and members of our Board of Directors. We expense the grant-date fair value of stock options. Compensation cost is recognized on a straight-line basis over the vesting period for which related services are performed. The compensation cost charged against income for the twenty-six weeks ended July 1, 2017 and June 25, 2016 was $0.1 million in each period. The compensation costs were classified as selling, general and administrative expense in the Consolidated Statements of Income. No cost was capitalized during the twenty-six weeks ended July 1, 2017 and June 25, 2016.

We use the Black-Scholes option valuation model to estimate the fair value of stock options granted. Expected volatility and expected dividend yield are based on the actual historical experience of our common stock. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using historical option exercise data. The risk-free rate was based on a U.S. Treasury security with terms equal to the expected time of exercise as of the grant date. During the twenty-six weeks ended July 1, 2017 and June 25, 2016, we granted 58,204 and 61,084 stock options, respectively.

The following table summarizes our stock option activity for the twenty-six weeks ended July 1, 2017:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 31, 2016		101,084		$	29.52
Granted		58,024		$	78.58
Exercised		(32,000	)	$	6.90

Balance at July 1, 2017		127,108		$	57.61		4.0	$	3,198,087

Options exercisable at July 1, 2017		23,271		$	31.41		3.1	$	1,195,152

There were 32,000 options exercised during the twenty-six weeks ended July 1, 2017. There were no options exercised in the twenty-six weeks ended June 25, 2016. As of July 1, 2017, there was $1.2 million of unrecognized compensation cost related to non-vestedstock options, which is expected to be recognized over a weighted-average period of 3.4 years.

The cash received from stock option exercises was less than $0.1 million in the twenty-six weeks ended July 1, 2017. There was no cash generated from stock option exercises in the twenty-six weeks ended June 25, 2016.

In accordance with ASU No. 2016-09 (see Note 11), the excess tax benefit generated from stock options exercises in the twenty-six weeks ended July 1, 2017 was $0.6 million and was credited to income tax expense. There was no excess tax benefit generated from stock option exercises in the twenty-six weeks ended June 25, 2016.