Controlling Interest by Officers, Directors and Family Members. As of both December 26, 2020 and December 28, 2019, Steven Berman, the Executive Chairman of the Company, and members of his family beneficially owned approximately 18% of the outstanding shares of our common stock and can influence matters requiring approval of shareholders, including the election of the Board of Directors and the approval of significant transactions.

Undesignated Stock. We have 50,000,000 shares authorized of undesignated capital stock for future issuance. The designation, rights and preferences of such shares will be determined by our Board of Directors.

Incentive Stock Plan. Prior to May 16, 2018, we issued stock compensation grants under our 2008 Stock Option and Stock Incentive Plan. On May 16, 2018, our shareholders approved our 2018 Stock Option and Stock Incentive Plan (the “2018 Plan” or the “Plan”), which supersedes our 2008 Stock Option and Stock Incentive Plan. All future stock compensation grants will be issued under the 2018 Plan. Under the terms of the Plan, our Board of Directors may grant up to 1,200,000 shares of common stock in the form of shares of restricted stock, restricted stock units, stock appreciation rights and 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. Stock options are exercisable upon the terms set forth in each grant agreement approved by the Board of Directors, but in no event more than ten years from the date of grant. Restricted stock and restricted stock units vest in accordance with the terms set forth in each applicable award agreement approved by our Board of Directors. At December 26, 2020, 853,471 shares were available for grant under the Plan.

Prior to March 2020, we issued awards of restricted stock to certain employees and members of our Board of Directors. Grants were made in the form of time-based restricted stock awards and performance-based restricted stock awards. For all restricted stock awards, we retain the restricted stock, and any dividends paid thereon, until the vesting restrictions have been met. For time-based restricted stock awards, compensation cost is recognized on a straight-line basis over the vesting period and is calculated using the closing price per share of our common stock on the grant date. Prior to 2019, we issued performance-based restricted stock awards tied to growth in adjusted pre-tax income. Compensation costs related to those awards is recognized over the performance period and is calculated using the closing price per share of our common stock on the grant date and an estimate of the probable outcome of the performance conditions as of the reporting date. In 2019, we introduced performance-based restricted stock awards that vest based on our total shareholder return ranking relative to the S&P Mid-Cap 400 Growth Index over a three-year performance period. For those awards, compensation cost is recognized on a straight-line basis over the

performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model. This valuation technique includes estimating the movement of stock prices and the effects of volatility, interest rates and dividends.

Beginning in March 2020, we began issuing restricted stock units to certain employees and members of our Board of Directors. For time-based restricted stock units, compensation cost is recognized on a straight-line basis over the vesting period and is calculated using the closing price per share of our common stock on the grant date. Also, in March 2020, we began issuing performance-based restricted stock units that vest based on our total shareholder return ranking relative to the S&P Mid-Cap 400 Growth Index over a three-year performance period. For performance-based restricted stock units tied to total shareholder return, compensation cost is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model as discussed in the paragraph above.

The following table summarizes the weighted average valuation assumptions used to calculate the fair value of total shareholder return performance-based restricted stock awards and performance-based restricted stock units granted:

The share price is the company’s closing share price as of the valuation date. The risk-free rate is based on the U.S. Treasury security with terms equal to the expected time of vesting as of the grant date. The weighted-average grant-date fair value of total shareholder return performance-based restricted stock units granted during fiscal 2020 was $65.09.

Compensation cost related to performance-based and time-based restricted stock awards and restricted stock units was $3.2 million, $2.1 million and $2.6 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The compensation costs were classified as selling, general and administrative expense in the Consolidated Statements of Operations. No cost was capitalized during fiscal 2020, fiscal 2019 or fiscal 2018.

The following table summarizes our restricted stock awards and restricted stock unit activity for the three years ended December 26, 2020:

	Shares			Weighted Average Price
Balance at December 30, 2017		153,727		$	59.94
Granted		89,798		$	73.51
Vested		(45,707	)	$	62.56
Cancelled		(27,081	)	$	75.39
Balance at December 29, 2018		170,737		$	63.94
Granted		92,396		$	81.92
Vested		(41,586	)	$	55.72
Cancelled		(44,056	)	$	58.03
Balance at December 28, 2019		177,491		$	76.70
Granted		83,875		$	64.66
Vested		(27,477	)	$	71.25
Cancelled		(16,154	)	$	76.44
Balance at December 26, 2020		217,735		$	72.77

As of December 26, 2020, there was approximately $6.9 million of unrecognized compensation cost related to unvested restricted stock and unvested restricted stock units, which is expected to be recognized over a weighted-average period of approximately 2.3 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. The excess tax benefit generated from restricted stock awards and restricted stock units was immaterial for all periods presented.

We grant stock options to certain employees. We expense the grant-date fair value of stock options as compensation cost over the vesting or performance period. Compensation cost charged against income for stock options was $1.0 million, $0.7 million and $0.5 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The compensation costs were classified as selling, general and administrative expense in the Consolidated Statements of Operations. No cost was capitalized during fiscal 2020, fiscal 2019 or fiscal 2018.

We used 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 is based on the U.S. Treasury security with terms equal to the expected time of exercise as of the grant date.

The following table summarizes the weighted average valuation assumptions used to calculate the fair value of options granted and the associated weighted-average grant-date fair values:

	For the Years Ended
	December 26, 2020			December 28, 2019			December 29, 2018
Expected dividend yield		0	%		0	%		0	%
Expected stock price volatility		29	%		28	%		27	%
Risk-free interest rate		0.8	%		2.3	%		2.6	%
Expected life of options		5.3		5.4 years			3.0 years
Weighted-average grant-date fair value	$	17.84		$	24.32		$	15.88

The following table summarizes our stock option activity for the three years ended December 26, 2020:

	Shares			Option Price per Share		Weighted Average Price		Weighted Average Remaining Terms (years)		Aggregate Intrinsic Value
Balance at December 30, 2017		122,547		$5.67 – $82.59		$	57.74
Granted		81,995		$68.93 – $82.94		$	73.84
Exercised		(15,113	)	$5.67 – $78.64		$	39.38
Cancelled		(960	)		$72.55	$	72.55
Balance at December 29, 2018		188,469		$7.74 – $82.94		$	66.14
Granted		44,025		$73.72 – $84.93		$	81.84
Exercised		(38,009	)	$7.74 – $78.76		$	58.96
Cancelled		(12,773	)	$41.59 – $82.94		$	75.52
Balance at December 28, 2019		181,712		$41.59 – $82.94		$	70.78
Granted		109,352		$61.68 – $83.06		$	63.25
Exercised		(31,521	)	$41.59 – $82.94		$	50.77
Cancelled		(8,764	)	$61.68 – $74.21		$	65.24
Balance at December 26, 2020		250,779		$41.59 – $84.93		$	70.21		4.9	$	4,847,742
Options exercisable at December 26, 2020		78,066		$41.59 – $84.93		$	72.06		2.5	$	1,366,281

As of December 26, 2020, there was approximately $2.3 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.8 years.

Cash received from option exercises was $1.2 million, $0.1 million, and $0.2 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The tax benefit generated from option exercises was immaterial for all periods presented. 2020 20192018

Employee Stock Purchase Plan. In May 2017, our shareholders approved the Dorman Products, Inc. Employee Stock Purchase Plan (the “ESPP”), which makes available 1,000,000 shares of our common stock for sale to eligible employees. The purpose of the ESPP, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions and limited cash contributions by our employees. These contributions are used to purchase shares of the Company’s common stock at a 15% discount from the lower of the market price at the beginning or end of the purchase window. Beginning in March 2018, share purchases under the plan are made twice annually. There were 79,089 shares, 21,200 shares and 21,173 shares purchased under this plan during fiscal 2020, fiscal 2019 and fiscal 2018, respectively. Compensation cost under the ESPP plan was $3.3 million, $0.3 million and $0.4 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. The tax benefit generated from ESPP purchases was $0.5 million in 2020. There was no tax benefit generated from ESPP purchases in fiscal 2019 or fiscal 2018.

401(k) Retirement Plan. The Dorman Products, Inc. 401(k) Retirement Plan and Trust (the “401(k) Plan”) is a defined contribution profit sharing and 401(k) plan covering substantially all of our employees as of December 26, 2020. Annual company contributions under the 401(k) Plan are determined by the Compensation Committee of our Board of Directors. Total expense related to the 401(k) Plan was $3.6 million, $3.1 million and $4.3 million in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. At December 26, 2020, the 401(k) Plan held 195,368 shares of our common stock.

Common Stock Repurchases. We periodically repurchase, at the then current market price, and cancel common stock issued to the 401(k) Plan. 401(k) Plan participants can no longer purchase shares of Dorman common stock as an investment option under the 401(k) Plan. Shares are generally purchased from the 401(k) Plan when participants sell units as permitted by the 401(k) Plan or elect to leave the 401(k) Plan upon retirement, termination or other reasons. The following table summarizes the repurchase and cancellation of common stock:

Share Repurchase Program. On December 12, 2013 we announced that our Board of Directors authorized a share repurchase program, authorizing the repurchase of up to $10 million of our outstanding common stock by the end of 2014. Through several expansions and extensions, our Board of Directors has expanded the program up to $500 million and extended the program through December 31, 2022. Under this program, share repurchases may be made from time to time depending on market conditions, share price, share availability and other factors at our discretion. The share repurchase program does not obligate us to acquire any specific number of shares. At December 26, 2020, $207.1 million was available for repurchase under this program. The following table summarizes the repurchase and cancellation of common stock: