Stock-Based Compensation

Equity Plans: The Company has equity-based compensation plans authorizing the granting of stock options, restricted shares, restricted share units, performance shares and other stock rights to employees and directors. As of December 29, 2018, there were 1.4 million shares available for issuance of future awards under the Company’s equity-based compensation plans.

Stock options generally vest over a three, four or five-year period and are exercisable over either a seven or ten-year period commencing from the date of the grant. Restricted shares and share units granted by the Company generally vest over three to four years. Stock options and restricted share units may have accelerated vesting upon meeting certain qualified conditions.

Upon completion of the IXYS acquisition, IXYS outstanding options were assumed by the Company and converted into options of 499,027 shares. The Company recognized approximately $11.9 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the fiscal year ended December 29, 2018, of which $4.5 million was recognized immediately as it related to prior service periods. See Note 2, Acquisitions and Dispositions, for further discussion.

The following table provides a reconciliation of outstanding stock options for the fiscal year ended December 29, 2018.



	Shares Under Option		Weighted Average Price		Weighted Average Remaining Contract Life (Years)	Aggregate Intrinsic Value (000’s)
Outstanding December 30, 2017	404,301		$	110.04
Granted	78,721		192.59
IXYS converted awards	499,027		92.52
Exercised	(296,914	)	87.85
Forfeited	(15,779	)	120.59
Outstanding December 29, 2018	669,356		116.29		5.4	$	36,494
Exercisable December 29, 2018	420,422		100.14		4.8	28,542

The following table provides a reconciliation of non-vested restricted share and share unit awards for the fiscal year ended December 29, 2018.



	Shares		Weighted Average Grant-Date Fair Value
Nonvested December 30, 2017	199,693		$	130.40
Granted	77,430		194.39
Vested	(104,062	)	123.45
Forfeited	(12,267	)	144.84
Nonvested December 29, 2018	160,794		164.61

The total intrinsic value of options exercised during 2018, 2017, and 2016 was $38.3 million, $2.2 million, and $13.3 million, respectively. The total fair value of shares vested was $20.8 million, $15.0 million, and $10.7 million for 2018, 2017, and 2016, respectively. The total amount of share-based liabilities paid was $1.1 million, $0.9 million and $0.6 million for 2018, 2017, and 2016, respectively.

The Company recognizes compensation cost of all share-based awards as an expense on a straight-line basis over the vesting period of the awards. At December 29, 2018, the unrecognized compensation cost for options and restricted shares was $22.0 million before tax, and will be recognized over a weighted average period of 1.8 years. Compensation cost included as a component of cost of sales, research and development and selling, general, and administrative expenses for all equity compensation plans discussed above was $28.2 million, $17.3 million, and $12.8 million for 2018, 2017, and 2016, respectively. The total income tax benefit recognized in the Consolidated Statements of Net Income was $6.0 million, $6.0 million and $4.4 million for 2018, 2017, and 2016, respectively.

The Company uses the Black-Scholes option valuation model to determine the fair value of awards granted. The weighted average fair value of and related assumptions for options granted are as follows:



	2018	2017	2016
Weighted average fair value of options granted	$45.19	$30.77	$26.06
Assumptions:
Risk-free interest rate	2.79%	1.79%	1.37%
Expected dividend yield	0.77%	0.86%	0.97%
Expected stock price volatility	25.0%	23.0%	26.0%
Expected life of options (years)	4.4	4.4	4.6

Expected volatilities are based on the historical volatility of the Company’s stock price. The expected life of options is based on historical data for options granted by the Company. The risk-free rates are based on yields available at the time of grant on U.S. Treasury bonds with maturities consistent with the expected life assumption.

Preferred Stock: The Board of Directors may authorize the issuance of preferred stock from time to time in one or more series with such designations, preferences, qualifications, limitations, restrictions, and optional or other special rights as the Board may fix by resolution.

Share Repurchase Program

The Company’s Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company’s common stock under a program for the period May 1, 2018 to April 30, 2019. During the fiscal year 2018, the Company repurchased 391,972 shares of its common stock.

As of February 18, 2019, the Company has repurchased 79,916 shares of its common stock since the fiscal year ended December 29, 2018.