Share-Based Compensation:

Share-based compensation includes stock option and restricted stock unit awards and certain transactions under the Company’s ESPP. Share-based compensation expense is recognized based on the grant date fair value of all stock option and restricted stock unit awards plus a discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the purchase date market value and the employee’s purchase price.

There were no significant modifications to the Company’s share-based compensation plans during fiscal 2016. At December 31, 2016, the Company had approximately 3.8 million shares available for future equity awards under the Company’s 2009 Stock Incentive Plan.

Share-based compensation expense, including changes in expense for modifications of awards, was $23.6 million, $19.4 million and $16.2 million for fiscal 2016, 2015 and 2014, respectively.

Stock Options

Under the Company’s 2009 Stock Incentive Plan, options may be granted to current or prospective officers or employees, non-employee directors and consultants. The per share exercise price of options granted shall not be less than the fair market value of the stock on the date of grant and such options will expire no later than ten years from the date of grant. Vesting of options commences at various anniversary dates following the dates of grant.

The fair value is separately estimated for each option grant. The fair value of each option is recognized as compensation expense ratably over the vesting period. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying a Black-Scholes pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The ranges of key assumptions used in determining the fair value of options granted during fiscal 2016, 2015 and 2014, as well as a summary of the methodology applied to develop each assumption, are as follows:



	Fiscal Year
	2016		2015	2014
Expected price volatility	25.5 - 27.9%		27.3 – 28.8%	28.0 – 29.3%
Risk-free interest rate	0.9 - 1.3%		1.2 – 1.5%	1.1 – 1.3%
Weighted average expected lives (in years)	4.4		4.5	4.5
Forfeiture rate	7.1	%	6.9%	6.9%
Dividend yield	0.9	%	1.0%	0.8%

Expected Price Volatility — This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses a blended volatility approach, weighting (i) actual historical changes in the market value of the stock at 75% and (ii) average implied volatility using tradable option data at 25%. To calculate historical changes in market value, the Company uses daily market value changes from the date of grant over a past period generally representative of the expected life of the options to determine volatility. To derive implied volatility, the Company relies on publicly traded options, with maturities of six months or greater. The Company believes this blended calculation of historical and expected price volatility provides the most relevant indicator of future volatility. An increase in the expected volatility will increase compensation expense.

Risk-Free Interest Rate — This is the United States Treasury Constant Maturity rate over a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Weighted Average Expected Lives — This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted generally have a maximum term of ten years. An increase in the expected life will increase compensation expense.

Forfeiture Rate — This is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience. An increase in the forfeiture rate will decrease compensation expense.

Dividend Yield —This is the estimated dividend yield for the weighted average expected life of the option granted. An increase in the dividend yield will decrease compensation expense.

The Company issues shares for options when exercised. A summary of stock option activity is as follows:



	Options		Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding December 28, 2013	4,309,048		$	30.72			7.1	$	193,123
Granted	1,167,060		64.08		$	15.36
Exercised	(1,179,175	)	20.15
Canceled	(213,507	)	57.14

Outstanding December 27, 2014	4,083,426		$	41.93			7.2	$	146,967
Granted	1,080,490		83.70		$	19.53
Exercised	(1,116,828	)	33.11
Canceled	(185,582	)	67.28

Outstanding December 26, 2015	3,861,506		$	54.95			7.1	$	119,050
Granted	1,150,941		86.05		$	19.27
Exercised	(851,118	)	42.53
Canceled	(187,582	)	80.01

Outstanding December 31, 2016	3,973,747		$	65.43			6.9	$	59,601

Exercisable at December 31, 2016	2,011,529		$	48.98			5.5	$	56,198

The aggregate intrinsic values in the table above represent the total difference between the Company’s closing stock price at each year-end and the option exercise price, multiplied by the number of in-the-money options at each year-end. As of December 31, 2016, total unrecognized compensation expense related to non-vested stock options was approximately $21.3 million with a weighted average expense recognition period of 1.7 years.

There were no material modifications to options in fiscal 2016, 2015 or 2014.

Other information relative to option activity during fiscal 2016, 2015 and 2014 is as follows (in thousands):



	2016		2015		2014
Total fair value of stock options vested	$	15,184	$	13,207	$	10,855
Total intrinsic value of stock options exercised	$	39,696	$	60,082	$	60,656

Restricted Stock Units

The Company issues shares for restricted stock unit awards once vesting occurs and related restrictions lapse. The units vest over a one to four year term; some plan participants have elected to defer receipt of shares of common stock upon vesting of restricted stock units, and as a result, shares are not issued until a later date. The status of restricted stock units is presented below:



Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Restricted at December 28, 2013	413,158		$	26.12
Granted	97,817		70.09
Exercised	(212,156	)	21.91
Forfeited	(21,472	)	54.54

Restricted at December 27, 2014	277,347		$	42.64
Granted	56,052		84.86
Exercised	(107,548	)	25.97
Forfeited	(6,234	)	63.57

Restricted at December 26, 2015	219,617		$	60.99
Granted	59,586		83.22
Exercised	(58,503	)	52.51
Forfeited	(26,669	)	76.51

Restricted at December 31, 2016	194,031		$	68.04

Other information relative to restricted stock unit activity during fiscal 2016, 2015 and 2014 is as follows (in thousands):



	2016		2015		2014
Total grant date fair value of restricted stock units vested and issued	$	3,072	$	2,793	$	4,647
Total intrinsic value of restricted stock units vested and issued	$	5,104	$	9,139	$	13,205

For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld by the Company for the minimum statutory tax withholding requirements, which the Company pays on behalf of its employees. The Company issued 48,267, 72,206, and 134,964 shares as a result of vested restricted stock units during fiscal 2016, 2015 and 2014, respectively. Although shares withheld are not issued, they are treated similar to common stock repurchases as they reduce the number of shares that would have been issued upon vesting. The amounts are net of 10,236, 35,342, and 77,192 shares withheld to satisfy $0.8 million, $3.0 million, and $4.8 million of employees’ tax obligations during fiscal 2016, 2015 and 2014, respectively.

There were no material modifications to restricted stock units in fiscal 2016, 2015 or 2014.

As of December 31, 2016, total unrecognized compensation expense related to non-vested restricted stock units was approximately $5.4 million with a weighted average expense recognition period of 1.6 years.

Employee Stock Purchase Plan

The ESPP provides Company employees the opportunity to purchase, through payroll deductions, shares of common stock at a 15% discount. Pursuant to the terms of the ESPP, the Company issued 69,562, 68,428 and 78,670 shares of common stock during fiscal 2016, 2015 and 2014, respectively. The total cost related to the ESPP, including the compensation expense calculations, was approximately $1.1 million, $1.1 million and $1.0 million in fiscal 2016, 2015 and 2014, respectively. There are a maximum of 16.0 million shares of common stock that are reserved under the ESPP. At December 31, 2016, there were approximately 12.1 million remaining shares of common stock reserved for future issuance under the ESPP.