NOTE K – EQUITY-BASED COMPENSATION



Equity-based compensation expense was $16,542,  $15,482, and $14,955 for fiscal years 2016, 2017, and 2018, respectively.  The related tax benefit for these periods was $5,540,  $5,144, and $2,777, respectively. 



The following table shows the remaining unrecognized compensation expense on a pre-tax basis for all types of unvested equity awards outstanding as of December 29, 2018.  This table does not include an estimate for future grants that may be issued.









NOTE K – EQUITY-BASED COMPENSATION - CONTINUED



The Company’s 2015 Equity Incentive Award Plan (the “2015 Plan”) allows for the grant of various equity awards including stock-settled stock appreciation rights, stock options, restricted stock units, deferred stock units, and other types of equity-based awards to the Company’s officers, key employees, and non-employee directors.  Prior to the approval of the 2015 plan, the Company maintained a 2006 Equity Incentive Award Plan (the “2006” Plan”), which expired in April of 2016.    The 2015 Plan replaced the 2006 Plan for all future grants, and no new awards have been granted under the 2006 Plan. 



At the inception of the 2015 Plan, 13,839 awards had been granted under the 2006 Plan, of which 13,595 were stock-settled stock appreciation rights, 15 were stock options, and 229 were deferred stock units.  Also, at the inception of the 2015 Plan, 2,551 awards had been forfeited.  Under the 2015 Plan, 10,000 shares have been authorized.  As of December 29, 2018,  3,009 awards had been granted under the 2015 Plan, of which 2,752 were stock-settled stock appreciation rights, and 257 were restricted stock awards.  Also, as of December 29, 2018, a total of 889 awards had been forfeited and added back to the number of shares available for issuance under the 2015 Plan. 



Stock-Settled Stock Appreciation Rights



The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock-settled stock appreciation rights.  Beginning in 2015, certain new grants of stock-settled stock appreciation rights became subject to a mandatory post-vesting holding requirement of 10% of the shares derived upon exercise for the sooner of five years following the exercise or at such time the grantee no longer qualifies as a participant under the Plan.  As a result of this requirement, the Company has included an illiquidity discount in the fair value calculation of these awards.  The weighted-average fair value, of stock-settled stock appreciation rights granted in 2016 was $22.99.  There were no stock-settled stock appreciation rights granted in 2017 or 2018.



Stock-settled stock appreciation rights granted to officers and key employees upon hire or promotion to such a position, or annually for existing participants, generally vest 25% each year on the anniversary of the grant date and expire four and one-half years from the date of grant.

   

Following is a table that includes the weighted-average assumptions that the Company used to calculate fair value of stock-settled stock appreciation rights that were granted during the periods indicated.









NOTE K – EQUITY-BASED COMPENSATION - CONTINUED



A summary of the Company’s stock-settled stock appreciation right activity is as follows:







* Aggregate intrinsic value is defined as the difference between the current market value at the reporting date (the closing price of the Company's common stock on the last trading day of the period) and the exercise price of awards that were in-the-money.  The closing price of the Company's common stock at December 30, 2017, and December 29, 2018, was $74.05 and $114.96, respectively.



The total intrinsic value of stock-settled stock appreciation rights exercised was $38,198, $25,424, and $46,224, for the years ended 2016, 2017 and 2018, respectively.  The total fair value of stock-settled stock appreciation rights that vested was $11,481,  $14,126, and $17,614, for the years ended 2016, 2017, and 2018 respectively.



During the year ended December 30, 2017 and December 29, 2018, certain employees elected to receive a net amount of shares upon the exercise of stock-settled stock appreciation rights in order to satisfy the Company’s tax withholding obligation.  This resulted in a reduction to additional paid-in capital of $316 and $154 for the years ended 2017 and 2018, respectively.

 

Restricted Stock Awards



Restricted stock awards include stock-settled and cash-settled restricted stock units granted to the Company’s officers and key employees, and deferred stock units granted to non-employee directors.  Restricted stock units are granted to officers and key employees upon hire or promotion to such a position, or annually for existing participants, and generally vest 25% each year on the anniversary of the grant date.  Awards of deferred stock units granted to non-employee directors generally vest 25% each quarter, commencing on the first vest date anniversary following the final vesting of the previous award.  Upon vesting, holders of stock-settled restricted stock units and deferred stock units are entitled to receive shares of the Company’s common stock on a one-for-one basis.  Holders of cash-settled restricted stock units are entitled to receive cash payments equivalent to the number of awards held, valued at the closing market price on the vest date.  The fair value of restricted stock awards is determined based on the Company’s closing stock price on the date of grant.  Cash-settled restricted stock units are accounted for as liability awards and fair value is remeasured to current fair value at each reporting date until the award is settled at vesting.  Restricted stock awards are full-value shares at the date of grant, vesting over the periods of service, and do not have expiration dates. 

NOTE K – EQUITY-BASED COMPENSATION - CONTINUED

A summary of the Company’s stock-settled restricted stock unit activity is as follows:







During the year ended December 29, 2018, certain employees elected to receive a net amount of shares upon the release of restricted stock units in order to satisfy the Company’s tax withholding obligation.  This resulted in a $655 reduction to additional paid-in capital.



A summary of the Company’s cash-settled restricted stock unit activity is as follows:







The total fair value of liability awards outstanding at December 29, 2018 was $98.



A summary of the Company’s deferred stock unit activity is as follows:





The number of deferred stock units vested and unreleased totaled 24 as of December 30, 2017 and December 29, 2018, respectively.



The total fair value of deferred stock units that vested was $962,  $638, and $290, for the years ended 2016, 2017, and 2018 respectively.  The total fair value of restricted stock units that vested in 2018 was $2,395.  There were no restricted stock units that vested during 2016 and 2017.