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Share-Based Compensation | 6 Months Ended
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Jul. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company has share-based compensation and employee stock purchase plans under which shares of the Company’s Class A common stock are available for future grants and sales. Pre-tax share-based compensation expense recognized in the statements of operations was $12 million and $18 million for the six-month periods ended July 2, 2016 and July 4, 2015, respectively. Tax related benefits of $4 million and $6 million were also recognized for the six-month periods ended July 2, 2016 and July 4, 2015, respectively. The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Company’s stock price over its entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights that will be settled in the Class A common stock or cash. Restricted stock grants are valued at the market closing price on the grant date. The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value based on those assumptions:
| Six Months Ended
| July 2, 2016 |  | July 4, 2015
Expected dividend yield | 0% |  | 0%
Forfeiture rate | 9.01% |  | 10.24%
Volatility | 43.14% |  | 33.98%
Risk free interest rate | 1.29% |  | 1.53%
Range of interest rates | 0.25% - 1.75% |  |  | 0.02% - 2.14% |
Expected weighted-average life | 5.33 years |  | 5.32 years
Fair value of SARs granted (in millions) | $ | 12 |  |  | $ | 11 |
Weighted-average grant date fair value of SARs granted (per underlying share) | $ | 19.95 |  |  | $ | 35.25 |
SARs activity was as follows:
| Six Months Ended July 2, 2016
SARs | Shares |  | Weighted- Average Exercise Price
Outstanding at beginning of period | 1,397,611 |  |  | $ | 56.78 |
Granted | 607,846 |  |  | 51.55 |
Exercised | (39,830 | ) |  | 40.06 |
Forfeited | (40,539 | ) |  | 64.66 |
Expired | (1,417 | ) |  | 74.72 |
Outstanding at end of period | 1,923,671 |  |  | 55.14 |
Exercisable at end of period | 946,826 |  |  | 43.73 |
Intrinsic value of exercised SARs (in millions) | $ | 1 |  |  |
The following table summarizes information about SARs outstanding at July 2, 2016:
| July 2, 2016
| Outstanding |  | Exercisable
Aggregate intrinsic value (in millions) | $ | 26 |  |  | $ | 20 |
Weighted-average remaining contractual term | 7.4 years |  | 5.4 years
Restricted stock award activity was as follows:
| Six Months Ended July 2, 2016
Restricted Stock Awards | Shares |  | Weighted-Average Grant Date Fair Value
Outstanding at beginning of period | 566,447 |  |  | $ | 77.68 |
Granted | 377,017 |  |  | 51.38 |
Released | (223,318 | ) |  | 55.74 |
Forfeited | (18,520 | ) |  | 73.58 |
Outstanding at end of period | 701,626 |  |  | 70.47 |
Performance stock award activity was as follows:
| Six Months Ended July 2, 2016
Performance Stock Awards | Shares |  | Weighted-Average Grant Date Fair Value
Outstanding at beginning of period | 332,630 |  |  | $ | 73.40 |
Granted | 179,385 |  |  | 50.36 |
Released | (108,371 | ) |  | 46.07 |
Forfeited | (6,363 | ) |  | 71.33 |
Outstanding at end of period | 397,281 |  |  | 70.18 |
Restricted stock unit activity was as follows:
| Six Months Ended July 2, 2016
Restricted Stock Units | Shares
Outstanding at beginning of period | 38,746 |
Granted | 31,194 |
Exercised | (7,585 | )
Forfeited | (1,485 | )
Outstanding at end of period | 60,870 |
There were no stock options and performance stock unit grants issued during the six months ended July 2, 2016. As of July 2, 2016, total unearned compensation costs related to the Company’s share-based compensation plans was $61 million which will be amortized over the weighted average remaining service period of 3.3 years. The fair value of the purchase rights issued to employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. An expected life of 3 months was used to calculate the fair value.
| Six Months Ended
| July 2, 2016 |  | July 4, 2015
Fair market value | $ | 60.28 |  |  | $ | 82.68 |
Option price | $ | 57.26 |  |  | $ | 78.55 |
Expected dividend yield | 0 | % |  | 0 | %
Expected volatility | 58 | % |  | 27 | %
Risk free interest rate | 0.21 | % |  | 0.04 | %

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- Definition Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 + Details
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