Stock-based Compensation

The Company's stock-based compensation awards are currently issued under the 2010 Incentive Plan, which was approved by its stockholders on August 5, 2010. However, any prior awards granted under the 1997 Incentive Plan remain subject to the terms of that plan. Any awards that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes are available for issuance under the 2010 Incentive Plan.

Refer to Note 17 of the Fiscal 2018 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service and performance conditions, and payout percentages (also refer to "Performance-based RSUs" below for information related to payout percentages for certain performance-based RSUs granted during the second quarter of Fiscal 2019). Additionally, during the second quarter of Fiscal 2019, in lieu of granting certain performance-based RSUs to its senior executives and other key employees, the Company granted a new type of award for which vesting is dependent on a market condition based on total shareholder return ("TSR"). Refer to "Market-based RSUs" below for a detailed description.

Impact on Results

A summary of total stock-based compensation expense and the related income tax benefits recognized during the three-month and nine-month periods ended December 29, 2018 and December 30, 2017 is as follows:



	Three Months Ended							Nine Months Ended
	December 29, 2018			December 30, 2017				December 29, 2018			December 30, 2017
	(millions)
Compensation expense	$	22.5		$	16.9		^(a)	$	65.3		$	56.3		^(a)
Income tax benefit	(3.4		)	(6.3		)		(9.9		)	(20.9		)


^(a)	The three-month and nine-month periods ended December 30, 2017 include $0.7 million and $2.8 million, respectively, of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.

The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grants and other factors, including the timing and magnitude of forfeiture and performance goal achievement adjustments, as well as changes to the size and composition of the eligible employee population, stock-based compensation expense recognized during any given fiscal period is not indicative of the level of compensation expense expected to be incurred in future periods.

Stock Options

A summary of stock option activity under all plans during the nine months ended December 29, 2018 is as follows:



	Number of Options
	(thousands)
Options outstanding at March 31, 2018	1,151
Granted	—
Exercised	(162	)
Cancelled/Forfeited	(150	)
Options outstanding at December 29, 2018	839

Restricted Stock Awards and Service-based RSUs

The fair values of restricted stock awards granted to non-employee directors are determined based on the fair value of the Company's Class A common stock on the date of grant. No such awards were granted during the nine-month periods ended December 29, 2018 and December 30, 2017. Effective beginning Fiscal 2019, non-employee directors are granted service-based RSUs.

The fair values of service-based RSUs granted to certain of the Company's senior executives and other employees, as well as non-employee directors, are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards not entitled to accrue dividend equivalents while outstanding. The weighted-average grant date fair values of service-based RSU awards granted were $113.30 and $73.32 per share during the nine-month periods ended December 29, 2018 and December 30, 2017, respectively.

A summary of restricted stock and service-based RSU activity during the nine months ended December 29, 2018 is as follows:



	Number of Shares
	Restricted Stock		Service-based RSUs
	(thousands)
Nonvested at March 31, 2018	19		1,072
Granted	—		585
Vested	(9	)	(420	)
Forfeited	—		(110	)
Nonvested at December 29, 2018	10		1,127

Performance-based RSUs

The fair values of the Company's performance-based RSUs granted to its senior executives and other key employees are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards not entitled to accrue dividend equivalents while outstanding. The weighted-average grant date fair values of performance-based RSUs granted were $129.78 and $69.40 per share during the nine-month periods ended December 29, 2018 and December 30, 2017, respectively.

Additionally, beginning with awards granted in the second quarter of Fiscal 2019, the number of shares that may be earned for performance-based RSUs subject to cliff vesting ranges between 0% (if the specified threshold performance level is not attained) and 200% (if performance meets or exceeds the maximum achievement level) of the awards originally granted. For such awards granted in recent years prior to Fiscal 2019, the payout percentages range from 0% to 150%.

A summary of performance-based RSU activity during the nine months ended December 29, 2018 is as follows:



	Number of Performance-based RSUs
	(thousands)
Nonvested at March 31, 2018	1,157
Granted	154
Change due to performance condition achievement	(29	)
Vested	(232	)
Forfeited	(20	)
Nonvested at December 29, 2018	1,030

Market-based RSUs

During the second quarter of Fiscal 2019, the Company granted cliff vesting RSU awards to its senior executives and other key employees, which, in addition to being subject to continuing employment requirements, are also subject to a market condition based on TSR performance. The number of shares that vest upon the completion of a three-year period of time is determined by comparing the Company's TSR relative to that of a pre-established peer group over the related three-year performance period. Depending on the Company's level of achievement, the number of shares that ultimately vest may range from 0% to 200% of the awards originally granted.

The weighted-average grant date fair value of TSR awards granted during the nine months ended December 29, 2018 was $177.13 per share. The Company estimates the fair value of its TSR awards on the date of grant using a Monte Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of the Company achieving various stock price levels to determine its expected TSR performance ranking relative to the peer group. Compensation expense, net of estimated forfeitures, is recorded regardless of whether the market condition is ultimately satisfied. The assumptions used to estimate the fair value of TSR awards granted during the nine months ended December 29, 2018 were as follows:



	Nine Months Ended
	December 29, 2018
Expected term (years)	2.6
Expected volatility	33.5	%
Expected dividend yield	1.9	%
Risk-free interest rate	2.6	%

A summary of market-based RSU activity during the nine months ended December 29, 2018 is as follows:



		Number of Market-based RSUs
		(thousands)
Nonvested at March 31, 2018		—
Granted		80
Change due to market condition achievement		—
Vested		—
Forfeited		—
Nonvested at December 29, 2018		80