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EQUITY INCENTIVE PLANS | 12 Months Ended
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Jan. 01, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
EQUITY INCENTIVE PLANS |
(9) | EQUITY INCENTIVE PLANS
The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated statements of income based on the estimated fair value of the awards. The Company’s current equity incentive plan benefits certain of the Company’s employees and directors and is named the Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”). As of January 1, 2017, the maximum number of shares that may be granted under the 2004 Equity Incentive Plan is 15,600,000 shares of voting common stock of which 2,949,836 shares were authorized for grant but have not been granted. The Company recorded total non-cash compensation expense of $18.6 million, $17.6 million and $17.6 million in 2016, 2015 and 2014, respectively. All non-cash compensation expense amounts are recorded in general and administrative expense. Stock Options As of January 1, 2017, the number of stock options granted and outstanding under the 2004 Equity Incentive Plan was 2,498,310 options. Stock options granted under the 2004 Equity Incentive Plan and a predecessor plan prior to fiscal 2009 were generally granted with an exercise price equal to the market price at the date of the grant, expired ten years from the date of grant and vested over five years from the date of grant. Stock options granted from fiscal 2009 through fiscal 2012 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over three years from the date of grant. Stock options granted in fiscal 2013 through fiscal 2016 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over four years from the date of grant. Additionally, all stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age requirements. Stock option activity related to the 2004 Equity Incentive Plan is summarized as follows:
|  | Common Stock Options |
|  |  |  |  | Weighted |  |  | Weighted |  |  |  |
|  |  |  |  | Average |  |  | Average |  |  | Aggregate |
|  |  |  |  | Exercise |  |  | Remaining |  |  | Intrinsic |
|  | Outstanding |  |  | Price |  |  | Life |  |  | Value |
|  |  |  |  |  |  |  | (Years) |  |  | (In thousands) |
Stock options at December 29, 2013 |  |  | 4,317,065 |  |  | $ | 17.17 |  |  |  |  |  |  |  |  |
Stock options granted |  |  | 222,060 |  |  |  | 72.30 |  |  |  |  |  |  |  |  |
Stock options cancelled |  |  | (9,670 | ) |  |  | 54.56 |  |  |  |  |  |  |  |  |
Stock options exercised |  |  | (939,340 | ) |  |  | 9.56 |  |  |  |  |  |  |  |  |
Stock options at December 28, 2014 |  |  | 3,590,115 |  |  | $ | 22.47 |  |  |  |  |  |  |  |  |
Stock options granted |  |  | 193,970 |  |  |  | 111.63 |  |  |  |  |  |  |  |  |
Stock options cancelled |  |  | (32,176 | ) |  |  | 73.55 |  |  |  |  |  |  |  |  |
Stock options exercised |  |  | (428,433 | ) |  |  | 11.70 |  |  |  |  |  |  |  |  |
Stock options at January 3, 2016 |  |  | 3,323,476 |  |  | $ | 28.57 |  |  |  |  |  |  |  |  |
Stock options granted |  |  | 233,280 |  |  |  | 129.42 |  |  |  |  |  |  |  |  |
Stock options cancelled |  |  | (12,798 | ) |  |  | 104.23 |  |  |  |  |  |  |  |  |
Stock options exercised |  |  | (1,045,648 | ) |  |  | 14.38 |  |  |  |  |  |  |  |  |
Stock options at January 1, 2017 |  |  | 2,498,310 |  |  | $ | 43.54 |  |  |  | 5.1 |  |  | $ | 289,237 |
Exercisable at January 1, 2017 |  |  | 1,932,209 |  |  | $ | 27.05 |  |  |  | 4.2 |  |  | $ | 255,414 |
The total intrinsic value of stock options exercised was approximately $128.0 million, $41.7 million and $68.1 million in 2016, 2015 and 2014, respectively. Cash received from the exercise of stock options was approximately $15.2 million, $4.8 million and $9.0 million in 2016, 2015 and 2014, respectively. The tax benefit realized from stock options exercised was approximately $46.1 million, $14.7 million and $23.6 million in 2016, 2015 and 2014, respectively. The Company recorded total non-cash compensation expense of $4.9 million, $3.9 million and $4.4 million in 2016, 2015 and 2014, respectively, related to stock option awards. All non-cash compensation expense amounts are recorded in general and administrative expense. As of January 1, 2017, there was $9.4 million of total unrecognized compensation cost related to unvested stock options granted under the 2004 Equity Incentive Plan which generally will be recognized on a straight-line basis over the related vesting period. This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.5 years. Management estimated the fair value of each option grant made during 2016, 2015 and 2014 as of the date of the grant using the Black-Scholes option pricing method. Weighted average assumptions are presented in the following table. The risk-free interest rate is based on the estimated effective life, and is estimated based on U.S. Treasury Bond rates as of the grant date. The expected life is based on several factors, including, among other things, the vesting term and contractual term as well as historical experience. The expected volatility is based principally on the historical volatility of the Company’s share price.
|  | 2016 |  |  | 2015 |  |  | 2014 |
Risk-free interest rate |  |  | 1.3 | % |  |  | 1.7 | % |  |  | 1.8 | %
Expected life (years) |  |  | 5.5 |  |  |  | 5.5 |  |  |  | 5.5 |
Expected volatility |  |  | 26.0 | % |  |  | 28.4 | % |  |  | 33.7 | %
Expected dividend yield |  |  | 1.2 | % |  |  | 1.1 | % |  |  | 1.4 | %
Weighted average fair value per stock option |  | $ | 29.59 |  |  | $ | 28.45 |  |  | $ | 21.16 |
Option valuation models require the input of highly subjective assumptions. In management’s opinion, existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options, as changes in subjective input assumptions can significantly affect the fair value estimate. Other Equity-Based Compensation Arrangements The Company granted 6,920 shares, 8,350 shares and 10,640 shares of restricted stock in 2016, 2015 and 2014, respectively, to members of its Board of Directors. These grants generally vest one-yearfrom the date of the grant and have a fair value equal to the market price of the Company’s stock on the grant date. These awards also contain provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age requirements. The Company recorded total non-cash compensation expense of $0.9 million, $0.9 million and $0.8 million in 2016, 2015 and 2014, respectively, related to these restricted stock awards. All non-cash compensation expense amounts are recorded in general and administrative expense. As of January 1, 2017, there was less than $0.1 million of total unrecognized compensation cost related to these restricted stock grants. The Company granted 90,730 shares, 88,250 shares and 119,670 shares of performance-based restricted stock in 2016, 2015 and 2014, respectively, to certain employees of the Company. These performance-based restricted stock awards are separated into four tranches and have time-based and performance-based vesting conditions with the last tranche vesting four years from the issuance date. These awards also contain provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age requirements. These awards are considered granted for accounting purposes when the performance target is set, which is generally in the fourth quarter of each year. The Company recorded total non-cash compensation expense of $12.8 million, $12.8 million and $12.4 million in 2016, 2015 and 2014, respectively, related to these awards. All non-cash compensation expense amounts are recorded in general and administrative expense. As of January 1, 2017, there was an estimated $25.7 million of total unrecognized compensation cost related to performance-based restricted stock. Restricted stock and performance-based restricted stock activity related to the 2004 Equity Incentive Plan is summarized as follows:
|  |  |  |  | Weighted |
|  |  |  |  | Average |
|  |  |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Nonvested at January 3, 2016 |  |  | 316,332 |  |  | $ | 75.74 |
Shares granted (1) |  |  | 97,650 |  |  |  | 131.75 |
Shares cancelled |  |  | (13,970 | ) |  |  | 88.34 |
Shares vested |  |  | (123,792 | ) |  |  | 70.39 |
Nonvested at January 1, 2017 |  |  | 276,220 |  |  | $ | 97.48 |
(1) | The weighted average grant date fair value for performance-based restricted shares granted was calculated based on the market price on the grant dates. Certain tranches will ultimately be valued when the performance condition is established for each tranche, which generally occurs in the fourth quarter of each fiscal year.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: 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 5: 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 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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