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Stock Options, Other Stock Awards and Warrants | 12 Months Ended
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Dec. 27, 2015
Stock Options, Other Stock Awards and Warrants [Abstract] |
Stock Options, Other Stock Awards and Warrants | (13) Stock Options, Other Stock Awards and Warrants Hasbro has reserved 11,217 shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the "plans"). These awards generally vest and are expensed in equal annual amounts over three to five years. The plans provide that options be granted at exercise prices not less than the market value of the underlying common stock on the date the option is granted and options and share awards are adjusted for such changes as stock splits and stock dividends. Options are exercisable for periods of no more than seven years after date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the case of performance based contingent stock and restricted stock unit grants, shares are issued out of available treasury shares. The Company's current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options. Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 27, 2015, December 28, 2014 and December 29, 2013 was $53,880, $36,152 and $21,272, respectively, and was recorded as follows:
| 2015 |  | 2014 |  | 2013
Cost of sales | $ | 366 |  | 395 |  | 152
Product development |  | 3,527 |  | 3,874 |  | 1,767
Selling, distribution and administration |  | 49,987 |  | 31,883 |  | 19,353
|  | 53,880 |  | 36,152 |  | 21,272
Income tax benefit |  | 13,489 |  | 11,745 |  | 7,065
| $ | 40,391 |  | 24,407 |  | 14,207
The following table represents total compensation expense by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of its Board of Directors, for the years ended December 27, 2015, December 28, 2014 and December 29, 2013:
| 2015 |  | 2014 |  | 2013
Stock performance awards | $ | 27,960 |  | 11,315 |  | 815
Restricted stock units |  | 19,052 |  | 15,643 |  | 8,732
Stock options |  | 5,419 |  | 7,473 |  | 8,849
Non-employee awards |  | 1,449 |  | 1,834 |  | 1,560
Cash-settled restricted stock units |  | - |  | (113) |  | 1,316
|  | 53,880 |  | 36,152 |  | 21,272
Income tax benefit |  | 13,489 |  | 11,745 |  | 7,065
| $ | 40,391 |  | 24,407 |  | 14,207
Stock Performance Awards In 2015, 2014 and 2013, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the "Stock Performance Awards"). These awards provide the recipients with the ability to earn shares of the Company's common stock based on the Company's achievement of stated cumulative diluted earnings per share and cumulative net revenue targets over the three fiscal years ended December 2017, December 2016, and December 2015 for the 2015, 2014 and 2013 awards, respectively. Each 2014 and 2013 Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets while the 2015 Stock Performance Awards include an additional return on invested capital target for certain employees in addition to the diluted earnings per share and revenue targets. The ultimate amount of the award may vary, depending on actual results. The 2013, 2014 and 2015 Awards may vary from 0% to 200% of the target number of shares. Information with respect to Stock Performance Awards for 2015, 2014 and 2013 is as follows:
| 2015 |  | 2014 |  | 2013
Outstanding at beginning of year |  | 655 |  | 943 |  | 1,019
Granted |  | 362 |  | 322 |  | 358
Forfeited |  | (25) |  | (32) |  | (101)
Cancelled |  | - |  | (578) |  | (333)
Vested |  | - |  | - |  | -
Outstanding at end of year |  | 992 |  | 655 |  | 943
Weighted average grant-date fair value: |  |  |  |  |  |
Granted | $ | 61.85 |  | 52.11 |  | 47.21
Forfeited | $ | 53.45 |  | 43.21 |  | 40.24
Cancelled | $ | - |  | 36.14 |  | 45.66
Vested | $ | - |  | - |  | -
Outstanding at end of year | $ | 53.17 |  | 49.57 |  | 40.24
Shares granted in 2015 include 90 shares related to the 2013 award, reflecting an increase in the ultimate amount of shares to be issued based on the Company's actual results during the performance period. These shares are excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2015. Shares cancelled in 2014 and 2013 represent the cancellation of the Stock Performance Awards granted during 2012 and 2011, respectively, based on failure to meet the targets set forth by the agreement. During 2015, 2014 and 2013, the Company recognized $27,960, $11,315 and $815, respectively, of expense relating to these awards. Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period. On a periodic basis the Company reviews the actual and forecasted performance of the Company against the stated targets for each award. The total expense is adjusted upward or downward based on the expected amount of shares to be issued as defined in the agreement. If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed. In the fourth quarter of 2013, it was determined that it was no longer probable that the minimum targets would be met for certain Stock Performance Awards grants and, as a result, all previously recognized expense totaling $7,046 related to these awards was reversed. At December 27, 2015, the amount of total unrecognized compensation cost related to these awards is approximately $20,410 and the weighted average period over which this will be expensed is 19 months. Restricted Stock Units The Company on occasion will issue restricted stock or grant restricted stock units to certain key employees. These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally between three and five years. During 2015, 2014 and 2013, the Company recognized compensation expense, net of forfeitures, on these awards of $19,052, $15,643 and $8,732, respectively. At December 27, 2015, the amount of total unrecognized compensation cost related to restricted stock units is $28,566 and the weighted average period over which this will be expensed is 22 months. In October 2012, as part of an Amended and Restated Employment Agreement, the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014. As of May 2013, both tranches met the accounting definition for grant date and, as such, are being expensed from 2013 through 2017. Expenses related to 2014 and 2013 are included in the aforementioned recognized and unrecognized compensation costs related to restricted stock units. 468 shares of this award are considered granted in 2013 while the remaining 119 shares were granted in February 2014. These awards provide the recipient with the ability to earn shares of the Company's common stock based on the Company's achievement of four stated stock price hurdles and continued employment through December 31, 2017. At the completion of the service period, the recipient will receive one quarter of the award for each stock price hurdle achieved after April 24, 2013. The four stock price hurdles are $45, $52, $56 and $60 which must be met for a period of at least thirty days using the average closing price over such period. In August 2014, the Amended and Restated Employment Agreement was further amended to include additional requirements. Specifically, if the third and fourth stock price hurdles are achieved, the number of shares ultimately issued will be dependent on the average stock price for the thirty day period immediately prior to December 31, 2017. This amendment did not result in any incremental fair value to the award which is used to record compensation expense for the award. The Company used a Monte Carlo simulation valuation model to determine the fair value of these awards. The following inputs were used in the simulation that resulted in an average grant date fair value for this award of $35.56:
| Inputs
Grant date stock price | $47.28
Stock price volatility | 26.12%
Risk-free interest rate | 0.65%
Dividend yield | 3.38%
Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2015, 2014 and 2013 is as follows:
| 2015 |  | 2014 |  | 2013
Outstanding at beginning of year |  | 937 |  | 702 |  | 296
Granted |  | 254 |  | 281 |  | 451
Forfeited |  | (52) |  | (39) |  | (44)
Vested |  | (184) |  | (7) |  | (1)
Outstanding at end of year |  | 955 |  | 937 |  | 702
Weighted average grant-date fair value: |  |  |  |  |  |
Granted | $ | 62.95 |  | 52.06 |  | 45.16
Forfeited | $ | 51.57 |  | 44.44 |  | 40.40
Vested | $ | 39.87 |  | 41.19 |  | 33.62
Outstanding at end of year | $ | 51.22 |  | 45.74 |  | 43.10
Stock Options Information with respect to stock options for the three years ended December 27, 2015 is as follows:
| 2015 |  | 2014 |  | 2013
Outstanding at beginning of year |  | 4,186 |  | 5,543 |  | 9,283
Granted |  | 549 |  | 684 |  | 776
Exercised |  | (1,280) |  | (1,951) |  | (4,377)
Expired or forfeited |  | (10) |  | (90) |  | (139)
Outstanding at end of year |  | 3,445 |  | 4,186 |  | 5,543
Exercisable at end of year |  | 2,208 |  | 2,374 |  | 3,144
Weighted average exercise price: |  |  |  |  |  |
Granted | $ | 61.77 |  | 52.11 |  | 47.21
Exercised | $ | 37.54 |  | 31.07 |  | 26.99
Expired or forfeited | $ | 46.38 |  | 39.85 |  | 39.59
Outstanding at end of year | $ | 46.41 |  | 41.68 |  | 36.63
Exercisable at end of year | $ | 41.36 |  | 38.90 |  | 33.22
With respect to the 3,445 outstanding options and 2,208 options exercisable at December 27, 2015, the weighted average remaining contractual life of these options was 3.76 years and 2.84 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 27, 2015 was $73,115 and $57,988, respectively. Substantially all unvested outstanding options are expected to vest. The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. The weighted average fair value of options granted in fiscal 2015, 2014 and 2013 was $9.29, $8.40 and $6.94, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2015, 2014 and 2013:
| 2015 |  | 2014 |  | 2013
Risk-free interest rate | 1.34% |  | 1.42% |  | 0.62%
Expected dividend yield | 2.98% |  | 3.30% |  | 3.39%
Expected volatility | 23% |  | 26% |  | 26%
Expected option life | 5 years |  | 5 years |  | 5 years
The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, of the options exercised in fiscal 2015, 2014 and 2013 were $41,906, $44,890 and $89,534, respectively. At December 27, 2015, the amount of total unrecognized compensation cost related to stock options was $6,220 and the weighted average period over which this will be expensed is 20 months. Non-Employee Awards In 2015, 2014 and 2013, the Company granted 20, 34 and 33 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 16 shares from the 2015 grant, 26 shares from the 2014 grant and 28 shares from the 2013 grant has been deferred to the date upon which the respective director ceases to be a member of the Company's Board of Directors. These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant. In connection with these grants, compensation cost of $1,449 was recorded in selling, distribution and administration expense in the year ended December 27, 2015, $1,834 in the year ended December 28, 2014 and $1,560 in the year ended December 29, 2013.

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