Share-Based Compensation

9 Months Ended

Oct. 03, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The number and weighted-average exercise price of options issued and outstanding under all of the Company’s stock option plans are as follows (in thousands, except for exercise prices):



	Nine Months Ended October 3, 2015
	Shares		Average Exercise Price
Options outstanding, beginning of period	9,956		$	23.59
Granted	781		$	35.28
Canceled	(196	)	$	24.51
Exercised	(1,252	)	$	19.92
Options outstanding, end of period	9,289		$	25.04
Options exercisable, end of period	5,524		$	24.62
Options available for grant, end of period	5,188

As of October 3, 2015, approximately 2.6 million options were outstanding with exercise prices ranging from $15.40 to $38.76 per share that were subject to acceleration of vesting, immediate exercise without payment of the applicable option price and immediate share issuance under the Chief Executive Officer's prior employment agreement if he was terminated by the Company, if he terminated his employment for good reason under certain circumstances or if there was a change in control of the Company. This employment agreement was restated by a new employment agreement, dated November 4, 2015, that eliminated certain of the foregoing provisions. Please see Note 16 below.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under the Company’s share-based compensation plans. The range of assumptions used and the resulting weighted-average fair value of options granted at the date of grant were as follows:



	Three Months Ended		Nine Months Ended
	October 3, 2015	September 27, 2014	October 3, 2015	September 27, 2014
Risk-free interest rate	1.5% to 1.8%	1.6% to 1.8%	1.3% to 1.9%	1.4% to 1.8%
Expected term (in years)	5.5	5.1	5.5	5.1
Estimated volatility	32.3% to 35.6%	31.7% to 32.1%	32.0% to 37.4%	31.7% to 33.1%
Expected dividends	0%	0%	0%	0%
Weighted-average fair value of options granted	$14.09	$6.79	$11.82	$7.85

The total share-based compensation expense for the three and nine months ended October 3, 2015 was $2.7 million and $8.1 million, respectively. The total share-based compensation expense for the three and nine months ended September 27, 2014 was $2.6 million and $7.8 million, respectively.

The aggregate intrinsic value of options is calculated as the positive difference, if any, between the market value of the Company’s common stock on the date of exercise or the respective period end, as appropriate, and the exercise price of the options. The aggregate intrinsic value of options outstanding, with an exercise price less than the closing price of the Company’s common stock, as of October 3, 2015 was $52.5 million. The aggregate intrinsic value of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of October 3, 2015 was $22.5 million. The aggregate intrinsic value of options exercised during the three and nine months ended October 3, 2015 was $10.0 million and $21.6 million, respectively.

The unrecognized share-based compensation expense related to unvested options granted after January 1, 2006 was $23.3 million as of October 3, 2015. The weighted-average remaining contractual term of options outstanding, with an exercise price less than the closing price of the Company’s common stock, as of October 3, 2015 was 5.8 years. The weighted-average remaining contractual term of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of October 3, 2015 was 4.2 years.