Equity-Based Compensation

We have equity-based compensation plans that authorize the issuance of equity-based awards for shares of Class A and Class B common stock to directors, officers and key employees. Equity-based compensation grants are designed to reward long-term contributions to Moog and provide incentives for recipients to remain with Moog.

On January 7, 2015, shareholders approved the 2014 Long Term Incentive Plan ("2014 Plan"). The 2014 Plan authorizes the issuance of a total of 2,000,000 shares of either Class A or Class B common stock. The 2014 Plan is intended to provide a flexible framework that permits the development and implementation of a variety of stock-based programs that base awards on key performance metrics as well as align our long term incentive compensation with our peers and shareholder interests.

During 2016, we granted awards in the form of stock appreciations rights (SARs) and performance-based restricted stock units (PSUs). The compensation cost for employee and non-employee director share-based compensation programs for all current and prior year awards granted are as follows:



	2016		2015		2014
Stock appreciation rights	$	2,482	$	4,955	$	6,751
Performance-based restricted stock units	755		—		—
Stock options	34		119		438
Total compensation cost	$	3,271	$	5,074	$	7,189

Stock Appreciation Rights and Stock Options

The fair value of SARs granted was estimated on the date of grant using the Black-Scholes option-pricing model. The following table provides the range of assumptions used to value awards and the weighted-average fair value of the awards granted.



	2016			2015			2014
Expected volatility	24% - 29%			24% - 38%			29% - 39%
Risk-free rate	1.4% - 1.8%			.9% - 1.9%			.7% - 2.0%
Expected dividends	—		%	—		%	—		%
Expected term	4-6 years			3-7 years			3-7 years
Weighted-average fair value of awards granted	$	18.24		$	28.71		$	23.74

To determine expected volatility, we generally use historical volatility based on weekly closing prices of our Class A and Class B common stock over periods that correlate with the expected terms of the awards granted. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate expected term of the awards granted. Expected dividends are based on our history and expectation of dividend payouts. The expected term of equity-based awards is based on vesting schedules, expected exercise patterns and contractual terms.

The number of shares received upon the exercise of a SAR is equal in value to the difference between the fair market value of the common stock on the exercise date and the exercise price of the SAR. The term of a SAR may not exceed ten years from the grant date. Options outstanding as of October 1, 2016 consisted of both incentive options and non-qualified options. Options become exercisable over periods not exceeding ten years. The exercise price of SARs and options, determined by a committee of the Board of Directors, may not be less than the fair value of the common stock on the grant date.

SARs and options are as follows:



Stock Appreciation Rights	Number of Awards		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at October 3, 2015	1,373,544		$	45.90
Granted in 2016	194,000		65.02
Exercised in 2016	(37,996	)	37.13
Expired in 2016	(32,337	)	56.56
Forfeited in 2016	(29,992	)	67.89
Outstanding at October 1, 2016	1,467,219		$	47.97	5.2 years	$	20,923
Exercisable at October 1, 2016	1,157,117		$	42.81	4.3 years	$	20,923



Stock Options
Outstanding at October 3, 2015	255,883		$	36.81
Exercised in 2016	(137,785	)	33.20
Outstanding at October 1, 2016	118,098		$	41.02	0.9 years	$	2,187
Exercisable at October 1, 2016	111,216		$	41.02	0.9 years	$	2,060

The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on our closing price of Class A common stock of $59.54 and Class B common stock of $59.64 as of October 1, 2016. That value would have been effectively received by the option and SAR holders had all option and SAR holders exercised their options and SARs as of that date.

The intrinsic value of awards exercised and fair value of awards vested are as follows:



	2016		2015		2014
Stock Appreciation Rights
Intrinsic value of SARs exercised	$	865	$	14,566	$	9,534
Total fair value of SARs vested	$	5,876	$	5,424	$	7,633
Stock Options
Intrinsic value of options exercised	$	4,100	$	14,205	$	6,977
Total fair value of options vested	$	947	$	981	$	1,009

As of October 1, 2016, total unvested compensation expense associated with SARs amounted to $2,376 and will be recognized over a weighted-average period of two years.

Performance-Based Restricted Stock Units

PSU awards consist of shares of our stock which are payable upon the determination that we achieve certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSU's granted in 2016 have a performance period of three years. The fair value of each PSU granted is equal to the fair market value of our common stock on the date of grant. PSUs granted generally have a three year period cliff vesting schedule; however, according to the grant agreements, if certain conditions are met, the employee (or beneficiary) will receive a prorated amount of the award based on active employment during the service period.

PSUs are as follows:



Performance-Based Restricted Stock Units	Number of Awards		Weighted- Average Grant Date Fair Value
Nonvested at October 3, 2015	—		$	—
Granted in 2016	41,550		64.95
Forfeited in 2016	(3,500	)	64.95
Nonvested at October 1, 2016	38,050		$	64.95

As of October 1, 2016, total unvested compensation expense associated with nonvested PSUs amounted to $1,717 and will be recognized over a weighted-average period of two years.