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Stock-Based Compensation | 6 Months Ended
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Sep. 24, 2016
Stock-Based Compensation |
Stock-Based Compensation | 6. Stock-Based Compensation Equity Incentive Plans On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan authorized the Company to issue options to employees, consultants and directors exercisable for up to a total of 3,750,000 shares of common stock. As of September 24, 2016, all awards granted by the Company under the 2011 Plan have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan. On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of August 24, 2016 (as amended, the “2014 Plan”). The 2014 Plan authorizes the Company to issue awards to employees, consultants and directors for up to a total of 3,600,000 shares of common stock, par value $0.0001 per share. As of September 24, 2016, all awards granted by the Company under the 2014 Plan to date have been nonqualified stock options, restricted stock awards or restricted stock units. Options granted under the 2014 Plan have a life of eight years and vest over service periods of five years or in connection with certain events as defined by the 2014 Plan. Restricted stock awards granted vest over one or four years, as determined by the Compensation Committee of the Board of Directors. Restricted stock units vest over service periods of one or five years, as determined by the Compensation Committee of the Board of Directors. Non-Qualified Stock Options During the thirteen weeks ended September 24, 2016, the Company did not grant options to purchase shares under the 2014 Plan. During the twenty-six weeks ended September 24, 2016, the Company granted certain members of management options to purchase a total of 560,892 shares under the 2014 Plan. The total grant date fair value of stock options granted during the twenty-six weeks ended September 24, 2016 was $1.5 million, with grant date fair values ranging from $2.50 to $2.95 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $7.11 and $8.38 per share. During the thirteen weeks ended September 26, 2015, the Company granted certain members of management options to purchase a total of 10,540 shares under the 2014 Plan. The total grant date fair value of stock options granted during the thirteen weeks ended September 26, 2015 was $0.1 million, with a grant date fair value of $11.52 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise price of these awards was $32.02 per share. During the twenty-six weeks ended September 26, 2015, the Company granted certain members of management options to purchase a total of 294,153 shares under the 2014 Plan. The total grant date fair value of stock options granted during the twenty-six weeks ended September 26, 2015 was $2.7 million, with grant date fair values ranging from $7.48 to $11.52 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $22.31 and $32.02 per share. On October 29, 2014, the Company granted its Chief Executive Officer (“CEO”) options to purchase 99,650 shares of common stock under the 2014 Plan. These options contain both service and market conditions. Vesting of the options occurs if the market price of the Company’s stock achieves stated targets through the third anniversary of the date of grant. As of March 26, 2016, the market price targets were achieved, and the options will vest in equal amounts on the third, fourth and fifth anniversaries of the grant date. The fair value of the options was estimated using a Monte Carlo simulation model. The following significant assumptions were used as of October 29, 2014:
Stock price |  | $ | 16.00 |
Exercise price |  | $ | 16.00 |
Expected option term |  |  | 6.0 | years
Expected volatility |  |  | 55.0 | %
Risk-free interest rate |  |  | 1.8 | %
Expected annual dividend yield |  |  | 0 | %
The stock option awards discussed above, with the exception of options awarded to the Company’s CEO on October 29, 2014, were measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility of the Company’s stock price over the option’s expected term, the risk-free interest rate over the option’s expected term and the Company’s expected annual dividend yield, if any. The Company’s estimate of pre-vesting forfeitures, or forfeiture rate, was based on its internal analysis, which included the award recipients’ positions within the Company and the vesting period of the awards. The Company will issue shares of common stock when the options are exercised. The fair values of stock options granted during the thirteen and twenty-six weeks ended September 24, 2016 and September 26, 2015 were estimated on the grant dates using the following assumptions:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended |
|  | September 24, |  | September 26, |  | September 24, |  | September 26, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Expected option term(1) |  |  |  |  | N/A |  |  |  |  |  | 5.5 | years |  |  |  |  | 5.5 | years |  |  |  |  | 5.5 | years |
Expected volatility factor(2) |  |  |  |  | N/A |  |  |  |  |  | 36.3 | % |  | 35.8 | % | - | 36.0 | % |  | 33.3 | % | - | 37.1 | % |
Risk-free interest rate(3) |  |  |  |  | N/A |  |  |  |  |  | 1.6 | % |  | 1.38 | % | - | 1.43 | % |  | 1.6 | % | - | 2.0 | % |
Expected annual dividend yield |  |  |  |  | N/A |  |  |  |  |  | 0 | % |  |  |  |  | 0 | % |  |  |  |  | 0 | % |
| (1) |  | The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.
| (2) |  | Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s competitors’ common stock over the most recent period equal to the expected option term of the Company’s awards.
| (3) |  | The risk-free interest rate is determined using the rate on treasury securities with the same term.
Intrinsic value for stock options is defined as the difference between the market price of the Company’s common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. The following table summarizes the stock award activity for the twenty-six weeks ended September 24, 2016:
|  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  | Grant Date |  | Average |  |  |  |
|  |  |  | Weighted |  | Remaining |  | Aggregate |
|  | Stock |  | Average |  | Contractual |  | Intrinsic |
|  | Options |  | Exercise Price |  | Life (in Years) |  | Value |
|  |  |  |  |  |  |  |  | (in thousands) |
Outstanding at March 26, 2016 |  | 2,447,133 |  | $ | 9.87 |  |  |  |  |  |
Granted |  | 560,892 |  | $ | 7.38 |  |  |  |  |  |
Exercised |  | (134,677) |  | $ | 5.49 |  |  |  | $ | 644 |
Cancelled, forfeited or expired |  | (181,418) |  | $ | 13.96 |  |  |  |  |  |
Outstanding at September 24, 2016 |  | 2,691,930 |  | $ | 9.29 |  | 6.4 |  | $ | 9,498 |
Vested and expected to vest after September 24, 2016 |  | 2,691,930 |  | $ | 9.29 |  | 6.4 |  | $ | 9,498 |
Exercisable at September 24, 2016 |  | 1,076,104 |  | $ | 8.15 |  | 5.9 |  | $ | 4,186 |
A summary of the status of non-vested stock options as of September 24, 2016 including changes during the twenty-six weeks ended September 24, 2016 is presented below:
|  |  |  | Weighted- |
|  |  |  | Average |
|  |  |  | Grant Date |
|  | Shares |  | Fair Value |
Nonvested at March 26, 2016 |  | 1,335,103 |  | $ | 5.82 |
Granted |  | 560,892 |  | $ | 2.60 |
Vested |  | (123,949) |  | $ | 7.52 |
Nonvested shares forfeited |  | (156,220) |  | $ | 6.20 |
Nonvested at September 24, 2016 |  | 1,615,826 |  | $ | 4.53 |
Restricted Stock During the thirteen and twenty-six weeks ended September 24, 2016, the Company granted 20,000 and 136,732 restricted stock units, respectively, to various directors and employees under the 2014 Plan. The shares granted to employees vest in five equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates. The shares granted to the Company’s directors vest on the first anniversary of the date of grant. The grant date fair value of these awards for the thirteen and twenty-six weeks ended September 24, 2016 totaled $0.3 million and $1.1 million, respectively. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award, commencing on the date of grant. During the thirteen and twenty-six weeks ended September 26, 2015, the Company granted 2,655 and 46,201 restricted stock units, respectively, to various employees under the 2014 Plan. The shares granted to employees vest in five equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates. The grant date fair value of these awards for the thirteen and twenty-six weeks ended September 26, 2015 totaled $0.1 million and $1.3 million, respectively. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award, commencing on the date of grant. Stock-Based Compensation Expense Stock-based compensation expense was $0.8 million and $0.7 million for the thirteen weeks ended September 24, 2016 and September 26, 2015, respectively. Stock-based compensation expense was $1.5 million and $1.4 million for the twenty-six weeks ended September 24, 2016 and September 26, 2015, respectively. Stock-based compensation expense of $0.1 million was recorded in cost of goods sold in the condensed consolidated statements of operations for each of the thirteen weeks ended September 24, 2016 and September 26, 2015, respectively. Stock-based compensation expense of $0.2 million was recorded in cost of goods sold in the condensed consolidated statements of operations for each of the twenty-six weeks ended September 24, 2016 and September 26, 2015, respectively. All other stock-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of September 24, 2016, there was $5.7 million of total unrecognized stock-based compensation expense related to unvested stock options, with a weighted-average remaining recognition period of 3.02 years. As of September 24, 2016, there was $2.2 million of total unrecognized stock-based compensation expense related to restricted stock, with a weighted-average remaining recognition period of 3.92 years.

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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=6418621&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=51659978&loc=d3e25284-112666 Reference 3: 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 4: 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 5: 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 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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