(10.) STOCK-BASED COMPENSATION

Stock-based Compensation Plans

The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors, or the Compensation and Organization Committee of the Board. The stock-based compensation plans provide for the granting of stock options, shares of restricted stock awards, restricted stock units, stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers.

The 2009 Stock Incentive Plan (“2009 Plan”), as amended, and 2011 Stock Incentive Plan (“2011 Plan”), as amended, each authorize the issuance of up to 1,350,000 shares of equity incentive awards and the 2016 Stock Incentive Plan (the “2016 Plan”) authorizes the issuance of up to 1,450,000 shares of equity incentive awards. The 2009 Plan limits the amount of restricted stock, restricted stock units and stock bonuses that may be awarded in the aggregate to 200,000 shares of the 1,350,000 shares authorized. Stock options remain outstanding under the 2005 Stock Incentive Plan, but the plan has been frozen to any new award issuances.

As of December 28, 2018, there were 722,766, 119,866 and 65,190 shares available for future grants under the 2016 Plan, 2011 Plan and 2009 Plan, respectively. Due to plan sub-limits, of the shares available for grant, 7,488 shares may be awarded under the 2009 Plan in the form of restricted stock, restricted stock units or stock bonuses.

The Company recognized a net tax benefit from the exercise of stock options and vesting of restricted stock and restricted stock units of $3.8 million, $1.9 million and $2.3 million for 2018, 2017 and 2016, respectively. Beginning in 2017, this amount was recorded as a component of income tax expense. In 2016, these amounts were recorded as increases in additional paid-in capital on the Consolidated Balance Sheets and as cash from financing activities on the Consolidated Statements of Cash Flows.

Stock-based Compensation Expense

The components and classification of stock-based compensation expense for fiscal years 2018, 2017 and 2016 were as follows (in thousands):



	2018		2017		2016
Stock options	$	873	$	1,633	$	2,455
RSAs and RSUs (time-based)	6,024		4,952		1,764
PRSUs	3,159		6,867		3,887
Stock-based compensation expense - continuing operations	10,056		$	13,452	$	8,106
Discontinued operations	414		1,228		302
Total stock-based compensation expense	$	10,470	$	14,680	$	8,408

Cost of sales	$	849	$	748	$	208
SG&A	9,090		9,893		6,086
RD&E	112		642		337
OOE	5		2,169		1,475
Discontinued operations	414		1,228		302
Total stock-based compensation expense	$	10,470	$	14,680	$	8,408

During the first quarter of 2017, the Company recorded $2.2 million of accelerated stock-based compensation expense in connection with the transition of its former Chief Executive Officer per the terms of his contract, which was classified as OOE. During the first quarter of 2016, the Company recorded $0.5 million of accelerated stock-based compensation expense in connection with the Spin-off, which was classified as OOE.

(10.) STOCK-BASED COMPENSATION (Continued)

Stock Options

The following table includes the weighted average grant date fair value of stock options granted to employees during fiscal years 2018, 2017 and 2016 and the related weighted average assumptions used in the Black-Scholes model:



	2018			2017			2016
Weighted average fair value of options granted	$	14.89		$	12.86		$	8.52
Assumptions:
Expected term (in years)	4.0			4.5			4.7
Risk-free interest rate	2.21		%	1.77		%	1.49		%
Expected volatility	39		%	37		%	27		%
Expected dividend yield	0		%	0		%	0		%

The following table summarizes stock option activity during the fiscal year ended December 28, 2018:



	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at December 29, 2017	931,353		$	30.89
Granted	28,447		45.13
Exercised	(413,317	)	30.02
Forfeited or expired	(23,700	)	41.28
Outstanding at December 28, 2018	522,783		$	31.88	5.8	$	23.1
Vested and expected to vest at December 28, 2018	522,783		$	31.88	5.8	$	23.1
Exercisable at December 28, 2018	488,468		$	31.37	5.6	$	21.8

Intrinsic value is calculated for in-the-money options (exercise price less than market price) as the difference between the market price of the Company’s common shares as of December 28, 2018 ($76.03) and the weighted average exercise price of the underlying stock options, multiplied by the number of options outstanding and/or exercisable. As of December 28, 2018, $0.5 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of 1.2 years. Shares are distributed from the Company’s authorized but unissued reserve upon the exercise of stock options.

The following table provides certain information relating to the exercise of stock options during fiscal years 2018, 2017 and 2016 (in thousands):



	2018		2017		2016
Intrinsic value	$	17,722	$	13,928	$	690
Cash received	12,409		19,324		2,821

(10.) STOCK-BASED COMPENSATION (Continued)

Restricted Stock Awards and Restricted Stock Units

The following table summarizes time-vested RSA and RSU activity during the fiscal year ended December 28, 2018:



	Time-Vested Restricted Stock Units and Awards		Weighted Average Grant Date Fair Value
Nonvested at December 29, 2017	163,431		$	35.96
Granted	167,514		52.14
Vested	(134,423	)	38.88
Forfeited	(54,286	)	42.44
Nonvested at December 28, 2018	142,236		$	49.78

As of December 28, 2018, there was $5.8 million of total unrecognized compensation cost related to time-based RSAs and RSUs, which is expected to be recognized over a weighted-average period of approximately 2.3 years. The fair value of RSA and RSU shares vested in 2018, 2017 and 2016 was $9.7 million, $6.4 million and $1.3 million, respectively. The weighted average grant date fair value of RSAs and RSUs granted during fiscal years 2018, 2017 and 2016 was $52.14, $34.18 and $47.95, respectively.

Performance-Based Shares

The following table summarizes the maximum number of PRSUs which could be earned and related activity during the fiscal year ended December 28, 2018:



	Performance- Vested Restricted Stock Units and Awards		Weighted Average Grant Date Fair Value
Nonvested at December 29, 2017	469,889		$	32.37
Granted	159,669		45.37
Vested	(161,674	)	35.28
Forfeited	(180,750	)	35.24
Nonvested at December 28, 2018	287,134		$	36.15

For the Company's PRSUs, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of financial performance or market-based conditions. The financial performance condition is based on the Company's sales targets. The market conditions are based on the Company’s achievement of a relative total shareholder return performance requirement, on a percentile basis, compared to a defined group of peer companies over two and three year performance periods.

Compensation expense for the PRSUs is initially estimated based on target performance and adjusted as appropriate throughout the performance period. At December 28, 2018, there was $3.3 million of total unrecognized compensation cost related to unvested PRSUs, which is expected to be recognized over a weighted-average period of approximately 1.9 years. The fair value of PRSU shares vested in 2018 and 2016 was $9.1 million and $10.5 million, respectively. There were no PRSU shares vested in 2017. The weighted average grant date fair value of PRSUs granted during fiscal years 2018, 2017 and 2016 was $45.37, $31.62 and $30.83, respectively.

The grant-date fair value of the market-based portion of the PRSUs granted during fiscal year 2018 was determined using the Monte Carlo simulation model on the date of grant, assuming the following (i) expected term of 2.92 years, (ii) risk free interest rate of 2.28%, (iii) expected dividend yield of 0.0% and (iv) expected stock price volatility over the expected term of the award of 40%.