Stock-Based Compensation

6 Months Ended

Jul. 01, 2017

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

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The Company recognized compensation expense of $5.3 million and $13.0 million, and related income tax benefits of $1.8 million and $4.4 million, for grants under its stock-based compensation plans for the 13 and 26 weeks ended July 1, 2017, respectively. The Company recognized compensation expense of $3.9 million and $11.5 million, and related income tax benefits of $1.3 million and $3.9 million, for grants under its stock-based compensation plans for the 12 and 24 weeks ended June 18, 2016.

The Company grants restricted stock or units (“restricted awards”), performance-based restricted stock or units (“performance awards”) and stock options under its stock-based compensation plans.

During the 26 weeks ended July 1, 2017, the Company granted 93,274 employee stock options with an estimated weighted average grant date fair value of $5.50. During the 24 weeks ended June 18, 2016, the Company granted 2,375,573 employee stock options with an estimated weighted average grant date fair value of $3.32. The Company estimated the fair value of the options on the date of grant using the Black-Scholes-Merton model with the following weighted average assumptions:



	26 Weeks Ended July 1, 2017		24 Weeks Ended June 18, 2016
Expected market price volatility ⁽¹⁾	29.3	%	27.1	%
Risk-free interest rate ⁽²⁾	1.7	%	1.0	%
Dividend yield ⁽³⁾	1.0	%	1.4	%
Expected term ⁽⁴⁾	4 years		4 years


⁽¹⁾	Based on historical volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price of the stock over the four years prior to the grant.


⁽²⁾	Represents the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant.


⁽³⁾	Represents the Company’s estimated cash dividend yield for the expected term.


⁽⁴⁾	Represents the period of time that options granted are expected to be outstanding. As part of the determination of the expected term, the Company concluded that all employee groups exhibit similar exercise and post-vesting termination behavior.

During the 26 weeks ended July 1, 2017, the Company issued 744,504 restricted awards at a weighted average grant date fair value of $22.94 per award. During the 24 weeks ended June 18, 2016, the Company issued 996,301 restricted awards at a weighted average grant date fair value of $16.56 per award.

During the 26 weeks ended July 1, 2017, the Company issued 488,918 performance awards at a weighted average grant date fair value of $25.02 per award. During the 24 weeks ended June 18, 2016, the Company issued 980,093 performance awards at a weighted average grant date fair value of $16.53 per award.

- 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.

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