STOCK-BASED COMPENSATION

Under the Company’s Amended and Restated Equity Incentive Plan (the "Plan"), the Compensation Committee of the Board of Directors may award incentive stock options, stock appreciation rights, restricted stock, unrestricted stock, stock deliverable on a deferred basis (including restricted stock units), and performance-based stock awards.

At the Company's May 17, 2018 shareholders' meeting, the shareholders approved an amendment to the Plan to increase the maximum number of shares of stock available under the Plan by 3,000,000 shares from a cumulative total of 15,778,392 shares to 18,778,392 shares. As of December 29, 2018, there were 3,702,701 remaining shares available for grant under the Plan. The Plan makes provision for the treatment of awards upon termination of service or in the case of a merger or similar corporate transaction. Participation in the Plan is limited to members of the Company's board of directors, executive officers and other key employees.

The limit on shares available under the Plan, the individual limits, and other award terms are subject to adjustment to reflect stock splits or stock dividends, combinations, and certain other events. All stock options issued under the Plan expire no later than ten years from the date of grant. The Company believes that the current level of authorized shares is sufficient to satisfy future grants for the foreseeable future.

The Company recorded stock-based compensation cost as follows:



	For the fiscal years ended
(dollars in thousands)	December 29, 2018		December 30, 2017		December 31, 2016
Stock options	$	4,788	$	4,244	$	4,237
Restricted stock:
Time-based awards	7,938		7,532		7,451
Performance-based awards	744		4,602		3,974
Stock awards	1,203		1,171		1,185
Total	$	14,673	$	17,549	$	16,847

The Company recognizes compensation cost ratably over the applicable performance periods based on the estimated probability of achievement of its performance targets at the end of each period. During fiscal 2018, the Company revised the estimated achievement of performance targets related to certain performance-based grants resulting in a $3.9 million reduction to stock compensation expense.

Stock Options

Stock options vest in equal annual installments over a four-year period. The Company issues new shares to satisfy stock option exercises.

Changes in the Company's stock options for the fiscal year ended December 29, 2018 were as follows:



	Number of shares		Weighted- average exercise price	Weighted-average remaining contractual terms (years)	Aggregate intrinsic value (in thousands)
Outstanding, December 30, 2017	1,494,223		$61.76

Granted	255,532		$118.43
Exercised	(261,113	)	$40.58
Forfeited	(40,533	)	$98.01
Expired	(968	)	$95.10
Outstanding, December 29, 2018	1,447,141		$74.55	5.96	$	21,714

Vested and Expected to Vest, December 29, 2018	1,377,440		$73.10	5.82	$	21,714
Exercisable, December 29, 2018	851,264		$57.33	4.31	$	21,714

The intrinsic value of stock options exercised during the fiscal years ended December 29, 2018, December 30, 2017, and December 31, 2016 was approximately $16.6 million, $14.9 million, and $9.0 million, respectively. At December 29, 2018, there was approximately $8.8 million of unrecognized compensation cost (net of estimated forfeitures) related to stock options which is expected to be recognized over a weighted-average period of approximately 2.6 years.

The table below presents the weighted-average assumptions used to calculate the fair value of options granted in each of the respective fiscal years:



	For the fiscal years ended
	December 29, 2018			December 30, 2017			December 31, 2016
Expected volatility	22.93		%	26.20		%	26.95		%
Risk-free interest rate	2.75		%	2.06		%	1.33		%
Expected term (years)	6.0			6.0			6.0
Dividend yield	1.47		%	1.77		%	1.45		%
Weighted average fair value of options granted	$	27.36		$	19.57		$	21.41

Restricted Stock Awards

Restricted stock awards issued under the Plan vest based upon: 1) continued service (time-based) or 2) a combination of continued service and performance targets (performance-based).

The following table summarizes activity related to all restricted stock awards during the fiscal year ended December 29, 2018:



	Restricted stock awards		Weighted-average grant-date fair value
Outstanding, December 30, 2017	397,848		$	85.44
Granted	143,085		$	118.03
Vested	(151,321	)	$	84.56
Forfeited	(15,604	)	$	97.83
Outstanding, December 29, 2018	374,008		$	97.57

During fiscal 2017, a total of 168,471 shares of restricted stock vested with a weighted-average fair value of $74.00 per share. During fiscal 2016, a total of 218,335 shares of restricted stock vested with a weighted-average fair value of $62.98 per share. At December 29, 2018, there was approximately $16.0 million of unrecognized compensation cost (net of estimated forfeitures) related to all restricted stock awards which is expected to be recognized over a weighted-average period of approximately 2.3 years.

Time-based Restricted Stock Awards

Time-based restricted stock awards vest in equal annual installments or cliff vest after a three- or four-year period. During fiscal years 2018, 2017, and 2016, a total of 100,625 shares, 114,703 shares, and 124,135 shares, respectively, of time-based restricted stock vested with a weighted-average fair value of $85.64 per share, $76.58 per share, and $65.80 per share, respectively. At December 29, 2018, there was approximately $13.4 million of unrecognized compensation cost (net of estimated forfeitures) related to time-based restricted stock which is expected to be recognized over a weighted-average period of approximately 2.4 years.

Performance-based Restricted Stock Awards



Fiscal year	Number of shares granted	Weighted-average fair value per share
2016	53,070	$	90.66
2017	60,952	$	83.84
2018	45,625	$	120.25

During the fiscal year ended December 29, 2018, a total of 50,696 performance shares vested with a weighted-average fair value of $82.40 per share. As of December 29, 2018, a total of 153,922 performance shares were unvested with a weighted-average fair value of $96.47 per share. Vesting of these 153,922 performance shares is based on the performance targets for the shares granted in fiscal 2018, 2017, and 2016. As of December 29, 2018, there was approximately $2.6 million of unrecognized compensation cost (net of estimated forfeitures) related to the unvested performance-based restricted stock awards which is expected to be recognized over a weighted-average period of approximately 1.7 years.

Stock Awards

Included in restricted stock awards are grants to non-management members of the Company's Board of Directors. At issuance, these awards were fully vested and issued as shares of the Company's common stock. During fiscal years 2018, 2017, and 2016, such awards were as follows:



Fiscal year	Number of shares issued	Fair value per share	Aggregate value (in thousands)
2016	12,758	$101.10	$1,290
2017	13,860	$84.46	$1,171
2018	10,971	$109.67	$1,203

The Company received no proceeds from the issuance of these shares.