XML 29 R16.htm IDEA: XBRL DOCUMENT

Share-Based Compensation

12 Months Ended

Dec. 30, 2017

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

We have three stock-based compensation plans covering officers, directors, certain employees, and consultants: the 2004 Equity Incentive Plan (the “2004 Plan”), the 2006 Long-Term Equity Incentive Plan (the “2006 Plan”), and the 2016 Amended and Restated Long-Term Incentive Plan (the “2016 Plan”). The plans are designed to motivate and retain individuals who are responsible for the attainment of our primary long-term performance goals. The plans provide a means whereby the participants develop a further sense of proprietorship and personal involvement in our development and financial success, thereby advancing the interests of the Company and its stockholders. Although we do not have a formal policy on the matter, we issue new shares of our common stock to participants upon the exercise of options or upon the vesting of restricted stock, restricted stock units, or performance shares, out of the total amount of common shares applicable for issuance or vesting under the aforementioned plans. Shares are available for new issuance only under the 2016 Plan. The 2006 and 2004 Plans have no shares remaining for issuance. Remaining 2006 Plan shares are outstanding only for the vesting of outstanding equity awards and the exercise of currently outstanding options; and 2004 Plan shares are outstanding only for the exercise of currently outstanding options.

The 2016 Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other share-based awards to participants of the 2016 Plan selected by our Board of Directors or a committee of the Board that administers the 2016 Plan.

We reserved 263,500 shares of our common stock for issuance under the 2016 Plan. The terms and conditions of awards under the 2016 Plan are determined by the Compensation Committee. Some of the awards issued under both the 2016 and 2006 Plans are subject to accelerated vesting in the event of a change in control as such an event is defined in the respective Plan documents.

For all awards designated as equity awards, we recognize compensation expense equal to the grant-date fair value for all share-based payment awards that are expected to vest, as described further below, in “Compensation Expense”. This expense is recorded on a straight-line basis over the requisite service period of the entire award, unless the awards are subject to market or performance conditions, in which case we recognize compensation expense over the requisite service period of each separate vesting tranche, to the extent the occurrence of such conditions are probable.

Outstanding awards designated as liability awards primarily consisted of Cash-Settled Stock Appreciation Rights (“cash-settled SARs”), where we intend to settle the awards in cash at the end of the vesting period. To value the cash-settled SARs, we utilize the Black-Scholes-Merton option pricing model (“Black-Scholes”), and record quarterly expense attributions of the awards based on estimates of the fair market value of the awards at the end of each quarter during the service period. The Black-Scholes model requires the input of highly subjective assumptions such as the expected stock price volatility. Additionally, we amended an award agreement for 1,500 performance shares for which the service component of the agreement was waived, which required reclassification as liability awards. These performance shares are marked to market on a quarterly basis, based on the closing price of our common stock on the last trading day of the quarter.

All compensation expense related to our share-based payment awards is recorded in “Selling, general, and administrative” expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Cash-Settled SARs

During fiscal 2016, we granted certain executives and employees a total of 493,000 cash-settled SARs. The cash-settled SARs vest on July 16, 2018, unless otherwise specifically modified, as applies to the 27,385 cash-settled SARs further discussed, below. On the vesting date, half of any vested value of the cash-settled SARs will become payable within thirty days of the vesting date, and the remainder payable within one year. The exercise price was modified during the first quarter of fiscal 2018 to be defined as based on a 20-day trading average of the Company’s common stock through the vesting date, in excess of the $7.00 grant date valuation.

During fiscal 2017, certain individuals were no longer employed with the Company, and their cash-settled SAR agreements allowed for a partial accelerated vesting (of 27,385 cash-settled SARs); and a partial forfeiture (of 20,615 cash-settled SARs), pro-rated based on employment dates. At that time, half the accelerated vested value of the cash-settled SARs, as valued at the closing stock price on the deemed exercise date, was paid to those participants, with the remaining half payable on July 16, 2019. These payments, and the accrued liability for the remaining half payable in fiscal 2019, were immaterial.

At December 30, 2017, there were 445,000 cash-settled SARs issued and outstanding, and we recognized expense of approximately $0.6 million and $0.4 million in fiscal 2017 and 2016, respectively, related to these awards.

The following table summarizes the assumptions used to compute the current fair value of our cash-settled SARs:



	December 30, 2017		December 31, 2016
Expected volatility	33.80	%	71.81	%
Risk-free interest rate	1.55	%	1.04	%
Expected term (in years)	0.54		1.54
Expected dividend yield	Not applicable		Not applicable

Restricted Stock, Restricted Stock Units, Performance Shares, and Stock Options

Restricted Stock

During fiscal 2017, we did not grant any restricted stock awards. Our sole remaining outstanding restricted stock award as of December 30, 2017, was due to vest and/or vested in equal annual increments over three years, of which January 13, 2018 was the final date of incremental vesting. Restricted stock awards that vested during fiscal 2017 had either vested in equal annual increments over three years, or had cliff vested three years after the date of grant. These awards were time-based and were not based upon attainment of performance goals.

As of December 30, 2017, there was no remaining unrecognized compensation expense related to restricted stock. As of December 30, 2017, the weighted average remaining contractual term for our restricted stock was zero, due to final incremental vesting on January 13, 2018, and the maximum contractual term was 3.0 years.

The following table summarizes activity for our restricted stock awards during fiscal 2017:



	Restricted Stock Awards
	Number of Awards		Weighted Average Fair Value
Outstanding as of December 31, 2016	98,560		$	13.19
Granted	—		—
Vested ⁽¹⁾	(81,893	)	14.10
Forfeited	—		—
Outstanding as of December 30, 2017	16,667		$	9.90


⁽¹⁾	The total fair value vested in fiscal 2017, fiscal 2016, and fiscal 2015 was $1.2 million, $1.1 million, and $1.5 million, respectively.

Restricted Stock Units

During fiscal 2017, and in prior years, the Board of Directors was granted restricted stock units with a one-year vesting period; although a pro-rated portion may vest prior to the one-year period, with the remainder forfeited, if a Director chooses not to stand for re-election before the one-year vesting period has elapsed. All vested director grants settle at the earlier of ten years from the vesting date or retirement from the Board of Directors. These awards are time-based and are not based upon attainment of performance goals.

One tranche of restricted stock units was granted to an executive officer during fiscal 2017, with a vesting date three years after the date of grant. Outstanding restricted stock units granted prior to fiscal 2017 to employees and executive officers vest either in equal annual increments over three years or between two and three years after the date of grant.

As of December 30, 2017, there was approximately $0.4 million of total unrecognized compensation expense related to restricted stock units. The unrecognized compensation expense is expected to be recognized over a weighted average term of 0.4 years. As of December 30, 2017, the weighted average remaining contractual term for our restricted stock units was 0.4 years, and the maximum contractual term was 3.0 years.

The following table summarizes activity for our restricted stock units during fiscal 2017:



	Restricted Stock Units
	Number of Awards		Weighted Average Fair Value
Outstanding as of December 31, 2016	270,450		$	7.32
Granted	98,396		7.30
Vested ⁽¹⁾	(100,390	)	6.79
Forfeited	(26,094	)	8.32
Outstanding as of December 30, 2017	242,362		$	7.41


⁽¹⁾	The total fair value of restricted stock units vested in fiscal 2017 and 2016 was $0.7 million and $0.6 million, respectively. No restricted stock units vested in fiscal year 2015.

Performance shares

During fiscal year 2015, the Board of Directors granted certain of our executive officers and employees awards of performance shares of our common stock. The performance shares are released only upon the successful achievement of specific, measurable performance criteria approved by the Compensation Committee, and the satisfaction of a service condition. The performance shares, when earned, vest in three equal tranches, though all tranches of the outstanding performance share awards will vest if certain criteria determinable at the end of fiscal year 2017 is met, despite the criteria not having been met for fiscal 2015 or 2016. Achievement of the performance criteria and vesting of all outstanding performance shares was considered probable at the end of fiscal 2017.

As of December 30, 2017, there was an immaterial amount of unrecognized compensation expense related to the performance share awards. If the final performance criteria for these shares is met, the outstanding performance shares would vest in July and September of 2018, with a weighted average contractual term remaining of approximately 0.6 years on the original three-year contractual term.

The following table summarizes activity for our performance share awards during fiscal 2017:



	Performance Shares
	Number of Awards		Weighted Average Fair Value
Outstanding as of December 31, 2016	67,000		$	9.35
Granted	—		—
Vested ⁽¹⁾	—		—
Forfeited	(7,000	)	9.80
Outstanding at December 30, 2017	60,000		$	9.29


⁽¹⁾	No performance share awards vested in fiscal 2017. The total fair value vested in fiscal 2016 and 2015 was $1.6 million and $1.7 million, respectively, from a prior tranche of performance shares which were issued in fiscal 2013 and fully vested in fiscal 2016.

Stock Options

The tables below summarize activity and include certain additional information related to our outstanding stock options granted under the 2004 Plan and 2006 Plan for the year ended December 30, 2017. The maximum contractual term for stock options was ten years from the grant date, and the remaining outstanding final tranche of options as of December 30, 2017, presented below, expire on March 10, 2018. There were no new employee stock option grants and no stock option exercises during fiscal years 2017, 2016, and 2015.



	Options
	Shares	Weighted Average Exercise Price
Outstanding as of December 31, 2016	75,000	$	46.60
Granted	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Outstanding and exercisable as of December 30, 2017	75,000	$	46.60

Compensation Expense

Total share-based compensation expense from our share-based awards was as follows:



	Fiscal Year Ended December 30, 2017		Fiscal Year Ended December 31, 2016		Fiscal Year Ended January 2, 2016
	(In thousands)
Restricted Stock and Restricted Stock Units	$	1,406	$	1,872	$	1,700
Performance Shares	452		92		127
Cash-settled Stock Appreciation Rights	622		375		—
Stock Options	—		—		—
Total	$	2,480	$	2,339	$	1,827

We recognized related income tax benefits in fiscal years 2017, 2016, and 2015 of $1.0 million, $0.9 million, and $0.7 million, respectively, which were fully realized in fiscal 2017, and offset by a valuation allowance during fiscal 2016 and 2015. We present the benefits of tax deductions in excess of recognized compensation expense as a net operating cash outflow in our Consolidated Statements of Cash Flows when present. There were no material excess tax benefits in fiscal years 2017, 2016, and 2015.