Stock Compensation

3 Months Ended

Mar. 31, 2018

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

Cash-Settled Stock Appreciation Rights (“SARs”)

During fiscal 2016, we granted certain executives and employees cash-settled SARs. The cash-settled SARs vest on July 16, 2018, unless otherwise specifically amended. 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 of the vesting date. The exercise price for the cash-settled SARs was amended during the first quarter of fiscal 2018 so that it is based on a 20-day trading average of the Company’s common stock through the vesting date (rather than as previously stated as on the vesting date), in excess of the $7.00 grant date valuation.

As of March 31, 2018, there were 445,000 cash-settled SARs issued and outstanding. On December 30, 2017, we had accrued a total liability of approximately $1.0 million for the cash-settled SARs. On March 31, 2018, we increased the total

liability to approximately $9.9 million, based on the assumptions below, which were largely driven by an increase in our stock price.

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



	March 31, 2018 ⁽¹⁾			December 30, 2017 ⁽²⁾
Stock price	$	32.59		$	9.76
Expected volatility	125.57		%	33.80		%
Risk-free interest rate	1.77		%	1.55		%
Expected term (in years)	0.29			0.54
Expected dividend yield	Not applicable			Not applicable

⁽¹⁾ Reflects an assumed exercise price based on the 20-trading day average, as per the amended SARs Agreement. The 20-day trading average was based on the 20 days prior to the last trading day of the fiscal quarter, inclusive of the last trading day.

⁽²⁾ Reflects an assumed exercise price based on the closing stock price, as per the original SARs Agreement. The closing stock price used in the analysis was the closing stock price on the last trading day of the fiscal quarter.