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Share-Based Employee Compensation | 12 Months Ended
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Sep. 27, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract] |
Share-Based Employee Compensation | SHARE-BASED EMPLOYEE COMPENSATION Stock incentive plans — We offer share-based compensation plans to attract, retain, and motivate key officers, employees, and non-employee directors to work toward the financial success of the Company. Our stock incentive plans are administered by the Compensation Committee of the Board of Directors and have been approved by the stockholders of the Company. The terms and conditions of our share-based awards are determined by the Compensation Committee for each award date and may include provisions for the exercise price, expirations, vesting, restriction on sales, and forfeitures, as applicable. We issue new shares to satisfy stock issuances under our stock incentive plans. Our Amended and Restated 2004 Stock Incentive Plan authorizes the issuance of up to 11,600,000 common shares in connection with the granting of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, or performance units to our employees and directors. There were 1,764,132 shares of common stock available for future issuance under this plan as of September 27, 2020. We also maintain a deferred compensation plan for non-management directors under which those who are eligible to receive fees or retainers may choose to defer receipt of their compensation. The deferred amounts are converted to stock equivalents. The plan requires settlement in shares of our common stock based on the number of stock equivalents and dividend equivalents at the time of a participant’s separation from the Board of Directors. This plan provides for the issuance of up to 350,000 shares of common stock in connection with the crediting of stock equivalents. There were 142,918 shares of common stock available for future issuance under this plan as of September 27, 2020. Compensation expense — The components of share-based compensation expense, included within “Selling, general, and administrative expenses” in our consolidated statement of earnings, in each fiscal year are as follows (in thousands):
|  | 2020 |  | 2019 |  | 2018
Nonvested stock units |  | $ | 3,526 |  |  | $ | 5,458 |  |  | $ | 5,737 |
Stock options |  | 351 |  |  | 936 |  |  | 1,790 |
Performance share awards |  | 254 |  |  | 1,417 |  |  | 1,236 |
Nonvested restricted stock awards |  | — |  |  | — |  |  | 33 |
Non-management directors’ deferred compensation |  | 263 |  |  | 263 |  |  | 350 |
Total share-based compensation expense |  | $ | 4,394 |  |  | $ | 8,074 |  |  | $ | 9,146 |
Nonvested restricted stock units — Nonvested restricted stock units (“RSUs”) are generally issued to executives, non-management directors and certain other members of management and employees. Prior to fiscal 2011, RSUs were granted to certain Executive and Senior Vice Presidents pursuant to our share ownership guidelines. These awards vest upon retirement or termination based on years of service. There were 34,700 of such RSUs outstanding as of September 27, 2020. Beginning fiscal 2011, we eliminated ownership share grants to executive officers and implemented a stock holding requirement on grants of time-vesting RSUs that vest ratably over four years, and require executives to hold until termination of service 50% of after-tax net shares resulting from the vesting of RSUs. There were 46,351 of such RSUs outstanding as of September 27, 2020. RSUs issued to non-management directors vest 12 months from the date of grant, or upon termination of board service if the director elects to defer receipt and totaled 64,836 units outstanding as of September 27, 2020. RSUs issued to certain other employees either cliff vest or vest ratably over three years and totaled 29,254 units outstanding as of September 27, 2020. These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date discounted by the present value of the expected dividend stream over the vesting period. The following is a summary of RSU activity for fiscal 2020:
|  | Shares |  | Weighted- Average Grant Date Fair Value
RSUs outstanding at September 29, 2019 |  | 311,845 |  |  | $ | 66.18 |
Granted |  | 76,429 |  |  | $ | 73.94 |
Released |  | (126,694) |  |  | $ | 68.39 |
Forfeited |  | (86,439) |  |  | $ | 83.05 |
RSUs outstanding at September 27, 2020 |  | 175,141 |  |  | $ | 59.65 |
As of September 27, 2020, there was approximately $2.6 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.4 years. The weighted-average grant date fair value of awards granted was $73.94, $86.08, and $94.93 in fiscal years 2020, 2019, and 2018, respectively. In fiscal years 2020, 2019, and 2018, the total fair value of RSUs that vested and were released was $8.7 million, $4.7 million, and $4.4 million, respectively. Modification of RSU awards — On April 16, 2020, we entered into a Retention, Transition and Separation Agreement with our former Chairman and Chief Executive Officer, which sets forth the terms of his transition and certain benefits he is eligible to receive, pro-rated through the duration of the transition period, which included vesting of his final tranche of unvested restricted stock units remaining under his November 2015 restricted stock unit award scheduled to vest in November 2020. Consequently, 23,128 shares vested on his last day of employment on July 31, 2020. This was accounted for as an equity award modification under ASC Topic 718, and as the fair value of the modified award was less than previously recognized compensation, no incremental compensation costs were recorded by the Company. Stock options — Option grants have contractual terms of seven years and employee options vest over a three-year period. Options may vest sooner upon retirement from the Company for employees meeting certain age and years of service thresholds. All option grants provide for an option exercise price equal to the closing market value of the common stock on the date of grant. The following is a summary of stock option activity for fiscal 2020:
| Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Options outstanding at September 29, 2019 | 266,558 |  |  | $ | 89.54 |  |  |  |  |
Granted | 129,173 |  |  | $ | 75.23 |  |  |  |  |
Exercised | (62,305) |  |  | $ | 74.57 |  |  |  |  |
Forfeited | (122,594) |  |  | $ | 77.95 |  |  |  |  |
Expired | (3,369) |  |  | $ | 97.31 |  |  |  |  |
Options outstanding at September 27, 2020 | 207,463 |  |  | $ | 91.85 |  |  | 2.48 |  | $ | 252 |
Options exercisable at September 27, 2020 | 174,104 |  |  | $ | 94.67 |  |  | 1.81 |  | $ | 107 |
The aggregate intrinsic value in the table above is the amount by which the current market price of our stock on September 27, 2020 exceeds the weighted-average exercise price. We use a valuation model to determine the fair value of options granted that requires the input of highly subjective assumptions, including the expected volatility of the stock price. The following table presents the weighted-average assumptions used for stock option grants in each fiscal year, along with the related weighted-average grant date fair value:
| 2020 |  | 2019 |  | 2018
Risk-free interest rate | 1.7% |  | N/A |  | 2.4%
Expected dividends yield | 2.1% |  | N/A |  | 1.8%
Expected stock price volatility | 28.1% |  | N/A |  | 28.8%
Expected life of options (in years) | 3.47 |  | N/A |  | 3.40
Weighted-average grant date fair value | $13.97 |  | N/A |  | $18.49
The risk-free interest rate was determined by a yield curve of risk-free rates based on published U.S. Treasury spot rates in effect at the time of grant and has a term equal to the expected life of the related options. The dividend yield assumption is based on the Company’s history and expectations of dividend payouts at the grant date. The expected stock price volatility in all years represents the Company’s historical volatility. The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends. As of September 27, 2020, there was approximately $0.3 million of total unrecognized compensation cost related to stock options grants that is expected to be recognized over a weighted-average period of 2 years. The total intrinsic value of stock options exercised was $0.7 million, $0.5 million, and $2.3 million in fiscal years 2020, 2019, and 2018, respectively. Performance share awards — Performance share awards, granted in the form of stock units, represent a right to receive a certain number of shares of common stock based on the achievement of corporate performance goals and continued employment during the vesting period. Performance share awards issued to executives vest at the end of a three-year period and vested amounts may range from 0% to a maximum of 150% of targeted amounts depending on the achievement of performance measures at the end of a three-year period. If the awardee ceases to be employed by the Company prior to the last day of the performance period due to retirement, disability, or death, the performance share awards become vested pro-rata based on the number of full accounting periods the awardee was continuously employed by the Company. The expected cost of the shares is based on the fair value of our stock on the date of grant and is reflected over the vesting period with a reduction for estimated forfeitures. These awards may be settled in cash or shares of common stock at the election of the Company on the date of grant. It is our intent to settle these awards with shares of common stock. The following is a summary of performance share award activity for fiscal 2020:
| Shares |  | Weighted- Average Grant Date Fair Value
Performance share awards outstanding at September 29, 2019 | 75,490 |  |  | $ | 83.40 |
Granted | 23,600 |  |  | $ | 81.02 |
Issued | (21,509) |  |  | $ | 97.51 |
Forfeited | (50,336) |  |  | $ | 83.31 |
Performance adjustments | (2,203) |  |  | $ | 86.84 |
Performance share awards outstanding at September 27, 2020 | 25,042 |  |  | $ | 63.59 |
As of September 27, 2020, there was approximately $0.5 million of total unrecognized compensation cost related to performance share awards, which is expected to be recognized over a weighted-average period of 1.6 years. The weighted-average grant date fair value of awards granted was $81.02, $84.60, and $97.02 in fiscal years 2020, 2019, and 2018, respectively. The total fair value of awards that became fully vested during fiscal years 2020, 2019, and 2018 was $0.5 million, $2.1 million, and $1.6 million, respectively. Nonvested stock awards — We previously issued nonvested stock awards (“RSAs”) to certain executives under our share ownership guidelines. Effective fiscal 2009, we no longer issue RSA awards and replaced them with grants of RSUs. The RSAs vest, subject to the discretion of our Board of Directors in certain circumstances, upon retirement or termination based upon years of service. These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date. During fiscal 2020, 33,243 RSAs were released with a weighted-average grant date fair value of $26.47 per share. Compensation cost related to RSAs was fully recognized by the end of 2018. As of September 27, 2020, there were no RSAs outstanding. Non-management directors’ deferred compensation — All awards outstanding under our directors’ deferred compensation plan are accounted for as equity-based awards and deferred amounts are converted into stock equivalents based on a per share price equal to the average of the closing price of our common stock for the 10 trading days immediately preceding the date the deferred compensation is credited to the director’s account. During fiscal 2020, 204 shares of common stock were issued in connection with director retirements with a fair value of less than $0.1 million. During fiscal years 2019 and 2018 no common stock was issued in connection with director retirements. The following is a summary of the stock equivalent activity for fiscal 2020:
| Stock Equivalents |  | Weighted- Average Grant Date Fair Value
Stock equivalents outstanding at September 29, 2019 | 100,005 |  |  | $ | 38.87 |
Deferred directors’ compensation | 3,851 |  |  | $ | 81.56 |
Dividend equivalents | 2,224 |  |  | $ | 68.80 |
Stock distribution | (204) |  |  | $ | 86.74 |
Stock equivalents outstanding at September 27, 2020 | 105,876 |  |  | $ | 40.96 |

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