Employee Benefit Plans

Deferred Compensation and Savings Plans. The Company has a defined contribution savings plan (the "401(k) Plan") for substantially all U.S.-based full-time employees of the Company, which includes a Roth 401(k) option. The Company's common stock is one of several investment alternatives available under the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan. After 90 days of service (minimum of 250 hours worked), the Company matches 50% of employee contributions up to 6% of their compensation. Matching contributions made by the Company to the 401(k) Plan totaled approximately $2.9 million, $2.8 million and $3.0 million for fiscal years 2016, 2015 and 2014, respectively. The Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions during fiscal years 2016, 2015 and 2014.

Under the Fossil Group, Inc. and Affiliates Deferred Compensation Plan (the "Deferred Plan") eligible participants may elect to defer up to 50% of their salary or up to 100% of any bonuses paid pursuant to the terms and conditions of the Deferred Plan. In addition, the Company may make employer contributions to participants under the Deferred Plan from time to time. The Company made no contributions to the Deferred Plan during fiscal years 2016, 2015 and 2014. In prior periods, the Company made payments pursuant to the Deferred Plan into a Rabbi Trust. The funds held in the Rabbi Trust are directed to certain investments available through life insurance products. As of December 31, 2016, the Company had an asset of $2.4 million related to the Company's invested balances recorded in intangible and other assets—net and a liability of $3.9 million related to the participants' invested balances recorded in accrued expenses—other, each on the Company's consolidated balance sheets.

Stock-Based Compensation Plans. The Company accounts for stock-based compensation using the Black-Scholes option pricing model to determine the fair value of stock options and stock appreciation rights at the date of grant. The Company’s grants under its current stock-based compensation plans generally include: (i) stock options, restricted stock units, and performance restricted stock units for its international employees, (ii) restricted stock units for its nonemployee directors, and (iii) stock appreciation rights, performance stock appreciation rights, restricted stock, restricted stock units, and performance restricted stock units for its U.S.-based employees. As of December 31, 2016, the Company had approximately $52.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company's stock based compensation plans. This cost is expected to be recognized over a weighted-average period of approximately 1.5 years. All time based or performance based stock appreciation rights and restricted stock units are settled in shares of the Company's common stock with the exception of one international employee’s grants that were converted to cash settled awards.

Long-Term Incentive Plans. An aggregate of 3,000,000 shares of the Company's common stock were reserved for issuance pursuant to the Company's 2016 Long-Term Incentive Plan ("2016 LTIP"), adopted in March 2016. Under the 2016 LTIP, designated employees of the Company, including officers, certain contractors, and outside directors of the Company, are eligible to receive (i) stock options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) performance awards, (vi) cash awards, or (vii) any combination of the foregoing. The 2016 LTIP is administered by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee"). Each award issued under the 2016 LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The current outstanding stock options, stock appreciation rights, performance stock appreciation rights, restricted stock, restricted stock units and performance restricted stock units issued under the 2016 LTIP predominantly have original vesting periods of three years. Time based or performance based stock appreciation rights and restricted stock units are predominately settled in shares of the Company's common stock. Each nonemployee director receives restricted stock units valued at $130,000 on the date of the Company's annual stockholders' meeting. These grants vest on the earlier of one year from the date of grant or the date of Company's next annual stockholders' meeting.

Prior to the Company establishing the 2016 LTIP, stock-based compensation awards were made to employees, certain contractors and nonemployee directors pursuant to the Company's 2008 Long-Term Incentive Plan (“2008 LTIP”) and, prior to the 2008 LTIP, pursuant to the Company’s initial Long-Term Incentive Plan ("LTIP") and Nonemployee Director Stock Option Plan ("Nonemployee Plan"), respectively. Each award issued under the 2008 LTIP and LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding stock options, stock appreciation rights, performance stock appreciation rights, restricted stock, restricted stock units and performance restricted stock units issued under the 2008 LTIP predominantly have original vesting periods of three years. The currently outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the LTIP and Nonemployee Plan have vested. The exercise prices of stock options granted under the 2008 LTIP and Nonemployee Plan were not less than the fair market value of the Company's common stock at the date of grant. All time based or performance based stock appreciation rights and restricted stock units under the 2008 LTIP are settled in shares of the Company's common stock. In March 2016, the Company’s Board of Directors elected to terminate the 2008 LTIP, and in March 2008, the Company’s Board of Directors elected to terminate the LTIP and the Nonemployee Plan. The termination of the 2008 LTIP, LTIP and Nonemployee Plan did not impair outstanding awards under those plans representing 1,238,579 shares under the 2008 LTIP, 41,342 shares under the LTIP and 15,750 shares under the Nonemployee Plan of the Company's common stock at December 31, 2016, which continued in accordance with their original terms.

Stock Options and Stock Appreciation Rights. The fair value of stock options and stock appreciation rights granted under the Company's stock-based compensation plans was estimated on the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for these award grants:



Fiscal Year	2016			2015			2014
Risk-free interest rate	1.1		%	1.3		%	0.9		%
Expected term (in years)	3.0			3.2			3.4
Expected volatility	38.8		%	42.3		%	47.1		%
Expected dividend yield	—		%	—		%	—		%
Estimated fair value per stock option/stock appreciation right granted	$	11.25		$	12.74		$	38.88

The expected term of the stock options and stock appreciation rights represent the estimated period of time until exercise and is based on historical experience of similar awards. Expected stock price volatility is based on the historical volatility of the Company's common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury securities with an equivalent remaining term.

The Company generally receives a tax deduction when stock options or stock appreciation rights are exercised or when restricted stock or restricted stock units vest. Generally for stock options and stock appreciation rights, the tax deduction is related to the excess of the stock price at the time the stock options or stock appreciation rights are exercised over the exercise price of the stock options or stock appreciation rights. For restricted stock and restricted stock units, the tax deduction is equal to the fair market value of the Company's common stock on the date the restricted stock or restricted stock units vest multiplied by the number of shares of restricted stock or restricted stock units. Excess tax benefits from stock-based compensation on the Company's consolidated statements of cash flows for fiscal years 2016, 2015 and 2014 amounted to approximately $5,000, $0.2 million and $1.4 million, respectively.

The following table summarizes stock option and stock appreciation rights activity:



Stock Options and Stock Appreciation Rights	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
	in thousands					in thousands
Outstanding at December 28, 2013	678		$	76.15	6.2	$	31,794
Granted	94		111.90
Exercised	(91	)	39.20			6,391
Forfeited or expired	(18	)	120.77
Outstanding at January 3, 2015	663		85.08		5.6	20,751
Granted	1,496		41.16
Exercised	(36	)	31.04			1,544
Forfeited or expired	(95	)	102.86
Outstanding at January 2, 2016	2,028		52.80		8.7	2,095
Granted	326		41.53
Exercised	(10	)	26.93			186
Forfeited or expired	(57	)	81.93
Outstanding at December 31, 2016	2,287		50.58		6.2	627
Exercisable at December 31, 2016	988		$	62.75	5.2	$	627

The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at December 31, 2016 and based on the fair market value of the Company's common stock on the exercise date for options/rights that were exercised during the fiscal year.

Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock options and stock appreciation rights outstanding and exercisable at December 31, 2016:



Stock Options Outstanding					Stock Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Number of Shares	Weighted- Average Exercise Price
	in thousands				in thousands
$13.65 - $29.49	40	$	14.40	2.2	40	$	14.40
$29.78 - $47.99	90	36.36		2.0	90	36.36
$55.04 - $83.83	92	80.80		4.3	92	80.80
$95.91 - $131.46	144	127.98		4.8	144	127.98
Total	366	$	81.12	3.7	366	$	81.12



Stock Appreciation Rights Outstanding					Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Number of Shares	Weighted- Average Exercise Price
	in thousands				in thousands
$13.65 - $29.49	113	$	27.72	6.7	13	$	13.65
$29.78 - $47.99	1,561	38.11		7.0	455	36.76
$55.04 - $83.83	138	79.00		5.5	65	79.50
$95.91 - $131.46	109	114.42		4.5	89	115.01
Total	1,921	$	44.75	6.7	622	$	51.93

Restricted Stock and Restricted Stock Units. The following table summarizes restricted stock and restricted stock unit activity:



Restricted Stock and Restricted Stock Units	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
	in thousands
Nonvested at December 28, 2013	219		$	99.27
Granted	164		110.95
Vested	(115	)	90.66
Forfeited	(13	)	108.76
Nonvested at January 3, 2015	255		$	110.17
Granted	1,131		49.16
Vested	(115	)	109.97
Forfeited	(63	)	94.54
Nonvested at January 2, 2016	1,208		$	53.87
Granted	588		27.94
Vested	(327	)	64.51
Forfeited	(64	)	56.29
Nonvested at December 31, 2016	1,405		$	40.41

The total fair value of shares/units vested during fiscal years 2016, 2015 and 2014 was $12.3 million, $9.0 million and $12.6 million, respectively.

The Company maintains a defined benefit plan for its employees located in Switzerland. The plan is funded through payments to an insurance company. The payments are determined by periodic actuarial calculations. During fiscal years 2016, 2015 and 2014, the Company recorded pension gains (expenses) of ($2.2) million, ($1.5) million and $0.2 million, respectively, related to this plan. The liability for the Company's defined benefit plan was $11.3 million and $16.0 million at the end of fiscal years 2016 and 2015, respectively. This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.

Under French law, the Company is required to maintain a defined benefit plan for its employees located in France, which is referred to as a "retirement indemnity". The amount of the retirement indemnity is based on the employee's last salary and duration of employment with the Company. The employee's right to receive the retirement indemnity is subject to the employee remaining with the Company until retirement. During fiscal years 2016, 2015 and 2014 the Company recorded pension expenses of $0.2 million, $0.1 million and $0.3 million, respectively, for its retirement indemnity obligations. The liability for the Company's retirement indemnity was $1.7 million and $1.6 million at the end of fiscal years 2016 and 2015, respectively. This liability is recorded in other long-term liabilities on the Company's consolidated balance sheets.