Note 14 – Stock-Based Compensation

The Company has a shareholder-approved 10-year stock incentive plan covering 2,500,000 shares of SpartanNash’s common stock. The SpartanNash Company Stock Incentive Plan of 2015 (the “2015 Plan”) provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, and other stock-based and stock-related awards to directors, officers and other key associates. Shares issued, as a result of stock option exercises, will be funded with the issuance of new shares. Holders of restricted stock and stock awards are entitled to participate in cash dividends and dividend equivalents. As of December 31, 2016, a total of 2,193,985 shares remained unissued under the 2015 Plan.

All outstanding unvested stock options and unvested shares of restricted stock vest immediately upon a “Change in Control,” as defined by the Plan. The Company has not issued any stock options since 2009 and all outstanding options are vested.

The following table summarizes stock option activity for the three years ended December 31, 2016:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Shares			Exercise		Contractual		Intrinsic Value
	Under Options			Price		Life Years		(in thousands)
Options outstanding and exercisable at December 28, 2013		586,766		$	19.30		4.01	$	2,965
Exercised		(88,152	)		12.68				869
Cancelled/Forfeited		(4,131	)		3.25
Options outstanding and exercisable at January 3, 2015		494,483			20.61		3.30		2,772
Exercised		(185,627	)		19.72				1,543
Cancelled/Forfeited		(63	)		11.50
Options outstanding and exercisable at January 2, 2016		308,793			21.15		2.46		773
Exercised		(107,338	)		23.46				1,043
Cancelled/Forfeited		(938	)		14.36
Options outstanding and exercisable at December 31, 2016		200,517		$	19.94		1.65	$	3,929

Cash received from option exercises was $2.5 million, $3.7 million and $1.1 million during fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015, respectively.

Restricted shares awarded to associates vest ratably over a four-year service period and over one year for grants to the Board of Directors. Awards are subject to forfeiture and certain transfer restrictions prior to vesting. All shares fully vest upon a “Change in Control,” as defined by the Plan. Compensation expense, representing the fair value of the stock at the measurement date of the award, is recognized over the required service period.

The following table summarizes restricted stock activity for fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015:

				Weighted Average
				Grant-Date
	Shares			Fair Value
Outstanding and nonvested at December 28, 2013		518,835		$	23.56
Granted		317,827			22.63
Vested		(219,894	)		23.56
Forfeited		(16,115	)		23.03
Outstanding and nonvested at January 3, 2015		600,653			23.08
Granted		314,595			26.59
Vested		(265,737	)		23.19
Forfeited		(11,956	)		23.85
Outstanding and nonvested at January 2, 2016		637,555			24.75
Granted		314,944			28.34
Vested		(255,156	)		24.56
Forfeited		(37,200	)		25.80
Outstanding and nonvested at December 31, 2016		660,143		$	26.48

The total fair value of shares vested during fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015 was $6.6 million, $7.6 million and $4.7 million, respectively.

Stock-based compensation expense recognized and included in “Selling, general and administrative expenses” in the consolidated statements of earnings, and related tax benefits were as follows:

	December 31,			January 2,			January 3,
	2016			2016			2015
(In thousands)	(52 Weeks)			(52 Weeks)			(53 Weeks)
Restricted stock	$	7,936		$	7,240		$	6,939
Tax benefits		(2,976	)		(2,758	)		(2,632	)
Stock-based compensation expense, net of tax	$	4,960		$	4,482		$	4,307

As of December 31, 2016, total unrecognized compensation cost related to non-vested share-based awards granted under the stock incentive plans was $5.8 million for restricted stock. The remaining compensation costs not yet recognized are expected to be recognized over a weighted average period of 2.3 years for restricted stock. All compensation costs related to stock options have been recognized.

The Company recognized tax deductions of $8.0 million, $9.5 million and $5.9 million related to the exercise of stock options and the vesting of restricted stock during fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015, respectively.

The Company has a stock bonus plan covering 300,000 shares of SpartanNash common stock. Under the provisions of this plan, certain officers and key associates may elect to receive a portion of their annual bonus in common stock rather than cash and will be granted additional shares of common stock worth 20% of the portion of the bonus they elect to receive in stock. After the shares are issued, the holder is not able to sell or otherwise transfer the shares until the end of the holding period, which is currently 24 months. Compensation expense is recorded based upon the market price of the stock as of the measurement date. A total of 21,169 shares remained unissued under the stock bonus plan at December 31, 2016.

The Company also has an associate stock purchase plan covering 200,000 shares of SpartanNash common stock. The plan provides that associates of the Company may purchase shares at 95% of the fair market value. The associate stock purchase plan was suspended during the 39-week period ended December 28, 2013 in conjunction with the merger with Nash-Finch and was reinstated in April 2014.As of December 31, 2016, a total of 70,960 shares had been issued under the plan.