(9) PERFORMANCE SHARES, STOCK OPTIONS, OTHER FORMS OF COMPENSATION, AND COMMON SHARE REPURCHASES

Stock-based Compensation

Effective May 5, 2015, we adopted a 2015 Equity Plan (the “2015 Plan”), pursuant to which we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. We also maintain an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). Together, the 2015 Plan and 2005 Plan are referred to herein as the “Plans.” Under the 2015 Plan, an aggregate of 34,050 shares of our Company’s common stock remained unreserved and available for issuance at January 1, 2017. The 2005 Plan prohibits the granting of incentives after May 12, 2015. Nonetheless, the 2005 Stock Incentive Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated.

We recognized stock-based compensation expense in our consolidated statements of operations for the fiscal years ended 2016, 2015, and 2014, respectively, as follows:

		For the Years Ended
			January 1,		January 3,		December 28,
(in thousands)			2017		2016		2014
Performance Share Programs:
	2011 Program⁽¹⁾⁽³⁾		---		---		(55)
	2012 Program⁽¹⁾⁽⁴⁾		---		---		(761)
	2013 Program^{(2)(5)(6)(7)(8)}		---		(169)		(412)
Performance Shares and
	Performance Stock Units	$	---	$	(169)	$	(1,228)
Stock Options^(10)(11)(12)			311		459		371
Restricted Stock and
	Restricted Stock Units ⁽⁸⁾		---		---		(73)
Director Shares^(9)(12)			28		60		47
		$	339	$	350	$	(883)

⁽¹⁾The 2011 and 2012 Program's consisted entirely of performance shares.
⁽²⁾The 2013 Program consisted of performance shares and performance stock units.
⁽³⁾Includes a $55,000 recapture of stock-based compensation due to employee departures for the year ended December 28, 2014.
⁽⁴⁾Includes a $761,000 recapture of stock-based compensation due to employee departures and the failure to achieve performance targets for the year ended December 28, 2014.
⁽⁵⁾Includes the recapture of stock-based compensation related to performance shares of approximately $458,000 and performance stock units of approximately $135,000 due to the employee departures for the year ended December 28, 2014.
⁽⁶⁾Includes the recapture of stock-based compensation for performance shares of approximately $131,000 and performance stock units of approximately $38,000 due to the failure to achieve threshold performance levels for the program as of January 3, 2016.
⁽⁷⁾Includes a mark-to-market adjustment for performance stock units of approximately $22,000 for the year ended December 28, 2014.
⁽⁸⁾Includes a $128,000 recapture of stock-based compensation due to the departure of our former CEO for the year ended December 28, 2014.
⁽⁹⁾Includes a $20,000 recapture of stock-based compensation due to the departure of our former CEO for the year ended December 28, 2014.
⁽¹⁰⁾Includes a $105,000 recapture of stock-based compensation due to employee departures for the year ended January 3, 2016.
⁽¹¹⁾Includes a $126,000 recapture of stock-based compensation due to the departure of our former CFO for the year ended January 1, 2017.
⁽¹²⁾Includes a $27,000 recapture of stock-based compensation due to the departure of our former CEO for the year ended January 1, 2017.

Performance Shares and Performance Stock Units

No shares were issued during fiscal 2016 or 2015 related to performance share programs. During the first quarter of fiscal 2014, we issued 86,519 shares upon satisfaction of conditions under the 2011 performance share program, representing the achievement of approximately 86.7% of the target payout for this program. Recipients elected to forfeit 30,518 of those shares to satisfy tax withholding obligations, resulting in a net issuance of 56,001 shares.

The Compensation Committee did not implement performance share programs for fiscal 2014, 2015 or 2016.

We recognize compensation cost for performance share awards and incentive stock option awards over the requisite service period (i.e. fixed treatment) based on their fair value, which is the closing stock price at the date of grant. Participants in each performance share program are entitled to receive a number of shares of our common stock (“Performance Shares”) based upon the extent to which we achieve the cumulative total of the earnings per share or Adjusted EBITDA goals established by our Compensation Committee for each fiscal year within a three-year performance period (the “Cumulative Adjusted EBITDA Goal”). Receipt of any performance shares is contingent upon us achieving a specified minimum percentage of the Cumulative Adjusted EBITDA Goal (as applicable).

We recognize compensation cost for performance stock unit awards over the requisite service period based on their initial fair value, which is the closing stock price at the date of grant. This award is adjusted to fair value based on the closing stock price at the end of each fiscal quarter. Recipients of performance stock unit awards are entitled to receive a cash payout based on a number of our stock units awarded (“Performance Stock Unit”) to the extent we achieve the Cumulative Adjusted EBITDA Goal, and the market value of our common stock.

At January 1, 2017, no performance share programs were in progress

Stock Options

The compensation expense for stock option grants is recognized under general and administrative expense in our consolidated statements of operations through the applicable service period

Other options granted to certain non-executive officer employees vest in equal annual installments over a period of four years and expire five years from the grant date. Compensation expense equal to the grant date fair value is generally recognized for these awards over the vesting period.

Options granted to certain non-employees in exchange for future services vest in monthly installments over a period of approximately two years and expire five years from the grant date. Expense is recognized over the vesting period, with previously unvested options being marked to market at the date of vesting.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation method with the assumptions noted in the table below. Due to a lack of recent historical share option exercise experience, the Company uses a simplified method for estimating the expected life, as outlined in Accounting Standards Codification 718, calculated using the following formula: (vesting term + original contract term)/2. Expected volatilities are based on the movement of the Company’s common stock over the most recent historical period equivalent to the expected life of the option. The risk-free interest rate for periods equal to the expected life of the option is based on the U.S. maturities over the expected life at the time of grant.

Information regarding our Company’s stock options is summarized below:

(number of options in thousands)		Number of Options	Weighted Average Exercise Price
		Number of Options	Weighted Average Exercise Price
Options outstanding at December 29, 2013		48	$		7.77
	Granted	191			28.11
	Exercised⁽¹⁾	(43)			7.40
Options outstanding at December 28, 2014		196			27.67
	Granted	465			15.75
	Canceled, forfeited or expired	(154)			28.07
Options outstanding at January 3, 2016		507			16.66
	Granted	416			5.55
	Exercised	(6)			5.90
	Canceled, forfeited or expired	(231)			19.44
Options outstanding at January 1, 2017		686	$		9.15

Options Exercisable at December 28, 2014		18	$		17.39
Options Exercisable at January 3, 2016		77	$		21.48
Options Exercisable at January 1, 2017		259	$		10.87


⁽¹⁾In 2014, option holders elected to forfeit approximately 18,000 shares to satisfy the strike price and tax withholding obligations, resulting in a net issuance of approximately 25,000 shares.


The following are weighted-average values and assumptions for valuing grants made during fiscal 2016:
Weighted-average fair value of options granted during the year			$	1.97
Expected life (in years)				5.2
Expected stock volatility				39.98	%
Risk-free interest rate				1.2	%

As of January 1, 2017, there was $1.0 million of total unrecognized compensation cost related to
stock option arrangements granted under the Company's stock option plan. The cost is expected to be
recognized over a weighted average period of 3.0 years.

The aggregate intrinsic value of options (the amount by which the market price of the stock on the date of exercise exceeds the exercise price of the option) exercised during fiscal 2016 was approximately $3,900. As of January 1, 2017, the aggregate intrinsic value of options outstanding and exercisable was approximately $1,200.

Restricted Stock Units

Employees forfeited 8,622 and 24,685 shares of restricted stock units during fiscal 2015 and 2014, at a price of $25.05 and $26.59 per share, respectively, to cover withholding taxes that were due from the employees at the time that the applicable forfeiture restrictions lapsed.

No restricted stock units were outstanding as of January 1, 2017.

Common Share Repurchases

On May 1, 2012, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to 1.0 million shares of our common stock in both the open market or through privately negotiated transactions. The program was completed during fiscal 2015. Over the course of the program, we repurchased all of the 1.0 million shares in this authorization for approximately $18.6 million at an average market price per share of $18.57, excluding commissions.