|12 Months Ended|
Sep. 30, 2017
|Disclosure of Compensation Related Costs, Share-based Payments [Abstract]|
The Company’s 2003 Omnibus Equity Incentive Plan (the “2003 Plan”), as amended, provides for the grant of options and restricted stock to key employees, directors and consultants of the Company. The 2003 Plan is administered by the Compensation Committee of the Board of Directors, which is comprised only of independent directors, and which must approve individual awards to be granted, vesting and exercise of share conditions.
There is a total of 5.8 million shares of Common Stock, 19.7 million shares of Class A Common Stock and 500,000 shares of Preferred Stock authorized under the 2003 Plan. If and when the Company issues any shares of Preferred Stock under the 2003 Plan, it will reduce the amount of Class A Common Stock available for future issuance in an amount equal to the number of shares of Class A Common Stock that are issuable upon conversion of such Preferred Stock.
The Company has a Nonemployee Director Stock Option Plan (the “Director Plan”) which provides for the grant of options and restricted stock to nonemployee directors of the Company. The Director Plan, as amended, provides for the granting to each independent director of options to purchase a number of shares equal to $200,000 divided by the fair market value of the Company’s common stock on the date of each annual meeting of stockholders and a number of shares of restricted stock equal to $20,000 divided by such fair market value.
As of September 30, 2017, there were approximately 32.1 thousand shares of Common Stock, 3.6 million shares of Class A Common Stock and no shares of Preferred Stock reserved for outstanding equity awards, and there were approximately 4.6 million shares of Common Stock, 11.7 million shares of Class A Common Stock and 0.5 million shares of Preferred Stock remaining for future awards.
Stock Option Awards
The Company recognized share-based compensation expense of $11.1 million, $8.4 million, and $8.3 million for the years ended September 30, 2017, September 24, 2016 and September 26, 2015, respectively, as a component of selling, general and administrative expenses. Share-based compensation expense in fiscal 2017, 2016 and 2015 consisted of $2.9 million, $2.2 million, and $3.3 million, respectively, for stock options, and $5.8 million, $4.5 million and $3.1 million, respectively, for stock awards. Share-based compensation expense in fiscal 2017, 2016 and 2015 also includes $2.4 million, $1.7 million and $1.9 million, respectively, for the Company’s 401(k) matching contributions.
During fiscal 2017, the Company granted time-based stock options with an exercise price based on the closing fair market value on the date of the grant. The majority of the options granted in fiscal 2017 vest in four annual installments commencing approximately one year from the date of grant and expire approximately six years after the grant date.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. Expected stock price volatilities are estimated based on the Company’s historical volatility. The expected term of options granted is based on analyses of historical employee termination rates, option exercises and the contractual term of the option. The risk-free rates are based on U.S. Treasury yields, for notes with comparable terms as the option grants, in effect at the time of the grant. For purposes of this valuation model, no dividends have been assumed.
The Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions: expected life from the date of grant, 3.7 years in fiscal 2017 and fiscal 2016 and 3.6 years in fiscal 2015; stock price volatility, 31.5% in fiscal 2017, 30.8% in fiscal 2016, and 30.3% in fiscal 2015; risk free interest rates, 2.0% in fiscal 2017, 1.3% in fiscal 2016 and 2015; and no dividends during the expected term.
The following table summarizes option activity for the period ended September 30, 2017:
The price of options to purchase shares of common stock and Class A common stock outstanding at September 30, 2017, September 24, 2016 and September 26, 2015 was between $6.43 to $33.15 per share, $6.43 to $15.56 per share and $6.43 to $15.00 per share, respectively. The weighted average grant date fair value of options granted during the fiscal years ended September 30, 2017, September 24, 2016 and September 26, 2015 was $8.14, $3.04 and $2.51, respectively. The total intrinsic value of options exercised during the fiscal years ended September 30, 2017, September 24, 2016 and September 26, 2015 was $44.0 million, $22.6 million, and $5.9 million, respectively.
As of September 30, 2017, there was $7.4 million of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over a remaining weighted average vesting period of three years.
Restricted Stock Awards
As of September 30, 2017 and September 24, 2016, there were approximately 1.1 million and 1.5 million, respectively, of restricted stock awards outstanding. Awards granted in fiscal 2017 and 2016 generally vest within four or five years from the date of grant.
Restricted stock award activity during the period ended September 30, 2017 is summarized as follows:
As of September 30, 2017, there was $11.1 million of unrecognized compensation cost related to nonvested restricted stock awards, which is expected to be recognized over a weighted average period of three years.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef