Stock-Based Compensation |
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | Stock-Based Compensation The Company’s 2003 Omnibus Equity Incentive Plan (the “2003 Plan”), as amended, allows for the grant of options, restricted stock and certain other specified types of awards 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 are 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 Equity Incentive 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. In October 2020, the Director Plan was amended such that the number of shares of restricted stock granted to each independent director would be equal to 70,000 divided by the fair market value of the Company's common stock on the date of each annual meeting of shareholders.
As of September 26, 2020, there were approximately 4.1 million shares of Class A Common Stock, no shares of Common Stock and no shares of Preferred Stock reserved for outstanding equity awards, and there were approximately 4.6 million shares of Common Stock, 9.9 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 stock-based compensation expense of $19.0 million, $14.7 million, and $11.6 million for the years ended September 26, 2020, September 28, 2019 and September 29, 2018, respectively, as a component of selling, general and administrative
expenses. Share-based compensation expense in fiscal 2020, 2019 and 2018 consisted of $5.1 million, $4.5 million, and $3.9 million, respectively, for stock options, and $7.5 million, $6.0 million and $5.4 million, respectively, for stock awards. Share-based compensation expense in fiscal 2020, 2019 and 2018 also includes $6.4 million, $4.2 million and $2.3 million, respectively, for the Company’s 401(k) matching contributions.
During fiscal 2020, 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 2020 vest in four annual installments commencing approximately one year from the date of grant and expire approximately 6 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 historical volatility of the Company’s stock price. 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 2020, 2019 and 2018; stock price volatility, 32.6% in fiscal 2020, 30.4% in fiscal 2019, and 31.6% in fiscal 2018; risk free interest rates, 1.4% in fiscal 2020, 2.5% in fiscal 2019 and 2.4% in 2018; and no dividends during the expected term.
The following table summarizes option activity for the period ended September 26, 2020:
The prices of options to purchase shares of common stock and Class A common stock outstanding at September 26, 2020, September 28, 2019 and September 29, 2018 were between $10.63 to $38.10 per share, $8.56 to $38.10 per share and $6.43 to $38.10 per share, respectively. The weighted average grant date fair value of options granted during the fiscal years ended September 26, 2020, September 28, 2019 and September 29, 2018 was $7.60, $7.28 and $9.80, respectively. The total intrinsic value of options exercised during the fiscal years ended September 26, 2020, September 28, 2019 and September 29, 2018 was $9.9 million, $6.7 million, and $16.6 million, respectively.
As of September 26, 2020, there was $12.3 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 26, 2020 and September 28, 2019, there were approximately 1.1 million and 1.1 million, respectively, of restricted stock awards outstanding. Awards granted in fiscal 2020 and 2019 generally vest within or five years from the date of grant.
Restricted stock award activity during the period ended September 26, 2020 is summarized as follows:
As of September 26, 2020, there was $22.9 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.
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