Share-based Compensation

6 Months Ended

Jun. 30, 2015

(2) Share-based Compensation

On May 16, 2013, our stockholders approved the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (the “Plan”). The Plan provides for the granting of incentive and non-qualified stock options to purchase shares of common stock, stock appreciation rights, and full value awards, including restricted stock, restricted stock units (“RSUs”), deferred stock units, performance stock and performance stock units (“PSUs”). As a result of the approval of the Plan, no future awards will be made under the Texas Roadhouse, Inc. 2004 Equity Incentive Plan.

Beginning in 2008, we changed the method by which we provide share-based compensation to our employees by granting primarily RSUs as a form of share-based compensation rather than stock option grants. An RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement.

The following table summarizes the share-based compensation expense recorded in the accompanying unaudited condensed consolidated statements of income and comprehensive income:

	13 Weeks Ended				26 Weeks Ended
	June 30, 2015		July 1, 2014		June 30, 2015		July 1, 2014

Labor expense	$	1,035	$	1,402	$	2,550	$	2,770
General and administrative expense	4,276		2,376		7,665		4,629

Total share-based compensation expense	$	5,311	$	3,778	$	10,215	$	7,399

Share-based compensation activity by type of grant as of June 30, 2015 and changes during the 26 weeks then ended are presented below.

Summary Details for RSUs

	Shares		Weighted- Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value

Outstanding at December 30, 2014	978,124		$	22.52
Granted	538,568		35.30
Forfeited	(21,910	)	26.43
Vested	(506,980	)	19.79

Outstanding at June 30, 2015	987,802		$	30.80	1.4	$	36,973

As of June 30, 2015, with respect to unvested RSUs, there was $21.6 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 1.4 years. The vesting terms of the RSUs range from approximately 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the 13 weeks ended June 30, 2015 and July 1, 2014 was $4.0 million and $2.7 million, respectively. For the 26 weeks ended June 30, 2015 and July 1, 2014, the total intrinsic value of RSUs vested was $17.4 million and $14.2 million, respectively.

Summary Details for PSUs

In 2015, we granted PSUs to two of our executives subject to a one-year vesting and the achievement of earnings targets. The number of units which vest at the end of the one-year vesting period is based on performance against the earnings targets. Share-based compensation is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant date and through the performance period. For each grant, PSUs meeting the performance criteria will vest as of the end of our fiscal year. The distribution of vested performance stock units as common stock will occur in the first quarter of 2016.

We granted 115,000 PSUs with a grant date fair value per share of $34.77. As of June 30, 2015, with respect to unvested PSUs, there was $2.1 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.5 years.

Summary Details for Share Options

	Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value

Outstanding at December 30, 2014	636,930		$	14.20
Granted	—		—
Forfeited	—		—
Exercised	(173,223	)	15.54

Outstanding at June 30, 2015	463,707		$	13.69	1.6	$	11,007


Exercisable at June 30, 2015	463,707		$	13.69	1.6	$	11,007

The total intrinsic value of options exercised during the 13 weeks ended June 30, 2015 and July 1, 2014 was $1.3 million and $0.8 million, respectively. For the 26 weeks ended June 30, 2015 and July 1, 2014, the total intrinsic value of options exercised was $3.6 million and $2.3 million, respectively. No stock options vested during the 13 or 26 weeks ended June 30, 2015 or July 1, 2014.