(13) 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"). This plan replaced the Texas Roadhouse, Inc. 2004 Equity Incentive Plan.

The following table summarizes the share‑based compensation recorded in the accompanying consolidated statements of income and comprehensive income:


	Fiscal Year Ended
	December 26,		December 27,		December 29,
	2017		2016		2015
Labor expense	$	7,171	$	6,124	$	5,329
General and administrative expense		19,763		19,943		17,496
Total share-based compensation expense	$	26,934	$	26,067	$	22,825

Effective December 28, 2016, we adopted Accounting Standards Update No. 2016-09, Compensation – Stock Compensation ("ASU 2016-09") which amends and simplifies the accounting for stock compensation. As a result of the adoption of ASU 2016-09, we made a change in our accounting for forfeitures to record as they occur and, as a result, we recorded a $0.1 million cumulative-effect reduction to retained earnings under the modified retrospective approach. We elected prospective transition for the requirement to classify excess tax benefits as an operating activity in the consolidated statement of cash flows. No prior periods have been adjusted. Additionally, as a result of the new guidance requirements, on a prospective basis, all excess tax benefits and tax deficiencies are recognized within the income tax provision in the consolidated statements of income and comprehensive income in the period in which the restricted shares vest or options are exercised. See note 8 for further discussion.

Beginning in 2008, we changed the method by which we provide share-based compensation to our employees by granting RSUs as a form of share-based compensation. Prior to 2008, we issued stock options as share-based compensation to our employees. Beginning in 2015, we began granting PSUs to two of our executives. An RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement. A PSU is the conditional right to receive one share of common stock upon meeting a performance obligation along with the satisfaction of the vesting requirement. In 2017, all remaining unexercised stock options expired leaving only RSUs and PSUs outstanding. Share‑based compensation activity by type of grant as of December 26, 2017 and changes during the period then ended are presented below.

Summary Details for RSUs


		Weighted-Average		Weighted-Average
		Grant Date Fair		Remaining Contractual	Aggregate
	Shares	Value		Term (years)	Intrinsic Value
Outstanding at December 27, 2016	919,463	$	37.06
Granted	577,644		48.76
Forfeited	(50,401)		38.09
Vested	(496,715)		38.01
Outstanding at December 26, 2017	949,991	$	43.62	1.4	$	51,402

As of December 26, 2017, with respect to unvested RSUs, there was $23.2 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 years ended December 26, 2017, December 27, 2016 and December 29, 2015 was $23.4 million, $21.5 million and $25.1 million, respectively. The excess tax benefit associated with vested RSUs for the year ended December 26, 2017 was $1.6 million which was recognized in the income tax provision. The excess tax benefit associated with vested RSUs for the years ended December 27, 2016 and December 29, 2015 was $1.5 million and $2.8 million, respectively, which was recorded in additional paid-in-capital in the consolidated balance sheets.

Summary Details for PSUs


		Weighted-Average		Weighted-Average
		Grant Date Fair		Remaining Contractual	Aggregate
	Shares	Value		Term (years)	Intrinsic Value
Outstanding at December 27, 2016	230,000	$	37.00
Granted	90,000		54.18
Incremental Performance Shares (1)	73,237		34.11
Forfeited	—		—
Vested	(188,237)		34.11
Outstanding at December 26, 2017	205,000	$	46.16	1.0	$	11,086

(1)

Additional shares from the November 2015 PSU grant that vested in January 2017 due to exceeding the initial 100% target.

Beginning in 2015, we granted PSUs to two of our executives subject to a one-year vesting and the achievement of certain earnings targets, which determine the number of units to vest at the end of the vesting period. 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 vest after meeting the performance and service conditions. The total intrinsic value of PSUs vested during the years ended December 26, 2017 and December 27, 2016 was $8.6 million and $5.0 million, respectively.

On January 8, 2018, 155,576 shares vested related to the November 2016 PSU grant and are expected to be distributed during the 13 weeks ending March 27, 2018. This included 115,000 granted shares and 40,576 incremental shares due to the grant exceeding the initial 100% target. As of December 26, 2017, with respect to unvested PSUs, there was $5.1 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 1.0 year. The excess tax benefit associated with vested PSUs for the year ended December 26, 2017 was $0.8 million which was recognized within the income tax provision.

Summary Details for Stock Options


		Weighted-		Weighted-Average
		Average Exercise		Remaining Contractual	Aggregate
	Shares	Price		Term (years)	Intrinsic Value
Outstanding at December 27, 2016	118,073	$	13.57
Granted	—		—
Cancelled/Expired	(2,836)		15.47
Exercised	(115,237)		13.52
Outstanding at December 26, 2017	—	$	—	—	$	—
Exercisable at December 26, 2017	—	$	—	—	$	—

No stock options were granted or vested during the fiscal years ended December 26, 2017, December 27, 2016 and December 29, 2015. The total intrinsic value of options exercised during the years ended December 26, 2017, December 27, 2016 and December 29, 2015 was $4.0 million, $6.3 million and $6.5 million, respectively.

For the years ended December 26, 2017, December 27, 2016 and December 29, 2015, cash received before tax withholdings from options exercised was $1.6 million, $2.7 million and $4.7 million, respectively. The excess tax benefit associated with options exercised for the year ended December 26, 2017 was $1.0 million which was recognized within the income tax provision. The excess tax benefit for the years ended December 27, 2016 and December 29, 2015 was $1.8 million and $1.7 million, respectively, which was recorded in additional paid-in-capital in the consolidated balance sheets.