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Stock-Based Compensation
9 Months Ended
Sep. 27, 2011
Stock-Based Compensation 
Stock-Based Compensation

5.  Stock-Based Compensation

 

The following table presents information related to stock-based compensation (in thousands):

 

 

 

Thirteen Weeks
Ended September 27,
2011

 

Thirteen Weeks
Ended September 28,
2010

 

Thirty-Nine Weeks
Ended September 27,

2011

 

Thirty-Nine Weeks
Ended September 28,
2010

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

$

2,851

 

$

2,891

 

$

8,797

 

$

9,473

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

1,091

 

1,096

 

3,365

 

3,593

 

 

 

 

 

 

 

 

 

 

 

Capitalized stock-based compensation (1)

 

76

 

19

 

206

 

151

 

 

 

(1)          It is our policy to capitalize the portion of stock-based compensation costs for our internal development and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation.  Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

 

In April 2011, our Board of Directors approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock authorized for issuance under the plan to 4,800,000 shares from 3,800,000 shares.  This amendment was approved by our shareholders at our Annual Meeting held on June 1, 2011.

 

Stock Options

 

The weighted average fair value at the grant date for options issued during the third quarter of fiscal 2011 and 2010 was $11.88 and $9.93 per option, respectively.  The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the third quarter of fiscal 2011 and 2010, respectively: (a) no dividend yield on our stock, (b) expected stock price volatility of 38.5% and 43.8%, (c) a risk-free interest rate of 1.4% and 1.7%, and (d) an expected option term of 6.0 and 5.8 years.

 

Stock option activity during the thirty-nine weeks ended September 27, 2011 was as follows:

 

 

 

Shares

 

Weighted
Average
Exercise Price

 

Weighted
Average
Remaining
Contractual
Term

 

Aggregate
Intrinsic Value

 

 

 

(In thousands)

 

(Per share)

 

(In years)

 

(In thousands)

 

Outstanding at December 28, 2010

 

9,159

 

$

22.63

 

5.4

 

$

79,835

 

Granted

 

767

 

$

30.77

 

 

 

 

 

Exercised

 

(457

)

$

20.34

 

 

 

 

 

Cancelled

 

(286

)

$

21.90

 

 

 

 

 

Outstanding at September 27, 2011

 

9,183

 

$

23.42

 

4.9

 

$

49,407

 

 

 

 

 

 

 

 

 

 

 

Exercisable at September 27, 2011

 

4,575

 

$

26.92

 

3.6

 

$

12,177

 

 

The total intrinsic value of options exercised during the thirteen and thirty-nine weeks ended September 27, 2011 was $0.9 million and $4.6 million, respectively.  The total intrinsic value of options exercised during the thirteen and thirty-nine weeks ended September 28, 2010 was $0.4 million and $4.3 million, respectively.  As of September 27, 2011, the total unrecognized stock-based compensation expense related to nonvested stock options was $18.7 million, which we expect to recognize over a weighted average period of approximately 2.5 years.

 

Restricted Shares

 

Restricted share activity during the thirty-nine weeks ended September 27, 2011 was as follows:

 

 

 

Shares

 

Weighted
Average
Fair Value

 

 

 

(In thousands)

 

(Per share)

 

 

 

 

 

 

 

Outstanding at December 28, 2010

 

537

 

$

14.72

 

Granted

 

267

 

29.84

 

Vested

 

(51

)

23.67

 

Forfeited

 

(18

)

14.55

 

Outstanding at September 27, 2011

 

735

 

$

19.57

 

 

Fair value of our restricted shares is based on our closing stock price on the date of grant.  The weighted average fair value at the grant date for restricted shares issued during the third quarter of fiscal 2011 was $26.98, and there were no restricted shares granted in the third quarter of fiscal 2010.  The fair value of shares that vested during the thirteen weeks and thirty-nine weeks ended September 27, 2011 was $0.3 million and $1.2 million, respectively.  The fair value of shares that vested during the thirteen weeks and thirty-nine weeks ended September 28, 2010 was $0.6 million and $4.4 million, respectively.  As of September 27, 2011, total unrecognized stock-based compensation expense related to nonvested restricted shares was $9.0 million, which we expect to recognize over a weighted average period of approximately 3.2 years.