Stock-Based Compensation

6 Months Ended

Jun. 28, 2016

6. Stock-Based Compensation

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

	Thirteen Weeks Ended June 28, 2016		Thirteen Weeks Ended June 30, 2015		Twenty-Six Weeks Ended June 28, 2016		Twenty-Six Weeks Ended June 30, 2015

Labor expenses	$	1,708	$	1,556	$	2,964	$	3,102
Other operating costs and expenses	75		64		125		137
General and administrative expenses	4,336		3,326		8,215		6,438

Total stock-based compensation	6,119		4,946		11,304		9,677
Income tax benefit	2,340		1,892		4,324		3,701

Total stock-based compensation, net of taxes	$	3,779	$	3,054	$	6,980	$	5,976


Capitalized stock-based compensation (1)	$	76	$	79	$	149	$	146

(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 condensed consolidated balance sheets.

Stock Options

We did not issue any stock options during the second quarters of fiscal 2016 or fiscal 2015. Stock option activity during the twenty-six weeks ended June 28, 2016 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(1)
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at December 29, 2015	3,066		$	30.00	3.6	$	52,416
Granted	225		50.26
Exercised	(644	)	21.41
Forfeited or cancelled	(31	)	40.96

Outstanding at June 28, 2016	2,616		$	33.73	3.9	$	36,215


Exercisable at June 28, 2016	1,651		$	27.92	2.8	$	31,779

(1)

Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pretax amount that would have been received by the option holders, had they all exercised their options on the fiscal period end date.

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 28, 2016 was $2.4 million and $18.6 million, respectively. The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 30, 2015 was $13.0 million and $21.6 million, respectively. As of June 28, 2016, total unrecognized stock-based compensation expense related to unvested stock options was $10.0 million, which we expect to recognize over a weighted average period of approximately 2.9 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended June 28, 2016 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)

Outstanding at December 29, 2015	1,891		$	41.31
Granted	316		49.95
Vested	(256	)	33.92
Forfeited	(66	)	41.79

Outstanding at June 28, 2016	1,885		$	43.70

Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted average fair value at the grant date for restricted shares and restricted share units issued during the second quarters of fiscal 2016 and fiscal 2015 was $52.08 and $48.80, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended June 28, 2016 was $0.3 million and $8.7 million, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended June 30, 2015 was $0.6 million and $6.3 million, respectively. As of June 28, 2016, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $43.9 million, which we expect to recognize over a weighted average period of approximately 2.8 years.