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Stock-Based Compensation
 3 Months Ended
Apr. 04, 2017
Stock-Based Compensation  
Stock-Based Compensation

 

6.  Stock-Based Compensation

 

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

 

 

 

Thirteen
Weeks Ended
April 4, 2017

 

Thirteen
Weeks Ended
March 29, 2016

 

 

 

 

 

 

 

Labor expenses

 

$
1,746

 

$
1,256

 

Other operating costs and expenses

 
98

 
50

 

General and administrative expenses

 
2,771

 
3,879

 

 

 

 

 

 

 

Total stock-based compensation

 
4,615

 
5,185

 

Income tax benefit

 
1,765

 
1,983

 

 

 

 

 

 

 

Total stock-based compensation, net of taxes

 

$
2,850

 

$
3,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized stock-based compensation (1)

 

$
56

 

$
73

 

 

(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, 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

 

The weighted average fair value at the grant date for options issued during the first quarter of fiscal 2017 and 2016 was $14.88 and $12.10 per share, respectively.  The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the first quarter of fiscal 2017 and 2016, respectively: (a) an expected option term of 6.9 years and 6.8 years, (b) expected stock price volatility of 24.4% and 26.3%, (c) a risk-free interest rate of 2.3% and 1.6%, and (d) a dividend yield on our stock of 1.6% and 1.6%.

 

Stock option activity during the thirteen weeks ended April 4, 2017 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 January 3, 2017

 
1,955

 

$
37.65

 
4.0

 

$
42,592

 

Granted

 
194

 
61.59

 

 

 

 

 

Exercised

 
(196

)
27.39

 

 

 

 

 

Forfeited or cancelled

 
(26

)
46.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at April 4, 2017

 
1,927

 

$
40.98

 
4.4

 

$
43,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at April 4, 2017

 
1,188

 

$
34.80

 
3.3

 

$
34,091

 

 

(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 pre-tax 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 weeks ended April 4, 2017 and March 29, 2016 was $6.7 million and $16.2 million, respectively.  As of April 4, 2017, total unrecognized stock-based compensation expense related to unvested stock options was $9.4 million, which we expect to recognize over a weighted average period of approximately 3.3 years.

 

Restricted Shares and Restricted Share Units

 

Restricted share and restricted share unit activity during the thirteen weeks ended April 4, 2017 was as follows:

 

 

 

Shares

 

Weighted
Average
Fair Value

 

 

 

(In thousands)

 

(Per share)

 

 

 

 

 

 

 

Outstanding at January 3, 2017

 
1,861

 

$
45.11

 

Granted

 
273

 
61.29

 

Vested

 
(270

)
40.58

 

Forfeited

 
(30

)
44.12

 

 

 

 

 

 

 

Outstanding at April 4, 2017

 
1,834

 

$
48.20

 

 

 

 

 

 

 

 

 

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 for restricted shares and restricted share units issued during the first quarter of fiscal 2017 and fiscal 2016 was $61.29 and $49.93, respectively.  The fair value of shares that vested during the thirteen weeks ended April 4, 2017 and March 29, 2016 was $11.0 million and $8.4 million, respectively.  As of April 4, 2017, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $53.3 million, which we expect to recognize over a weighted average period of approximately 2.9 years.