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Stock-Based Compensation

9 Months Ended

Oct. 01, 2024

Stock-Based Compensation

Stock-Based Compensation

9. Stock-Based Compensation

We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. The following table presents information related to stock-based compensation, net of forfeitures (in thousands):


		Thirteen			Thirteen			Thirty-Nine			Thirty-Nine
		Weeks Ended			Weeks Ended			Weeks Ended			Weeks Ended
		October 1, 2024			October 3, 2023			October 1, 2024			October 3, 2023

Labor expenses		$	2,829		$	2,365		$	7,890		$	7,153
Other operating costs and expenses			97			76			253			227
General and administrative expenses			4,095			4,182			13,353			11,470
Total stock-based compensation			7,021			6,623			21,496			18,850
Income tax benefit			1,755			1,653			5,369			4,706
Total stock-based compensation, net of taxes		$	5,266		$	4,970		$	16,127		$	14,144

Capitalized stock-based compensation ⁽¹⁾		$	58		$	44		$	163		$	131

(1)

It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets.

Stock Options

We did not issue any stock options during the third quarters of fiscal 2024 and fiscal 2023. Stock option activity during the thirty-nine weeks ended October 1, 2024 was as follows:


							Weighted-
							Average
				Weighted-			Remaining
				Average			Contractual		Aggregate
		Shares		Exercise Price			Term		Intrinsic Value ⁽¹⁾
		(In thousands)		(Per share)			(In years)		(In thousands)
Outstanding at January 2, 2024		1,550		$	45.75		3.8		$	0
Granted		81			34.91
Exercised		—			—
Forfeited or cancelled		(156)			50.26
Outstanding at October 1, 2024		1,475		$	44.68		3.8		$	1,007

Exercisable at October 1, 2024		1,235		$	45.90		3.1		$	395

(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.

There were no options exercised during the thirteen and thirty-nine weeks ended October 1, 2024. There were no options exercised during the thirteen and thirty-nine weeks ended October 3, 2023. As of October 1, 2024, total unrecognized stock-based compensation expense related to unvested stock options was $1.6 million, which we expect to recognize over a weighted-average period of approximately 2.1 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirty-nine weeks ended October 1, 2024 was as follows:


				Weighted-
				Average
		Shares		Fair Value
		(In thousands)		(Per share)
Outstanding at January 2, 2024		2,886		$	40.28
Granted		895			35.19
Vested		(522)			46.76
Forfeited		(104)			45.78
Outstanding at October 1, 2024		3,155		$	37.89

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 third quarter of fiscal 2024 and 2023 was $36.69 and $36.81, respectively. The fair value of shares that vested during the thirteen and thirty-nine weeks ended October 1, 2024 was $1.9 million and $24.4 million, respectively. The fair value of shares that vested during the thirteen and thirty-nine weeks ended October 3, 2023 was $3.3 million and $19.9 million, respectively. As of October 1, 2024, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $61.7 million, which we expect to recognize over a weighted-average period of approximately 3.0 years.