Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

From time to time, the Company has granted nonqualified stock options, restricted stock, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and  non-employee directors of the Company. Currently, the Company is authorized to grant nonqualified stock options, stock appreciation rights, restricted stock, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and nonemployee directors under the DineEquity, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan was approved by stockholders on May 17, 2011 and permits the issuance of up to 1,500,000 shares of the Company’s common stock. The 2011 Plan will expire in May 2021.

The nonqualified stock options generally vest over a three-year period and have a term of ten years from the effective issuance date. Option exercise prices equal the closing price of the Company’s common stock on the New York Stock Exchange on the date of grant. Restricted stock and restricted stock units are issued at no cost to the holder and vest over terms determined by the Compensation Committee of the Company’s Board of Directors, generally three years.

The following table summarizes the components of the Company’s stock-based compensation expense included in general and administrative expenses in the consolidated financial statements:

	Three Months Ended
	March 31,
	2012			2011
	(In millions)
Pre-tax compensation expense	$	4.5		$	3.1
Tax provision	(1.7		)	(1.2		)
Total stock-based compensation expense, net of tax	$	2.8		$	1.9

As of March 31, 2012, total unrecognized compensation cost (including estimated forfeitures) of $14.4 million related to restricted stock and restricted stock units and $12.3 million related to stock options is expected to be recognized over a weighted average period of 1.3 years for restricted stock and restricted stock units and 1.2 years for stock options.

The estimated fair values of the options granted during the three months ended March 31, 2012 were calculated using a Black-Scholes option pricing model. The following summarizes the assumptions used in the Black-Scholes model:

Risk-free interest rate	0.86		%
Weighted average historical volatility	83.6		%
Dividend yield	—
Expected years until exercise	4.66
Forfeitures	11.0		%
Weighted average fair value of options granted	$	33.11

Option balances as of March 31, 2012 and activity related to the Company’s stock options during the three months then ended were as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2011	1,318,640		$	32.06
Granted	147,674		$	51.63
Exercised	(164,954	)	$	12.40
Forfeited	(13,335	)	$	44.44
Outstanding at March 31, 2012	1,288,025		$	36.69	6.89	$	18,277,000
Vested at March 31, 2012 and Expected to Vest	1,220,562		$	36.09	6.77	$	17,958,000
Exercisable at March 31, 2012	812,691		$	31.82	5.68	$	14,914,000

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the first quarter of 2012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2012. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options.

A summary of restricted stock activity for the three months ended March 31, 2012 is presented below:

	Restricted Stock		Weighted Average Grant Date Fair Value		Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2011	486,533		$	31.18	18,000	$	29.32
Granted	120,123		$	51.85	19,152	52.23
Released	(125,914	)	$	7.00	—	—
Forfeited	(14,194	)	$	38.68	—	—
Outstanding at March 31, 2012	466,548		$	42.80	37,152	$	41.13

The Company has issued 44,957 shares of cash-settled restricted stock units to members of the Board of Directors, of which 41,957 were outstanding at March 31, 2012. As these instruments can only be settled in cash, they are recorded as liabilities based on the closing price of the Company’s common stock as of March 31, 2012. For the three months ended March 31, 2012 and 2011, $0.3 million and $0.8 million, respectively, were included in pre-tax stock-based compensation expense for the cash-settled restricted stock units.