Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive (Loss) Income:



	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
	(In millions)
Total stock-based compensation expense:
Equity classified awards expense	$	2.6	$	1.8	$	6.7	$	5.9
Liability classified awards expense (credit)	0.1		1.4		(0.5)		2.4
Total pre-tax stock-based compensation expense	2.7		3.2		6.2		8.3
Book income tax benefit	(0.7)		(0.9)		(1.6)		(2.2)
Total stock-based compensation expense, net of tax	$	2.0	$	2.3	$	4.6	$	6.1

As of June 30, 2020, total unrecognized compensation expense of $17.0 million related to restricted stock and restricted stock units and $3.8 million related to stock options are expected to be recognized over a weighted average period of 1.3 years for restricted stock and restricted stock units and 1.5 years for stock options.

Fair Value Assumptions

The Company granted 167,969 stock options during the six months ended June 30, 2020 for which the fair value was estimated using a Black-Scholes option pricing model. The following summarizes the assumptions used in the Black-Scholes model:


Risk-free interest rate	1.2	%
Weighted average historical volatility	30.5	%
Dividend yield	3.5	%
Expected years until exercise	4.6
Weighted average fair value of options granted	$17.53

Equity Classified Awards - Stock Options

Stock option balances at June 30, 2020, and activity for the six months ended June 30, 2020 were as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at December 31, 2019	1,217,438	$	66.43
Granted	167,969	87.17
Exercised	(270,024)	76.01
Expired	(48,119)	112.58
Forfeited	(30,106)	85.14
Outstanding at June 30, 2020	1,037,158	64.61		7.1	$	—
Vested at June 30, 2020 and Expected to Vest	980,893	64.41		7.0	$	—
Exercisable at June 30, 2020	559,407	$	59.79	8.0	$	—

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 second quarter of 2020 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 June 30, 2020. The 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.

Equity Classified Awards - Restricted Stock and Restricted Stock Units

Outstanding balances as of June 30, 2020, and activity related to restricted stock and restricted stock units for the six months ended June 30, 2020 were as follows:


	Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019	224,515	$	70.52	357,807	$	30.35
Granted	110,583	79.32		27,893	87.17
Released	(74,826)	57.38		(30,032)	64.76
Forfeited	(23,675)	83.45		—	—
Outstanding at June 30, 2020	236,597	$	78.16	355,668	$	28.19

Liability Classified Awards - Cash-settled Restricted Stock Units

The Company has granted cash-settled restricted stock units to certain employees. These instruments are recorded as liabilities at fair value as of the respective period end.


						Cash-Settled Restricted Stock Units
Outstanding at December 31, 2019						63,852
Granted						2,658

Forfeited						(10,085)
Outstanding at June 30, 2020						56,425

For the three months ended June 30, 2020 and 2019, an expense of $0.4 million and $0.5 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. For the six months ended June 30, 2020 and 2019, a credit of $0.9 million and an expense of $1.1 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. At June 30, 2020 and December 31, 2019, liabilities of $1.3 million and $2.3 million, respectively, related to cash-settled restricted stock units were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.

Liability Classified Awards - Long-Term Incentive Awards

The Company has granted cash long-term incentive awards (“LTIP awards”) to certain employees. Annual LTIP awards vest over a three-year period and are determined using multipliers from 0% to 200% of the target award based on (i) the total stockholder return of Dine Brands Global common stock compared to the total stockholder returns of a peer group of companies and (ii) the percentage increase in the Company's adjusted earnings per share (as defined in the applicable award agreement). The awards are considered stock-based compensation and are classified as liabilities measured at fair value as of the respective period end. For the three months ended June 30, 2020 and 2019, a credit of $0.3 million and an expense of $0.8 million, respectively, were included in total stock-based compensation expense related to LTIP awards. For the six months ended June 30, 2020 and 2019, $0.4 million and $1.2 million, respectively, were included in total stock-based compensation expense related to LTIP awards. At June 30, 2020 and December 31, 2019, liabilities of $1.8 million and $2.9 million, respectively, related to LTIP awards were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.