XML 42 R20.htm IDEA: XBRL DOCUMENT v3.20.4
Stock-Based Incentive Plans
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Incentive Plans Stock-Based Incentive Plans
General Description
Currently, the Company is authorized to grant stock options, stock appreciation rights, restricted stock, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and non-employee directors under the Dine Brands Global, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan was approved by stockholders on May 14, 2019 to permit the issuance of up to 2,050,000 shares (subject to adjustment as defined in the 2019 Plan for shares that may become available from prior plans) of the Company’s common stock for incentive stock awards. The 2019 Plan will expire in May 2029.

The Dine Brands Global, Inc. 2016 Stock Incentive Plan (the “2016 Plan”) was adopted in 2016 to permit the issuance of up to 3,750,000 shares of the Company’s common stock for incentive stock awards. The 2016 Plan was terminated upon adoption of the 2019 Plan, but there are stock options (vested and unvested) and unvested restricted stock and restricted stock units issued under the 2016 Plan that are outstanding as of December 31, 2020.
The DineEquity, Inc. 2011 Stock Incentive Plan (the “2011 Plan”) was adopted in 2011 to permit the issuance of up to 1,500,000 shares of the Company’s common stock for incentive stock awards. The 2011 Plan was terminated upon adoption of the 2016 Plan, but there are vested stock options issued under the 2011 Plan that are outstanding as of December 31, 2020.
The 2019 Plan, 2016 Plan and the 2011 Plan are collectively referred to as the “Plans.”
Stock-Based Compensation Expense
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 under the Plans. The nonqualified stock options generally vest ratably over a three-year period in one-third increments and have a maturity of ten years from the grant date. Options vest immediately upon a change in control of the Company, as defined in the Plans. 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 from the date of grant or immediately
upon a change in control of the Company, as defined in the Plans. The Company either utilizes treasury stock or issues new shares from its authorized but unissued share pool when vested stock options are exercised, when restricted stock awards are granted and when restricted stock units settle in stock upon vesting.
The following table summarizes the Company's stock-based compensation expense included as a component of general and administrative expenses in the consolidated financial statements:
 Year Ended December 31,
 202020192018
 (In millions)
Total stock-based compensation expense:   
Equity classified awards expense$12.6 $10.9 $10.6 
Liability classified awards expense1.0 3.2 3.1 
Total pretax stock-based compensation expense13.614.113.7
Book income tax benefit(3.4)(3.5)(3.5)
Total stock-based compensation expense, net of tax$10.2 $10.6 $10.2 
As of December 31, 2020, total unrecognized compensation cost related to restricted stock and restricted stock units of $16.5 million and $2.6 million related to stock options is expected to be recognized over a weighted average period of approximately 1.2 years for restricted stock and restricted stock units and 1.3 years for stock options.
Equity Classified Awards - Stock Options
The per share fair values of the stock options granted have been estimated as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes model considers, among other factors, the expected life of the option and the historical volatility of the Company's stock price. The Black-Scholes model meets the requirements of U.S. GAAP, but the fair values generated by the model may not be indicative of the actual fair values of the Company's stock-based awards.
The Company granted 167,969 stock options during the year ended December 31, 2020 for which the fair value was estimated using a Black-Scholes option pricing model. The following table summarizes the assumptions used in the Black-Scholes model:
202020192018
Risk free interest rate1.2 %2.5 %2.6 %
Weighted average historical volatility30.5 %30.3 %26.1 %
Dividend yield3.5 %2.8 %3.6 %
Expected years until exercise4.64.74.6
Weighted average fair value of options granted$17.53 $21.93 $11.94 

The Company granted 25,330 performance-based stock options and 55,245 performance-based restricted stock units during the year ended December 31, 2018, with performance periods ranging from 36 to 40 months. The following summarizes the assumptions used in estimating the fair values:
2018
Risk free interest rate2.5 %
Weighted average historical volatility34.4 %
Dividend yield3.4 %
Expected years until exercise3.0
Weighted average fair value of options granted$9.79 
Weighted average fair value of restricted stock units granted$53.72 

As of December 31, 2020, all of the stock options and 26,670 of the restricted stock units have been forfeited.
Stock option activity for the years ended December 31, 2020, 2019 and 2018 is summarized as follows:
Number of
Shares Under Option		Weighted Average
Exercise Price
Per Share		Weighted Average
Remaining Contractual
Term (in Years)		Aggregate Intrinsic
Value (in Millions)
Outstanding at December 31, 20171,272,048 $61.44   
Granted248,899 69.12   
Exercised(74,930)52.43   
Forfeited(6,309)68.80   
Outstanding at December 31, 20181,439,708 63.21   
Granted132,832 98.97   
Exercised(211,352)57.36   
Forfeited(106,745)72.19   
Expired(37,005)93.06   
Outstanding at December 31, 20191,217,438 66.43   
Granted167,969 87.17   
Exercised(270,024)76.01   
Forfeited(45,247)86.39   
Expired(55,466)107.78   
Outstanding at December 31, 20201,014,670 $64.16 6.4$7.0 
Vested and Expected to Vest at December 31, 2020996,118 $63.71 6.4$7.0 
Exercisable at December 31, 2020415,914 $70.43 5.0$0.9 
The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $4.3 million, $6.9 million and $2.4 million, respectively.
Cash received from options exercised under all stock-based payment arrangements for the years ended December 31, 2020, 2019 and 2018 was $20.5 million, $12.0 million and $3.9 million, respectively. The actual tax benefit realized for the tax deduction from option exercises under the stock-based payment arrangements totaled $1.1 million, $1.8 million and $0.6 million, respectively, for the years ended December 31, 2020, 2019 and 2018.
Equity Classified Awards - Restricted Stock and Restricted Stock Units
Activity in equity classified awards of restricted stock and restricted stock units for the years ended December 31, 2020, 2019 and 2018 is as follows:

Shares of Restricted Stock		Weighted
Average
Grant-Date Per
Share
Fair Value		Restricted
Stock Units		Weighted
Average
Grant-Date
Per Share
Fair Value
Outstanding at December 31, 2017275,191 $65.97 303,348 $28.39 
Granted92,466 69.20 86,990 57.21 
Released(74,253)81.07 (15,737)98.54 
Forfeited(26,162)61.27 (72)53.49 
Outstanding at December 31, 2018267,242 64.21 374,529 31.05 
Granted75,556 96.86 23,427 95.77 
Released(76,962)76.25 (12,347)90.34 
Forfeited(41,321)67.20 (27,802)34.53 
Outstanding at December 31, 2019224,515 70.52 357,807 30.35 
Granted163,522 73.68 30,997 77.33 
Released(95,211)55.75 (33,234)63.98 
Forfeited(38,495)85.03 — — 
Outstanding at December 31, 2020254,331 $76.50 355,570 $28.01 
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, 201963,852 
Granted2,658 
Released(1,426)
Forfeited(12,128)
Outstanding at December 31, 202052,956 
For the years ended December 31, 2020, 2019 and 2018, $0.3 million, $1.6 million and, $0.8 million respectively, was included as stock-based compensation expense related to cash-settled restricted stock units.

Liability Classified Awards - Long-Term Incentive Awards
The Company has granted cash long-term incentive awards to certain employees (“LTIP awards”). Annual LTIP awards vest over a three-year period and are determined using a multiplier from 0% to 200% of the target award based on the total stockholder return of the Company's common stock compared to the total stockholder returns of a peer group of companies. Though LTIP awards are only paid in cash, since the multiplier is primarily based on the price of the Company's common stock, the awards are considered stock-based compensation in accordance with U.S. GAAP and are classified as liabilities. For the years ended December 31, 2020, 2019 and 2018, expense of $0.7 million, $1.7 million and $2.3 million, respectively, was included in stock-based compensation expense related to the LTIP awards. At December 31, 2020 and 2019, liabilities of $2.1 million and $2.9 million, respectively, were included as accrued employee compensation and benefits in the Consolidated Balance Sheets.