Stock-Based Compensation

6 Months Ended

Jun. 28, 2011

Stock-Based Compensation

Stock-Based Compensation

5.  Stock-Based Compensation

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

	Thirteen Weeks Ended June 28, 2011		Thirteen Weeks Ended June 29, 2010		Twenty-Six Weeks Ended June 28, 2011		Twenty-Six Weeks Ended June 29, 2010
Stock-based compensation expense	$	2,965	$	2,939	$	5,946	$	6,582
Income tax benefit	1,134		1,115		2,274		2,497
Capitalized stock-based compensation (1)	57		78		130		132

(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 and liquor license acquisition activities and equipment installation.  Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

In April 2011, our Board of Directors approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock authorized for issuance under the plan to 4,800,000 shares from 3,800,000 shares.  This amendment was approved by our shareholders at our Annual Meeting held on June 1, 2011.

Stock Options

The weighted average fair value at the grant date for options issued during the second quarter of fiscal 2011 and 2010 was $12.11 and $11.14 per option, respectively.  The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the second quarter of fiscal 2011 and 2010, respectively: (a) no dividend yield on our stock, (b) expected stock price volatility of 39.0% and 40.0%, (c) a risk-free interest rate of 2.0% and 2.5%, and (d) an expected option term of 6.0 and 5.8 years.

Stock option activity during the twenty-six weeks ended June 28, 2011 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at December 28, 2010	9,159		$	22.63	5.4	$	79,835
Granted	660		$	30.81
Exercised	(365	)	$	20.44
Cancelled	(211	)	$	19.73
Outstanding at June 28, 2011	9,243		$	23.35	5.1	$	80,979
Exercisable at June 28, 2011	4,527		$	27.01	3.8	$	24,592

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 28, 2011 was $2.3 million and $3.7 million, respectively.  The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 29, 2010 was $1.8 million and $3.9 million, respectively.  As of June 28, 2011, the total unrecognized stock-based compensation expense related to nonvested stock options was $18.6 million, which we expect to recognize over a weighted average period of approximately 2.6 years.

Restricted Shares

Restricted share activity during the twenty-six weeks ended June 28, 2011 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at December 28, 2010	537		$	14.72
Granted	192		30.96
Vested	(36	)	26.03
Forfeited	(16	)	13.58
Outstanding at June 28, 2011	677		$	18.73

Fair value of our restricted shares is based on our closing stock price on the date of grant.  The weighted average fair value at the grant date for restricted shares issued during the second quarter of fiscal 2011 and 2010 was $29.86 and $22.94, respectively.  The fair value of shares that vested during the thirteen weeks and twenty-six weeks ended June 28, 2011 was $0.8 million and $0.9 million, respectively.  The fair value of shares that vested during the thirteen weeks and twenty-six weeks ended June 29, 2010 was $0.3 million and $3.7 million, respectively.  As of June 28, 2011, total unrecognized stock-based compensation expense related to nonvested restricted shares was $7.9 million, which we expect to recognize over a weighted average period of approximately 3.3 years.