Stock-Based Compensation

9 Months Ended

Oct. 01, 2013

Stock-Based Compensation

Stock-Based Compensation

6.  Stock-Based Compensation

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

	Thirteen Weeks Ended October 1, 2013		Thirteen Weeks Ended October 2, 2012		Thirty-nine Weeks Ended October 1, 2013		Thirty-nine Weeks Ended October 2, 2012
Labor expenses	$	1,158	$	932	$	3,251	$	2,765
Other operating costs and expenses	35		47		133		142
General and administrative expenses	2,267		1,174		6,889		5,520
Total stock-based compensation	3,460		2,153		10,273		8,427
Income tax benefit	1,324		823		3,930		3,223
Total stock-based compensation, net of taxes	$	2,136	$	1,330	$	6,343	$	5,204
Capitalized stock-based compensation (1)	$	41	$	56	$	129	$	206

(1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development, construction, and legal departments that relates to 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.

Stock Options

We did not issue any stock options during the third quarter of fiscal 2013.  The weighted average fair value at the grant date for options issued during the third quarter of fiscal 2012 was $10.27 per option.  The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the third quarter of fiscal 2012: (a) an expected option term of 6.1 years, (b) expected stock price volatility of 37.3%, (c) a risk-free interest rate of 1.1%, and (d) a dividend yield on our stock of 1.4%.

Stock option activity during the thirty-nine weeks ended October 1, 2013 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 January 1, 2013	7,414		$	23.98	4.2	$	66,682
Granted	386		35.62
Exercised	(2,358	)	26.67
Forfeited or cancelled	(177	)	23.36
Outstanding at October 1, 2013	5,265		$	23.65	4.3	$	110,260
Exercisable at October 1, 2013	2,646		$	24.97	3.4	$	51,926

The total intrinsic value of options exercised during the thirteen and thirty-nine weeks ended October 1, 2013 was $9.7 million and $29.4 million, respectively.  The total intrinsic value of options exercised during the thirteen and thirty-nine weeks ended October 2, 2012 was $3.4 million and $11.6 million, respectively.  As of October 1, 2013, the total unrecognized stock-based compensation expense related to unvested stock options was $13.3 million, which we expect to recognize over a weighted average period of approximately 2.2 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirty-nine weeks ended October 1, 2013 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at January 1, 2013	1,316		$	26.91
Granted	534		37.77
Vested	(173	)	14.49
Forfeited	(106	)	30.15
Outstanding at October 1, 2013	1,571		$	31.75

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 at the grant date for restricted shares and restricted share units issued during the third quarter of fiscal 2013 and fiscal 2012 was $42.63 and $34.00, respectively.  The fair value of shares that vested during the thirteen and thirty-nine weeks ended October 1, 2013 was $76,000 and $2.5 million, respectively.  The fair value of shares that vested during the thirty-nine weeks ended October 2, 2012 was $2.4 million.  No shares vested during the thirteen weeks ended October 2, 2012.  As of October 1, 2013, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $28.3 million, which we expect to recognize over a weighted average period of approximately 3.6 years.