Stock-Based Compensation

6 Months Ended

Jul. 01, 2014

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 July 1, 2014		Thirteen Weeks Ended July 2, 2013		Twenty-Six Weeks Ended July 1, 2014		Twenty-Six Weeks Ended July 2, 2013
Labor expenses	$	1,196	$	1,049	$	2,536	$	2,093
Other operating costs and expenses	42		52		89		98
General and administrative expenses	2,661		2,307		5,113		4,622
Total stock-based compensation	3,899		3,408		7,738		6,813
Income tax benefit	1,491		1,304		2,960		2,606
Total stock-based compensation, net of taxes	$	2,408	$	2,104	$	4,778	$	4,207
Capitalized stock-based compensation (1)	$	51	$	41	$	99	$	88

(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.

Stock Options

We did not issue any stock options during the second quarters of fiscal 2014 or fiscal 2013.

Stock option activity during the twenty-six weeks ended July 1, 2014 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (1)
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at December 31, 2013	4,823		$	23.70	4.1	$	118,505
Granted	330		48.19
Exercised	(449	)	19.22
Forfeited or cancelled	(26	)	30.26
Outstanding at July 1, 2014	4,678		$	25.82	3.9	$	98,824
Exercisable at July 1, 2014	2,649		$	23.74	3.1	$	61,213

(1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal period end date.

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 1, 2014 was $3.8 million and $12.7 million, respectively.  The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 2, 2013 was $11.7 million and $19.8 million, respectively.  As of July 1, 2014, the total unrecognized stock-based compensation expense related to unvested stock options was $14.1 million, which we expect to recognize over a weighted average period of approximately 2.3 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirteen weeks ended July 1, 2014 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at December 31, 2013	1,672		$	32.81
Granted	307		48.11
Vested	(166	)	23.01
Forfeited	(56	)	36.19
Outstanding at July 1, 2014	1,757		$	36.30

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 second quarter of fiscal 2014 and fiscal 2013 was $48.19 and $39.75, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended July 1, 2014 was $0.1 million and $3.8 million, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended July 2, 2013 was $6 thousand and $2.4 million, respectively.  As of July 1, 2014, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $37.4 million, which we expect to recognize over a weighted average period of approximately 3.4 years.