Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

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 March 31, 2015		Thirteen Weeks Ended April 1, 2014
Labor expenses	$	1,546	$	1,340
Other operating costs and expenses	73		47
General and administrative expenses	3,112		2,452
Total stock-based compensation	4,731		3,839
Income tax benefit	1,810		1,469
Total stock-based compensation, net of taxes	$	2,921	$	2,370
Capitalized stock-based compensation (1)	$	67	$	48

(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

The weighted average fair value at the grant date for options issued during the first quarter of fiscal 2015 and 2014 was $14.17 and $15.48 per option, respectively.  The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the first quarter of fiscal 2015 and 2014, respectively: (a) an expected option term of 6.6 and 6.5 years, (b) expected stock price volatility of 31.3% and 32.9%, (c) a risk-free interest rate of 1.9% and 2.2%, and (d) a dividend yield on our stock of 1.4% and 1.2%.

Stock option activity during the thirteen weeks ended March 31, 2015 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 30, 2014	4,023		$	26.34	3.7	$	97,406
Granted	312		48.01
Exercised	(280	)	20.25
Forfeited or cancelled	(12	)	24.87
Outstanding at March 31, 2015	4,043		$	28.43	3.9	$	84,484
Exercisable at March 31, 2015	2,434		$	24.64	2.9	$	60,095

(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 pretax 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 weeks ended March 31, 2015 and April 1, 2014 was $8.5 million and $8.9 million, respectively.  As of March 31, 2015, the total unrecognized stock-based compensation expense related to unvested stock options was $14.2 million, which we expect to recognize over a weighted average period of approximately 2.5 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirteen weeks ended March 31, 2015 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at December 30, 2014	1,820		$	37.12
Granted	297		48.48
Vested	(213	)	26.89
Forfeited	(39	)	35.40
Outstanding at March 31, 2015	1,865		$	40.14

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 first quarters of fiscal 2015 and fiscal 2014 was $48.48 and $48.11, respectively.  The fair value of shares that vested during the thirteen weeks ended March 31, 2015 and April 1, 2014 was $5.7 million and $3.7 million, respectively.  As of March 31, 2015, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $46.3 million, which we expect to recognize over a weighted average period of approximately 3.3 years.