18. Equity Compensation

We award stock options and restricted stock (both time- and performance-based) from time to time under the Papa John’s International, Inc. 2011 Omnibus Incentive Plan and other such agreements as may arise.

There are approximately 7.8 million shares of common stock authorized for issuance and remaining available under the 2011 Omnibus Incentive Plan as of December 29, 2013, which includes 4.0 million shares transferred from the Papa John’s International, Inc. 2008 Omnibus Incentive Plan. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options outstanding as of December 29, 2013 generally expire five or ten years from the date of grant and vest over a three-year period.

We recorded stock-based employee compensation expense of $7.4 million in 2013, $6.9 million in 2012 and $6.7 million in 2011. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $2.7 million in 2013, $2.4 million in 2012 and $2.2 million in 2011. At December 29, 2013, there was $5.9 million of unrecognized compensation cost related to nonvested option awards and restricted stock, of which the Company expects to recognize $4.4 million in 2014, $1.3 million in 2015 and $193,000 in 2016.

Stock Options

Options exercised included 697,000 shares in 2013, 864,000 shares in 2012 and 1.1 million shares in 2011. The total intrinsic value of the options exercised during 2013, 2012 and 2011 was $13.1 million, $7.5 million and $4.6 million, respectively. Cash received upon the exercise of stock options was $6.9 million, $12.3 million and $14.0 million during 2013, 2012 and 2011, respectively, and the related tax benefits realized were approximately $4.8 million, $2.6 million and $1.7 million during the corresponding periods.

Information pertaining to option activity during 2013 is as follows (number of options and aggregate intrinsic value in thousands):

					Weighted
					Average
			Weighted		Remaining
	Number		Average		Contractual	Aggregate
	of		Exercise		Term	Intrinsic
	Options		Price		(In Years)	Value
Outstanding at December 30, 2012	2,400		$	14.39
Granted	498		27.14
Exercised	(697	)	13.59
Cancelled	(97	)	20.41
Outstanding at December 29, 2013	2,104		$	17.39	4.27	$	58,030
Exercisable at December 29, 2013	1,182		$	13.61	1.56	$	37,084

The following is a summary of the significant assumptions used in estimating the fair value of options granted in 2013, 2012 and 2011:

	2013		2012		2011

Assumptions (weighted average):
Risk-free interest rate	1.1	%	1.1	%	1.5	%
Expected dividend yield	0.1	%	0.0	%	0.0	%
Expected volatility	37.5	%	37.8	%	41.2	%
Expected term (in years)	6.0		6.0		3.7

The risk-free interest rate for the periods within the contractual life of an option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield was estimated as the annual dividend divided by the market price of the Company’s shares on the date of grant. Expected volatility was estimated by using the Company’s historical share price volatility for a period similar to the expected life of the option.

Options granted in 2013 and 2012 generally vest in equal installments over three years and expire ten years after grant. The expected term for these options represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method prescribed by Securities and Exchange Commission rules and regulations as there was insufficient historical detail to be used as an alternative basis to estimating the term. The expected term for options granted in 2011 that expire five years from the grant date was based on an analysis of actual historical exercises and forfeitures.

The weighted average grant-date fair values of options granted during 2013, 2012 and 2011 was $9.87, $7.04 and $4.75, respectively. The Company granted 498,000, 508,000 and 806,000 options in 2013, 2012 and 2011, respectively.

Restricted Stock

In 2013, 2012 and 2011, we granted shares of restricted stock that were time-based and generally vest in equal installments over three years. These restricted shares are intended to focus participants on our long-range objectives, while at the same time serving as a retention mechanism. We consider time-based restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights. In 2013, we declared dividends totaling $86,000 ($0.25 per share) to holders of time-based restricted stock. Additionally, we granted approximately 111,000 shares of performance-based restricted stock units to executive management. These awards cliff-vest at the end of three years, in February 2015, based upon the Company’s achievement of a compounded annual growth rate of earnings per share and the achievement of certain sales and unit growth metrics. The fair value of both time- and performance-based restricted stock is based on the market price of the Company’s shares on the grant date.

Information pertaining to restricted stock activity during 2013, 2012 and 2011 is as follows (shares in thousands):

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Total as of December 26, 2010	568		$	13.31
Granted	320		14.54
Forfeited	(156	)	13.50
Vested	(232	)	13.64
Total as of December 25, 2011	500		14.10
Granted	266		18.59
Forfeited	(74	)	15.46
Vested	(156	)	13.89
Total as of December 30, 2012	536		16.31
Granted	160		27.09
Forfeited	(70	)	18.56
Vested	(203	)	15.51
Total as of December 29, 2013	423		$	20.39