Our current shareholder approved stock-based compensation plan is the BJ’s Restaurants, Inc. 2024 Equity Incentive Plan, (as it may be amended from time to time, “the Plan”), which replaced our prior Equity Incentive Plan. Under the Plan, we may issue shares of our common stock to team members, officers, directors and consultants. We have historically granted incentive stock options, non-qualified stock options, and service- and performance-based RSUs. In Fiscal 2024, we also granted market-based RSUs. Stock options are charged against the Plan share reserve on the basis of one share for each share of common stock issuable upon exercise of options granted. All options granted under the Plan expire within 10 years of their date of grant. Awards of stock options or stock appreciation rights are charged against the Plan share reserve on the basis of one share for each share granted. All other awards are charged against the 2024 Plan share reserve on the basis of 1.5 shares for each share granted. The Plan also contains other limits on the terms of incentive grants such as the maximum number that can be granted to a team member during any fiscal year.

We use the Black-Scholes option-pricing model to determine the fair value of our stock options, and we use the Monte Carlo simulation model to determine the fair value of our market-based RSUs. Both models require assumptions to be made regarding our stock price volatility, the expected life of the award, risk-free interest rate and expected dividend rates. The fair value of service-based and performance-based RSUs granted is equal to the fair value of our common stock at market close on the date of grant or the last trading day prior to the date of grant when grants take place on a day when the market is closed. The grant date fair value of each stock option, market-based and service-based RSU is expensed over the vesting period (e.g., one, three or five years) and the fair value of each performance-based RSU is expensed based on the estimated quantity that is expected to vest corresponding with management's current estimate of the level that the performance goal will be achieved.

The following table presents the stock-based compensation recognized within our consolidated financial statements (in thousands):


	For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
Labor and benefits	$	529	$	410	$	1,037	$	1,276
General and administrative	$	2,237	$	2,368	$	4,206	$	4,144
Capitalized (1)	$	79	$	95	$	163	$	189
Total stock-based compensation	$	2,845	$	2,873	$	5,406	$	5,609

(1)

Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets.

The fair value of each stock option was estimated on the grant date using the Black‑Scholes option-pricing model with the following weighted average assumptions:


	For the Twenty-Six Weeks Ended
	July 2, 2024			July 4, 2023
Volatility		67.5	%		66.9	%
Risk-free interest rate		3.9	%		3.5	%
Expected life (years)	5			5
Expected dividend yield		—	%		—	%
Fair value of options granted	$	18.86		$	18.29

Under our stock-based compensation plan, the exercise price of a stock option is required to equal or exceed the fair value of our common stock at market close on the option grant date or the last trading day prior to the date of grant when grants take place on a day when the market is closed. The following table presents stock option activity:


	Options Outstanding					Options Exercisable
	Shares (in thousands)			Weighted Average Exercise Price		Shares (in thousands)		Weighted Average Exercise Price
Outstanding at January 2, 2024		867		$	39.70		648	$	41.65
Granted		121			31.86
Exercised		(5	)		31.54
Forfeited		(6	)		37.69
Outstanding at July 2, 2024		977		$	38.79		727	$	41.03

As of July 2, 2024, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $3.1 million, which is expected to be recognized over the next three years.

The following table presents service-based restricted stock unit activity:


	Shares (in thousands)			Weighted Average Fair Value
Outstanding at January 2, 2024		822		$	31.46
Granted		199			32.13
Released		(165	)		38.61
Forfeited		(49	)		29.89
Outstanding at July 2, 2024		807		$	30.25

As of July 2, 2024, total unrecognized stock-based compensation expense related to non-vested service-based RSUs was approximately $12.8 million, which is expected to be recognized over the next three to five years.

The following table presents market-based and performance-based restricted stock unit activity:


	Shares (in thousands)			Weighted Average Fair Value
Outstanding at January 2, 2024		128		$	36.24
Awarded		79			39.09
Released		(65	)		46.91
Forfeited		(1	)		38.23
Outstanding at July 2, 2024		141		$	32.87

The fair value of market-based RSUs was estimated on the grant date using the Monte Carlo simulation model with the following weighted average assumptions:


	For the Twenty-Six Weeks Ended
	July 2, 2024			July 4, 2023
Volatility		49.8	%	n/a
Risk-free interest rate		3.8	%	n/a
Expected life (years)	3			n/a
Expected dividend yield		—	%	n/a
Fair value of market-based awards granted	$	34.79		n/a

As of July 2, 2024, the total unrecognized stock-based compensation expense related to non-vested market-based and performance-based RSUs was approximately $2.2 million, which is expected to be recognized over the next three years.