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Stock-Based Incentive Plans
 12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Incentive Plans Stock-Based Incentive Plans
General Description
Currently, the Company is authorized to grant stock options, stock appreciation rights, restricted stock, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and non-employee directors under the Dine Brands Global, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan was approved by stockholders on May 14, 2019 to permit the issuance of up to 2,050,000 shares (subject to adjustment as defined in the 2019 Plan for shares that may become available from prior plans) of the Company’s common stock for incentive stock awards. The 2019 Plan will expire in May 2029.

The Dine Brands Global, Inc. 2016 Stock Incentive Plan (the “2016 Plan”) was adopted in 2016 to permit the issuance of up to 3,750,000 shares of the Company’s common stock for incentive stock awards. The 2016 Plan was terminated upon adoption of the 2019 Plan, but there are stock options (vested and unvested) and unvested restricted stock and restricted stock units issued under the 2016 Plan that are outstanding as of December 31, 2019.
The DineEquity, Inc. 2011 Stock Incentive Plan (the “2011 Plan”) was adopted in 2011 to permit the issuance of up to 1,500,000 shares of the Company’s common stock for incentive stock awards. The 2011 Plan was terminated upon adoption of the 2016 Plan, but there are vested stock options issued under the 2011 Plan that are outstanding as of December 31, 2019.
The IHOP Corp. 2001 Stock Incentive Plan (the “2001 Plan”) was adopted in 2001 and amended and restated in 2005 and 2008 to authorize the issuance of up to 4,200,000 shares of common stock. The 2001 Plan has expired but there are vested stock options issued under the 2001 Plan outstanding as of December 31, 2019.
The 2019 Plan, 2016 Plan, the 2011 Plan and the 2001 Plan are collectively referred to as the “Plans.”
Stock-Based Compensation Expense
From time to time, the Company has granted nonqualified stock options, restricted stock, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and non-employee directors of the Company under the Plans. The nonqualified stock options generally vest ratably over a three-year period in one-third increments and have a maturity of ten years from the grant date. Options vest immediately upon a change in control of the Company, as defined in the Plans. Option exercise prices equal the closing price of the Company's common stock on the New York Stock Exchange on the date of grant. Restricted stock and restricted stock units are issued at no cost to the holder and vest over terms determined by the Compensation Committee of the Company's Board of Directors, generally three years from the date of grant or immediately upon a change in control of the Company, as defined in the Plans. The Company either utilizes treasury stock or issues new shares from its authorized but unissued share pool when vested stock options are exercised, when restricted stock awards are granted and when restricted stock units settle in stock upon vesting.
The following table summarizes the Company's stock-based compensation expense included as a component of general and administrative expenses in the consolidated financial statements:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(In millions)
Total stock-based compensation expense:
 
 
 
 
 
Equity classified awards expense
$
10.9

 
$
10.6

 
$
10.9

Liability classified awards expense (credit)
3.2

 
3.1

 
(1.0
)
Total pretax stock-based compensation expense
14.1

 
13.7

 
9.9

Book income tax benefit
(3.5
)
 
(3.5
)
 
(3.8
)
Total stock-based compensation expense, net of tax
$
10.6

 
$
10.2

 
$
6.1


As of December 31, 2019, total unrecognized compensation cost related to restricted stock and restricted stock units of $15.9 million and $3.0 million related to stock options is expected to be recognized over a weighted average period of approximately 1.3 years for restricted stock and restricted stock units and 1.3 years for stock options.
Equity Classified Awards - Stock Options
The per share fair values of the stock options granted have been estimated as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes model considers, among other factors, the expected life of the option and the historical volatility of the Company's stock price. The Black-Scholes model meets the requirements of U.S. GAAP, but the fair values generated by the model may not be indicative of the actual fair values of the Company's stock-based awards.
The Company granted 132,832 stock options during the year ended December 31, 2019 for which the fair value was estimated using a Black-Scholes option pricing model. The following table summarizes the assumptions used in the Black-Scholes model:
 
2019
 
2018
 
2017
Risk free interest rate
2.5
%
 
2.6
%
 
1.9
%
Weighted average historical volatility
30.3
%
 
26.1
%
 
22.9
%
Dividend yield
2.8
%
 
3.6
%
 
7.3
%
Expected years until exercise
4.7

 
4.6

 
4.5

Weighted average fair value of options granted
$
21.93

 
$
11.94

 
$
4.31



The Company granted 25,330 performance-based stock options and 55,245 performance-based restricted stock units during the year ended December 31, 2018, with performance periods ranging from 36 to 40 months. As of December 31, 2019, all of the stock options and 26,670 of the restricted stock units have been forfeited. During the year ended December 31, 2017, the Company granted 350,000 performance-based stock options and 175,000 performance-based restricted stock units with a performance period of approximately 42 months. These performance-based awards can vest from 0% to 100% of the award granted depending on the Company's stock price over certain measurement periods. Fair value of these grants was estimated using a Monte Carlo simulation method. The following summarizes the assumptions used in estimating the fair values:
 
2018
2017
Risk free interest rate
2.5
%
1.6
%
Weighted average historical volatility
34.4
%
30.0
%
Dividend yield
3.4
%
9.6
%
Expected years until exercise
3.0

3.4

Weighted average fair value of options granted
$
9.79

$
3.07

Weighted average fair value of restricted stock units granted
$
53.72

$
10.19


Stock option activity for the years ended December 31, 2019, 2018 and 2017 is summarized as follows:
 
Number of
Shares Under Option
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining Contractual
Term (in Years)
 
Aggregate Intrinsic
Value (in Millions)
Outstanding at December 31, 2016
701,134

 
$
80.04

 
 
 
 

Granted
887,030

 
48.35

 
 
 
 

Exercised
(64,916
)
 
40.59

 
 
 
 

Forfeited
(171,847
)
 
65.82

 
 
 
 

Expired
(79,353
)
 
87.02

 
 
 
 

Outstanding at December 31, 2017
1,272,048

 
61.44

 
 
 
 

Granted
248,899

 
69.12

 
 
 
 

Exercised
(74,930
)
 
52.43

 
 
 
 

Forfeited
(6,309
)
 
68.80

 
 
 
 

Outstanding at December 31, 2018
1,439,708

 
63.21

 
 
 
 

Granted
132,832

 
98.97

 
 
 
 

Exercised
(211,352
)
 
57.36

 
 
 
 

Forfeited
(106,745
)
 
72.19

 
 
 
 

Expired
(37,005
)
 
93.06

 
 
 
 

Outstanding at December 31, 2019
1,217,438

 
$
66.43

 
5.7
 
$
24.1

Vested and Expected to Vest at December 31, 2019
1,146,329

 
$
67.06

 
5.6
 
$
22.0

Exercisable at December 31, 2019
561,872

 
$
77.80

 
3.1
 
$
5.9


The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $6.9 million, $2.4 million and $1.4 million, respectively.
Cash received from options exercised under all stock-based payment arrangements for the years ended December 31, 2019, 2018 and 2017 was $12.0 million, $3.9 million and $2.6 million, respectively. The actual tax benefit realized for the tax deduction from option exercises under the stock-based payment arrangements totaled $1.8 million, $0.6 million and $0.5 million, respectively, for the years ended December 31, 2019, 2018 and 2017.
Equity Classified Awards - Restricted Stock and Restricted Stock Units
Activity in equity classified awards of restricted stock and restricted stock units for the years ended December 31, 2019, 2018 and 2017 is as follows:
 

Shares of Restricted Stock
 
Weighted
Average
Grant-Date Per
Share
Fair Value
 
Restricted
Stock Units
 
Weighted
Average
Grant-Date
Per Share
Fair Value
Outstanding at December 31, 2016
235,472

 
$
92.91

 
34,058

 
$
93.95

Granted
216,269

 
51.89

 
281,973

 
22.37

Released
(92,968
)
 
88.62

 
(12,683
)
 
81.63

Forfeited
(83,582
)
 
79.52

 
—

 
—

Outstanding at December 31, 2017
275,191

 
65.97

 
303,348

 
28.39

Granted
92,466

 
69.20

 
86,990

 
57.21

Released
(74,253
)
 
81.07

 
(15,737
)
 
98.54

Forfeited
(26,162
)
 
61.27

 
(72
)
 
53.49

Outstanding at December 31, 2018
267,242

 
64.21

 
374,529

 
31.05

Granted
75,556

 
96.86

 
23,427

 
95.77

Released
(76,962
)
 
76.25

 
(12,347
)
 
90.34

Forfeited
(41,321
)
 
67.20

 
(27,802
)
 
34.53

Outstanding at December 31, 2019
224,515

 
$
70.52

 
357,807

 
$
30.35


 
Liability Classified Awards - Cash-settled Restricted Stock Units

The Company has granted cash-settled restricted stock units to certain employees. These instruments are recorded as liabilities at fair value as of the respective period end.
 
 
Cash-Settled Restricted
Stock Units
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2018
 
53,766

 
$
79.07

Granted
 
20,989

 
83.58

Released
 
(462
)
 
83.18

Forfeited
 
(10,441
)
 
88.70

Outstanding at December 31, 2019
 
63,852

 
$
85.63



For the years ended December 31, 2019 and 2018, $1.6 million and $0.8 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units.

Liability Classified Awards - Long-Term Incentive Awards
The Company has granted cash long-term incentive awards to certain employees (“LTIP awards”). Annual LTIP awards vest over a three-year period and are determined using a multiplier from 0% to 200% of the target award based on (i) the total stockholder return of the Company's common stock compared to the total stockholder returns of a peer group of companies and (ii) the percentage increase in the Company's adjusted earnings per share (as defined in the applicable award agreement). Though LTIP awards are only paid in cash, since the multiplier is primarily based on the price of the Company's common stock, the awards are considered stock-based compensation in accordance with U.S. GAAP and are classified as liabilities. For the years ended December 31, 2019 and 2018, expense of $1.7 million and $2.3 million, respectively, was included in stock-based compensation expense related to the LTIP awards. For the year ended December 31, 2017, a credit $1.0 million was included in stock-based compensation expense related to the LTIP awards. At December 31, 2019 and 2018, liabilities of $2.9 million and $2.4 million, respectively, were included as accrued employee compensation and benefits in the Consolidated Balance Sheets.