Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income:

		Three months ended March 31,
		2022		2021
Total stock-based compensation expense:	(In millions)
Equity classified awards expense		$	4.4	$	3.1
Liability classified awards expense		0.4		1.5
Total pre-tax stock-based compensation expense		4.8		4.6
Book income tax benefit		(1.2)		(1.1)
Total stock-based compensation expense, net of tax		$	3.6	$	3.5

As of March 31, 2022, total unrecognized compensation expense of $26.3 million related to restricted stock and restricted stock units and $4.6 million related to stock options are expected to be recognized over a weighted average period of 1.7 years for restricted stock and restricted stock units and 1.8 years for stock options.

Fair Value Assumptions

The following table summarizes the assumptions used in the Black-Scholes model for stock options granted during the three months ended March 31, 2022.

Risk-free interest rate	1.7	%
Historical volatility	70.1	%
Dividend yield	2.6	%
Expected years until exercise	4.5
Fair value of options granted	$33.23

Equity Classified Awards - Stock Options

Stock option balances at March 31, 2022, and activity for the three months ended March 31, 2022 were as follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at December 31, 2021	475,904	$	76.65
Granted	75,795	70.08
Exercised	(3,505)	68.08
Forfeited	(2,635)	90.54
Outstanding at March 31, 2022	545,559	75.72		7.0	$	3.9
Vested at March 31, 2022 and Expected to Vest	522,263	75.82		6.9	$	3.7
Exercisable at March 31, 2022	374,716	$	75.93	6.0	$	3.1

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the first quarter of 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2022. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options.

Equity Classified Awards - Restricted Stock and Restricted Stock Units

Outstanding balances as of March 31, 2022, and activity related to restricted stock and restricted stock units for the three months ended March 31, 2022 were as follows:

	Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	276,611	$	80.85	105,592	$	71.00
Granted	167,797	70.09		59,002	46.64
Released	(56,687)	89.34		(40,599)	66.31
Forfeited	(6,667)	86.86		—	—
Outstanding at March 31, 2022	381,054	$	74.77	123,995	$	61.01

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
Outstanding at December 31, 2021	12,799
Granted	67
Released	(12,866)
Outstanding at March 31, 2022	—

For the three months ended March 31, 2022 and 2021, an expense of $0.2 million and $1.4 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. At March 31, 2022 and December 31, 2021, liabilities were zero and $0.9 million, respectively, related to cash-settled restricted stock units were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.

Liability Classified Awards - Long-Term Incentive Awards

The Company has granted cash long-term incentive awards (“LTIP awards”) to certain employees. Annual LTIP awards vest over a three-year period and are determined using multipliers from 0% to 200% of the target award based on the total stockholder return of Dine Brands Global common stock compared to the total stockholder returns of a peer group of companies. The awards are considered stock-based compensation and are classified as liabilities measured at fair value as of the respective period end. For the three months ended March 31, 2022 and 2021, an expense of $0.2 million and $0.1 million, respectively, were included in total stock-based compensation expense related to LTIP awards. At March 31, 2022 and December 31, 2021, liabilities of $1.2 million and $1.5 million, respectively, related to LTIP awards were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.