10.

Share-Based Employee Compensation

Preferred Stock

RTI is authorized, under its Certificate of Incorporation, to issue up to

250,000

shares of preferred stock with a par value of

$0.01.

These shares

may

be issued from time to time in

one

or more series. Each series will have dividend rates, rights of conversion and redemption, liquidation prices, and other terms or conditions as determined by the Board of Directors.

preferred shares have been issued as of

June 6, 2017

and

May 31, 2016.

The Ruby Tuesday, Inc. Stock Incentive Plan and the Ruby Tuesday, Inc.

1996

Stock Incentive Plan

A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc.

1996

Stock Incentive Plan (

“1996

SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives. Stock option grants under the SIP and

1996

SIP can have varying vesting provisions and exercise periods as determined by such committee. A majority of currently outstanding stock options granted under the SIP and

1996

SIP vest within

three

years following the date of grant and expire

seven

years after the date of grant. The SIP and

1996

SIP permit the committee to make awards of shares of common stock, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awards to eligible persons. These discretionary awards

may

be made on an individual basis or for the benefit of a group of eligible persons. All stock options awarded under the SIP and

1996

SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

June 6, 2017,

we had reserved a total of

6,420,000

shares of common stock for the SIP and

1996

SIP. Of the reserved shares at

June 6, 2017,

1,694,000

were subject to stock options outstanding. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at

June 6, 2017

were

4,726,000.

Stock Options

The following table summarizes our stock option activity under these stock option plans for the fiscal year ended

June 6, 2017 (

Stock Options and Aggregate Intrinsic Value are in thousands):

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Service-based vesting:
Outstanding at beginning of year		2,066		$	7.89
Granted		1,126			3.46
Cancellations and forfeitures		(50	)		4.49
Expired		(1,448	)		6.66
Outstanding at end of year		1,694		$	6.09		2.93	$	–
Exercisable at end of year		1,224		$	7.00		1.72	$	–

The aggregate intrinsic value represents the closing stock price as of

June 6, 2017

less the strike price, multiplied by the number of stock options that have a strike price that is less than that closing stock price. There were

stock options exercised during fiscal years

2017

and

2016.

The total intrinsic value of stock options exercised during fiscal year

2015

was

$0.1

million.

June 6, 2017,

there was approximately

$0.3

million of unrecognized pre-tax compensation expense related to non-vested stock options. This cost is expected to be recognized over a weighted average period of

1.6

years. The total fair value at grant date of awards vested during fiscal years

2017,

2016,

and

2015

totaled

$1.8

million,

$1.7

million, and

$1.9

million, respectively.

During fiscal year

2017,

we granted

879,000

service-based stock options to certain employees under the terms of the SIP.

The stock options awarded vest in equal annual installments over a

three

-year period following grant of the award, and have a maximum life of

seven

years.

Also during fiscal

2017,

we granted

247,000

service-based stock options to our then Interim Chief Executive Officer under the terms of the SIP.

The stock options awarded cliff vested at the end of fiscal year

2017

and have a maximum life of

seven

years.

The weighted average Black-Scholes grant date fair value for stock options awarded during fiscal years

2017

and

2015

was

$1.21

and

$2.27

per share, respectively.

stock options were awarded during fiscal year

2016.

The grant date fair values of unvested stock options are amortized over the respective vesting period of the awards unless a recipient becomes retirement eligible during the vesting period. For retirement eligible individuals, the grant date fair value of the award is amortized from the period of the date of grant through the date upon which the individual becomes retirement eligible. The weighted average assumptions used in our Black-Scholes option-pricing model are as follows:

	2017			2015
Risk-free interest rate		1.08	%		1.48	%
Expected dividend yield		0	%		0	%
Expected stock price volatility		41.19	%		44.27	%
Expected life (in years)		4.34			4.50

Restricted Stock and Restricted Stock Units (“RSU”)

The following table summarizes our restricted stock and RSU activity for the fiscal year ended

June 6, 2017 (

in thousands, except per-share data):

	2017
	Shares			Weighted Average Fair Value
Service-Based Vesting:
Unvested at beginning of year		564		$	6.29
Granted		680			3.10
Vested		(618	)		5.70
Cancellations and forfeitures		(45	)		5.61
Unvested at end of year		581		$	3.24

Performance-Based Vesting:
Unvested at beginning of year		225		$	6.51
Cancellations and forfeitures		(108	)		6.51
Unvested at end of year		117		$	6.51

The fair value of restricted stock and RSU awards is based on the closing price of our common stock on the date prior to the grant date. The total intrinsic value of restricted stock and RSU grants vesting during fiscal years

2017,

2016,

and

2015

was

$1.8

million,

$2.1

million, and

$5.4

million, respectively. At

June 6, 2017,

unrecognized compensation expense related to restricted stock and RSU grants expected to vest totaled

$1.0

million and will be recognized over a weighted average vesting period of

1.3

years.

During fiscal year

2017,

we granted

219,000

restricted shares to non-employee directors under the terms of the SIP. These shares cliff vest over a

one

year period following the grant date of the award.

During fiscal year

2017,

we granted

319,000

RSUs and

142,000

restricted shares to certain employees under the terms of the SIP and

1996

SIP.

The awards will vest in

three

equal installments over a

three

-year period following the date of grant.

Phantom

Stock Units

We began granting phantom stock units during fiscal year

2017.

Each phantom stock unit entitles the recipient to receive a cash payment equal to the value of a single share of our common stock upon vesting. The following table summarizes our phantom stock unit activity for the fiscal year ended

June 6, 2017 (

in thousands):

	Phantom Stock Units
Service-Based Vesting:
Unvested at beginning of year		–
Granted		652
Vested		(76	)
Unvested at end of year		576

Performance-Based Vesting:
Unvested at beginning of year		–
Granted		598
Cancellations and forfeitures		(300	)
Unvested at end of year		298

During fiscal year

2017,

we granted

81,000

service-based phantom stock units to our then Interim Chief Executive Officer.

The phantom stock units cliff vested at the end of the fiscal year

2017.

Also during the fiscal year

2017,

we granted

571,000

service-based phantom stock units to our senior executive team. The phantom stock units will cliff vest

two

years following the grant date of the award. During the

fourth

quarter of fiscal year

2017,

76,000

of these units vested in connection with the departure of our former Ruby Tuesday Concept President.

During the fiscal year

2017,

we granted

598,000

performance-based phantom stock units that will vest approximately

three

years after the grant date.

Vesting of the performance-based phantom stock units is contingent upon the Company's achievement of a same-restaurant sales performance condition related to the next

three

fiscal years. Of these performance-based phantom stock units,

300,000

were forfeited during fiscal year

2017

primarily in connection with the departure of our former President and Chief Executive Officer and the Ruby Tuesday Concept President.

Included in our Consolidated Balance Sheets are amounts within Accrued liabilities: Payroll and related costs of

$0.4

million as of

June 6, 2017

and amounts within Other deferred liabilities of

$0.5

million and

$0.2

million as of

June 6, 2017

and

May 31, 2016,

respectively, relating to all of our long-term incentive awards that will settle in cash.

Included within General

and administrative expenses in our Consolidated Statements of Operations and Comprehensive Loss is share-based compensation expense of

$3.6

million,

$2.1

million, and

$7.1

million for the fiscal years ended

June 6, 2017,

May 31, 2016,

and

June 2, 2015,

respectively.

As discussed further in Note

to the Consolidated Financial Statements, various management personnel left the Company during fiscal years

2017,

2016,

and

2015.

Several of these individuals held share-based compensation awards at the times of their separations, and these awards were either vested or forfeited in accordance with the terms of the original awards.