Stock-Based Compensation

12 Months Ended

Dec. 30, 2012

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

2006 Stock Incentive Plan. In 2006, the Company adopted a stock plan entitled the 2006 Stock Incentive Plan, as amended, (the “2006 Plan”) and reserved and authorized a total of 3,300,000 shares of common stock for grant thereunder. On June 9, 2011, the stockholders approved an amendment to the 2006 Plan increasing the number of shares of common stock available for issuance by an additional 1,000,000 shares.

In 2012, the Company issued an aggregate of 36,338 non-vested shares to non-employee directors and 510,900 non-vested shares to certain employees. In connection with the Spin-off of Fiesta, on March 5, 2012 Carrols Restaurant Group converted all of its outstanding vested stock options to shares of the Company's common stock and all of its outstanding non-vested stock options to non-vested shares of the Company's common stock. The 288,435 non-vested shares will generally vest over the same period as the non-vested stock options. The non-vested stock awards issued in connection with the conversion of all outstanding non-vested stock options to non-vested shares of the Company's common stock vest according to the same period and anniversary dates as the original stock options, with the pro-rated portion of the award vesting on the anniversary of the original option award. The conversion resulted in $1.0 million in incremental compensation cost, of which $0.5 million pertains to continuing operations of the Company. During the year ended December 30, 2012, $0.8 million of incremental cost was recognized by the Company, of which $0.4 million pertains to continuing operations and $0.4 million has been classified as discontinued operations as it relates to Fiesta stock-based compensation cost prior to the Spin-off.

In 2011, the Company issued an aggregate of 8,334 non-vested shares to non-employee directors and 360,200 non-vested shares to certain employees. In 2010, the Company granted an aggregate of 552,000 stock options, issued an aggregate of 14,478 non-vested shares to non-employee directors and 11,000 non-vested shares to certain employees. As of December 30, 2012, 2,167,958 shares were available for future grant or issuance.

The non-vested stock awards issued to certain employees in 2012 and 2011 vest over four years at the rate of 25% on each anniversary of the award. The non-vested stock awards issued to non-employee directors in 2012 vest over five years at the rate of 20% on each anniversary date of the award, provided that the participant has continuously remained a director of the Company. The non-vested stock awards issued to non-employee directors in 2011 and 2010 vest over two years at the rate of 50% on each anniversary date of the award, provided that the participant has continuously remained a director of the Company. The non-vested stock awards issued to certain restaurant employees in 2010 vest 100% on the third anniversary date of the award. Forfeiture rates are based on a stratification of employees by expected exercise behavior and range from 0% to 15%.

Stock-based compensation expense for the years endedDecember 30, 2012, January 2, 2012, and January 1, 2012 was $0.9 million, $1.0 million and $0.9 million, respectively. A portion of the Company's granted options qualified as ISO's for income tax purposes, and as such, a tax benefit is not recorded at the time the compensation cost related to the options is recorded for financial reporting purposes because an ISO does not ordinarily result in a tax benefit unless there is a disqualifying disposition. Stock option grants of non-qualified options result in the creation of a deferred tax asset until the time that the option is exercised.

As of December 30, 2012, the total non-vested stock-based compensation expense relating to non-vested shares was approximately $3.6 million. At December 30, 2012, the remaining weighted average vesting period for non-vested shares was 2.6 years. Shares issued upon exercise of options have been previously registered with the SEC.

A summary of all option activity for the year ended December 30, 2012 was as follows:

	2006 Plan
	Number of Options		Weighted Average Exercise Price		Average Remaining Contractual Life	Aggregate Intrinsic Value
Options outstanding at January 1, 2012	2,438,327		$	9.33	3.2	$	8,275
Granted	—		—
Exercised	(69,824	)	4.20
Converted (1)	(2,348,950	)	9.51
Forfeited	(19,553	)	6.58
Options outstanding at December 30, 2012	—
Vested or expected to vest at December 30, 2012	—
Options exercisable at December 30, 2012	—

A summary of all non-vested shares activity for the year ended December 30, 2012 was as follows:

	Shares	Weighted Average Grant Date Price
Non-vested at January 1, 2012	385,426	$	7.54
Converted (1)	288,435	7.98
Granted	547,238	5.90
Vested (2)	(262,090)	7.62
Forfeited	(24,381)	9.38
Non-vested at December 30, 2012	934,628	7.84

The fair value of the non-vested shares is based on the closing price of the Company's stock on the date of grant.

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(1) Includes the conversion of all of outstanding vested stock options to shares of the Company's common stock and all of its outstanding non-vested stock options to non-vested shares of the Company's common stock as discussed above.

(2) Includes accelerated vesting of 200,000 non-vested shares of the Company's common stock of the former Chairman of the board of directors of Fiesta.