Share-Based Compensation

Share-Based Compensation Plans

We maintain three share-based compensation plans under which stock options and other awards granted to our employees and directors are outstanding. Currently, the Denny's Corporation 2012 Omnibus Incentive Plan (the "2012 Omnibus Plan") is used to grant share-based compensation to selected employees, officers and directors of Denny’s and its affiliates. However, we reserve the right to pay discretionary bonuses, or other types of compensation, outside of this plan. At December 30, 2015, there were 2.5 million shares available for grant under the 2012 Omnibus Plan. In addition, we have 0.8 million shares available to be issued outside of the 2012 Omnibus Plan pursuant to the grant or exercise of employment inducement awards of stock options and restricted stock units in accordance with NASDAQ Listing Rule 5635(c)(4).

Share-Based Compensation Expense

Total share-based compensation expense included as a component of net income was as follows:



	Fiscal Year Ended
	December 30, 2015		December 31, 2014		December 25, 2013
	(In thousands)
Stock options	$	—	$	52	$	558
Performance share awards	5,821		5,009		3,488
Restricted stock units for board members	814		785		806
Total share-based compensation	$	6,635	$	5,846	$	4,852

The income tax benefits recognized as a component of the provision for income taxes in our Consolidated Statements of Income related to share-based compensation expense were approximately $2.6 million, $2.3 million and $1.9 million during the years ended December 30, 2015, December 31, 2014 and December 25, 2013, respectively.

Stock Options

Options granted to date generally vest evenly over 3 years, have a 10-year contractual life and are issued at the market value at the date of grant.

The following table summarizes information about stock options outstanding and exercisable at December 30, 2015:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(In thousands, except per share amounts)
Outstanding, beginning of year	1,538		$	3.26
Exercised	(200	)	$	3.66
Outstanding, end of year	1,338		$	3.20	3.44	$	9,081
Exercisable, end of year	1,338		$	3.20	3.44	$	9,081

The aggregate intrinsic value represents the difference between the market price of our stock on December 30, 2015 and the exercise price, multiplied by the number of options that have an exercise price that is less than the market price of our stock. The aggregate intrinsic value of the options exercised was $1.4 million, $3.0 million and $2.6 million during the years ended December 30, 2015, December 31, 2014 and December 25, 2013, respectively.

There were no options granted during the years ended December 30, 2015, December 31, 2014 and December 25, 2013. As of December 30, 2015, there was no unrecognized compensation cost related to unvested stock option awards outstanding.

Restricted Stock Units

We primarily grant restricted stock units containing a market condition based on the total shareholder return of our stock compared with the returns of a group of peer companies. The number of shares that are ultimately issued is dependent upon the level of obtainment of the market condition. The following table summarizes the restricted stock units activity during the year ended December 30, 2015:



	Units		Weighted Average Grant Date Fair Value
	(In thousands)
Outstanding, beginning of year	845		$	7.20
Granted	514		$	11.43
Converted	(297	)	$	6.05
Forfeited	(34	)	$	9.95
Outstanding, end of year	1,028		$	9.55
Convertible, end of year	297		$	8.05

The weighted average grant date fair value of awards granted was $11.43, $7.51 and $8.05 for 2015, 2014 and 2013, respectively. We made payments of $3.4 million, $1.1 million and $1.2 million in cash during 2015, 2014 and 2013, respectively, and issued shares of 0.4 million, 0.1 million and 0.3 million, respectively, related to converted restricted stock units. The intrinsic value of shares converted was $4.9 million, $1.4 million and $2.7 million, during 2015, 2014 and 2013, respectively.

In February 2015, we granted certain employees approximately 0.2 million performance shares that vest based on the total shareholder return ("TSR") of our stock compared to the TSRs of a group of peer companies and 0.3 million performance shares that vest based on our Adjusted EBITDA growth rate, as defined under the terms of the award. As the TSR based performance shares contain a market condition, a Monte Carlo valuation was used to determine the grant date fair value of $11.86 per share. The performance shares based on the Adjusted EBITDA growth rate have a grant date fair value of $11.03 per share, the market value of our stock on the date of grant. The awards granted to our named executive officers also contain a performance condition based on certain operating measures for the fiscal year ended December 30, 2015. The TSR and Adjusted EBITDA growth rate performance period is the three year fiscal period beginning January 1, 2015 and ending December 27, 2017. The performance shares will vest and be earned (from 0% to 150% of the target award for each such increment) at the end of the performance period.

As of December 30, 2015 and December 31, 2014, we had accrued compensation of $2.6 million and $2.5 million, respectively, included as a component of other current liabilities and $2.2 million and $2.5 million, respectively, included as a component of other noncurrent liabilities in our Consolidated Balance Sheets (based on the fair value of the related shares for the liability classified units as of the respective balance sheet dates). As of December 30, 2015, we had $6.0 million of unrecognized compensation cost related to unvested restricted stock unit awards granted, which is expected to be recognized over a weighted average of 1.7 years.

Board Deferred Stock Units

During the year ended December 30, 2015, we granted 0.1 million deferred stock units (which are equity classified) with a weighted average grant date fair value of $10.60 per unit to non-employee members of our Board of Directors. A director may elect to convert these awards into shares of our common stock either on a specific date in the future (while still serving as a member of our Board of Directors) or upon termination as a member of our Board of Directors. During the year ended December 30, 2015, approximately 0.1 million deferred stock units with an intrinsic value of $1.4 million were converted into shares of our common stock. As of both December 30, 2015 and December 31, 2014 there were 0.9 million deferred stock units outstanding. As of December 30, 2015, we had approximately $0.3 million of unrecognized compensation cost related to all unvested deferred stock unit awards outstanding, which is expected to be recognized over a weighted average of 0.3 years.