Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

6. Stock-Based Compensation

On April 2, 2015, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock available for grant under the plan to 9.2 million shares from 6.8 million shares. This amendment was approved by our stockholders at our annual meeting held on May 28, 2015.

The following table presents information related to stock-based compensation (in thousands):

	Thirteen Weeks Ended June 30, 2015		Thirteen Weeks Ended July 1, 2014		Twenty-Six Weeks Ended June 30, 2015		Twenty-Six Weeks Ended July 1, 2014

Labor expenses	$	1,556	$	1,196	$	3,102	$	2,536
Other operating costs and expenses	64		42		137		89
General and administrative expenses	3,326		2,661		6,438		5,113


Total stock-based compensation	4,946		3,899		9,677		7,738
Income tax benefit	1,892		1,491		3,701		2,960


Total stock-based compensation, net of taxes	$	3,054	$	2,408	$	5,976	$	4,778



Capitalized stock-based compensation (1)	$	79	$	51	$	146	$	99

(1)

It is our policy to capitalize the portion of stock-based compensation costs for our internal development and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

Stock Options

We did not issue any stock options during the second quarters of fiscal 2015 or fiscal 2014. Stock option activity during the twenty six weeks ended June 30, 2015 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(1)
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at December 30, 2014	4,023		$	26.34	3.7	$	97,406
Granted	312		48.01
Exercised	(744	)	22.71
Forfeited or cancelled	(23	)	19.96

Outstanding at June 30, 2015	3,568		$	29.02	3.8	$	91,027


Exercisable at June 30, 2015	2,061		$	24.40	2.8	$	62,094

(1)

Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pretax amount that would have been received by the option holders, had they all exercised their options on the fiscal period end date.

The total intrinsic value of options exercised during the thirteen weeks and twenty-six weeks ended June 30, 2015 was $13.0 million and $21.6 million, respectively. The total intrinsic value of options exercised during the thirteen weeks and twenty-six weeks ended July 1, 2014 was $3.8 million and $12.7 million, respectively. As of June 30, 2015, the total unrecognized stock-based compensation expense related to unvested stock options was $12.7 million, which we expect to recognize over a weighted average period of approximately 2.4 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended June 30, 2015 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)

Outstanding at December 30, 2014	1,820		$	37.12
Granted	307		48.49
Vested	(233	)	27.09
Forfeited	(66	)	36.35

Outstanding at June 30, 2015	1,828		$	40.34

Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted average fair value at the grant date for restricted shares and restricted share units issued during the second quarters of fiscal 2015 and fiscal 2014 was $48.80 and $48.19, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended June 30, 2015 was $0.6 million and $6.3 million, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended July 1, 2014 was $0.1 million and $3.8 million, respectively. As of June 30, 2015, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $41.8 million, which we expect to recognize over a weighted average period of approximately 3.1 years.