Stock-Based Compensation

3 Months Ended

Apr. 01, 2025

Stock-Based Compensation

Stock-Based Compensation

9. Stock-Based Compensation

We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors.

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


		Thirteen			Thirteen
		Weeks Ended			Weeks Ended
		April 1, 2025			April 2, 2024

Labor expenses		$	2,437		$	2,495
Other operating costs and expenses			99			78
General and administrative expenses			5,045			5,076
Total stock-based compensation			7,581			7,649
Income tax benefit			1,870			1,908
Total stock-based compensation, net of taxes		$	5,711		$	5,741

Capitalized stock-based compensation ⁽¹⁾		$	54		$	49

(1)

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

Stock Options

We did not issue any stock options during the first quarter of fiscal 2025. The weighted-average fair value at the grant date for options issued during the first quarter of fiscal 2024 was $12.45. The fair value of options issued was estimated utilizing the Black-Scholes valuation model with the following weighted-average assumptions for the first quarter of fiscal 2024: (a) an expected option term of 6.9 years, (b) expected stock price volatility of 41.9%, (c) a risk-free interest rate of 4.3%, and (d) a dividend yield on our stock of 3.1%. Stock option activity during the thirteen weeks ended April 1, 2025 was as follows:


							Weighted-
							Average
				Weighted-			Remaining
				Average			Contractual		Aggregate
		Shares		Exercise Price			Term		Intrinsic Value ⁽¹⁾
		(In thousands)		(Per share)			(In years)		(In thousands)
Outstanding at December 31, 2024		1,167		$	45.77		3.1		$	4,163.6
Granted		—			—
Exercised		(230)			46.90
Forfeited or cancelled		(150)			61.59
Outstanding at April 1, 2025		787		$	42.44		4.0		$	6,674

Exercisable at April 1, 2025		698		$	43.21		3.4		$	5,387

(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 pre-tax 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 first quarter of fiscal 2025 was $0.1 million. There were no options exercised in the first quarter of fiscal 2024. As April 1, 2025, total unrecognized stock-based compensation expense related to unvested stock options was $1.1 million, which we expect to recognize over a weighted-average period of approximately 3.6 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirteen weeks ended April 1, 2025 was as follows:


				Weighted-
				Average
		Shares		Fair Value
		(In thousands)		(Per share)
Outstanding at December 31, 2024		3,239		$	38.02
Granted		621			51.89
Vested		(556)			40.23
Forfeited		(45)			38.52
Outstanding at April 1, 2025		3,259		$	40.28

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 for restricted shares and restricted share units issued during the first quarter of fiscal 2025 and 2024 was $51.89 and $34.77, respectively. The fair value of shares that vested during the thirteen weeks ended April 1, 2025 and April 2, 2024 was $22.4 million and $17.8 million, respectively. As of April 1, 2025, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $78.9 million, which we expect to recognize over a weighted-average period of approximately 3.3 years.