Stock Based Compensation
|12 Months Ended|
Dec. 30, 2012
|Stock Based Compensation||
10. STOCK-BASED COMPENSATION
The Company has outstanding awards under the 2006 Plan. On April 6, 2012, the Company amended the 2006 Plan to increase the shares available for the issuance of options under the 2006 Plan from 1,004,957 to 1,070,209 shares of the Company’s common stock. Options granted have a maximum term of 10 years. Subject to an optionee’s continued employment, options granted vest 20% on each of the first five anniversaries of the date of grant. In addition, under the 2006 Plan, all options would immediately vest upon a change in control. In connection with the IPO, the Company terminated the 2006 Plan, and no further awards will be granted under the 2006 Plan. The termination of the 2006 Plan did not affect awards outstanding under the 2006 Plan at the time of its termination and the terms of the 2006 Plan continue to govern those outstanding awards.
In connection with the IPO, the Company adopted the 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) which allows the Company’s Board of Directors to grant stock options, restricted stock, and other equity-based awards to directors, officers, and key employees for the Company. The 2012 Plan provides for granting of options to purchase shares of common stock at an exercise price not less than the fair value of the stock on the date of grant. The options granted vest 20% on the each of the first five anniversaries of the date of grant and have a maximum term of 10 years. A total of 1,250,000 shares of common stock are reserved and available for issuance under the 2012 Plan.
Stock-based compensation cost recognized in the accompanying consolidated statements of income was $329, $352 and $310 for the years ended December 30, 2012, December 25, 2011 and December 26, 2010, respectively. A summary of stock-based compensation activity and changes during the fiscal year ended December 30, 2012 are as follows:
The aggregate intrinsic value in the table above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying common stock as of December 30, 2012 and multiplying this result by the related number of options outstanding and exercisable at December 30, 2012. The fair value of the common stock as of December 30, 2012 used in the above calculation was $22.43 per share, the closing price of the Company’s common stock on the Nasdaq Stock Market on December 28, 2012.
The weighted-average grant date fair value of options granted was $6.07, $5.71 and $4.17 for the years ended December 30, 2012, December 25, 2011, December 26, 2010, respectively, as estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
The assumptions above represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. The expected life of options granted during 2010 and 2011 was based on the simplified method of estimating expected term. The expected term of options granted during 2012 was based on a representative peer group with similar employee groups and expected behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury constant maturities rate in effect at the time of grant. The Company utilized a weighted rate for expected volatility based on a representative peer group within the industry.
There was $796 of total unrecognized compensation costs related to options granted under the Plan as of December 30, 2012. These costs will be recognized through the year 2017. As of December 30, 2012, in the event of a change of control, $597 of the Company’s unrecognized compensation costs would be immediately recognized.
One significant factor in determining the fair value of the Company’s options, when using the Black-Scholes option pricing model, is the fair value of the common stock underlying those stock options. The Company was a private company with no active public market for its common stock prior to its IPO. During that time, the fair value of the common stock underlying the stock options was determined by the Company’s board of directors, which intended to grant all stock options with an exercise price per share not less than the per share fair value of our common stock underlying those options on the date of grant. The Company has determined the estimated per share fair value of its common stock on a quarterly basis using a contemporaneous valuation determined by the Company’s board of directors based upon information available to it at the time of the valuation. The fair value of the Company’s common stock was based on an analysis of relevant metrics, including the following:
(a) The rights, privileges and preferences of the Company’s convertible preferred stock;
(b) The Company’s operating and financial performance;
(c) The hiring of key personnel;
(d) The risks inherent in the development and expansion of the Company’s restaurants;
(e) The fact that the option grants involve illiquid securities in a private company;
(f) The likelihood of achieving a liquidity event, such as an initial public offering or sale of our company;
(g) An estimated enterprise value determined by applying a consistent multiple to the Company’s earnings before interest, taxes, depreciation and amortization; and
(h) Financial metrics of publicly traded companies in the Company’s peer group.
In addition, at December 25, 2011, as part of the Company’s valuation analysis, the board of directors obtained a contemporaneous valuation study from an independent third-party valuation firm. In performing its valuation analysis, the valuation firm engaged in discussions with management, analyzed historical and forecasted financial statements and reviewed the Company’s corporate documents. In addition, these valuation studies were based on a number of assumptions, including industry, general economic, market and other conditions that could reasonably be evaluated at the time of the valuation.
After the consummation of the IPO, the fair value of the Company’s common stock is based on the market price as quoted by the Nasdaq Stock Market.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef