Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
 9 Months Ended
Sep. 29, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
STOCK-BASED COMPENSATION
The Company has outstanding awards under the 2006 Plan. The outstanding options vest 20% on each of the first five anniversaries of the date of grant and have a maximum term of 10 years. 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 of 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 outstanding options vest 20% on each of the first five anniversaries of the date of grant and have a maximum term of 10 years. As of September 29, 2013, a total of 1,080,120 shares of common stock are reserved and remain available for issuance under the 2012 Plan.
Stock-based compensation cost recognized in the accompanying consolidated income statements was $147,000 and $77,000 for the thirteen weeks ended September 29, 2013 and September 23, 2012, respectively, and $383,000 and $252,000 for the thirty-nine weeks ended September 29, 2013 and September 23, 2012, respectively.
 
A summary of stock-based compensation activity and changes for the thirty-nine weeks ended September 29, 2013 are as follows:
 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
(Year)
 
Aggregate
Intrinsic
Value
Outstanding and expected to vest at December 30, 2012
1,052,861

 
$
5.28

 
 
 
 
Granted
145,907

 
28.97

 
 
 
 
Exercised
(463,613
)
 
3.07

 
 
 
 
Forfeited
(2,702
)
 
12.18

 
 
 
 
Outstanding and expected to vest at September 29, 2013
732,453

 
$
11.37

 
5.73
 
$
16,757

Exercisable at September 29, 2013
467,978

 
$
5.60

 
4.47
 
$
13,406


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 September 29, 2013 and multiplying this result by the related number of options outstanding and exercisable at September 29, 2013. The estimated fair value of the common stock as of September 29, 2013 used in the above calculation was $34.25 per share, the closing price of the Company’s common stock on September 27, 2013, the last trading day of the third quarter.
The weighted-average grant date fair value of options granted during the thirty-nine weeks ended September 29, 2013 was $11.02 per share, as estimated at the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions: 
 
 
Dividend yield
0
%
Expected volatility
43
%
Risk-free rate of return
0.79
%
Expected life (in years)
5


The assumptions above represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. The expected term of options granted is 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 approximately $2.0 million of total unrecognized compensation costs related to options granted under the 2006 Plan and the 2012 Plan as of September 29, 2013. These costs will be recognized ratably through the year 2018. In the event of a change of control, approximately $428,000 of the Company’s unrecognized compensation costs would be immediately recognized.