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Stock-Based Compensation
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Dec. 29, 2013
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| 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 December 29, 2013, a total of 1,079,056 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 $531,000, $329,000 and $352,000 for the years ended December 29, 2013, December 30, 2012 and December 25, 2011, respectively.
A summary of stock-based compensation activity and changes for the year ended December 29, 2013 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 29, 2013 and multiplying this result by the related number of options outstanding and exercisable at December 29, 2013. The estimated fair value of the common stock as of December 29, 2013 used in the above calculation was $36.63 per share, the closing price of the Company’s common stock on December 27, 2013, the last trading day of the year. The total intrinsic value of options exercised during the year ended December 29, 2013 was $11.2 million.
The weighted-average grant date fair value of options granted was $11.05, $6.07 and $5.71 per share, during the years ended December 29, 2013, December 30, 2012 and December 25, 2011, respectively, as estimated at the date of grant using the Black-Scholes 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 2011 was based on the simplified method of estimating expected term. The expected term of options granted during 2012 and 2013 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 approximately $1.9 million of total unrecognized compensation costs related to options granted under the 2006 Plan and the 2012 Plan as of December 29, 2013. These costs will be recognized ratably through the year 2018. In the event of a change of control, approximately $369,000 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 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.
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