Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
 6 Months Ended
Jun. 29, 2014
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 Chuy's Holdings, Inc. 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) which allows the Company’s Board of Directors to grant stock options, restricted stock, restricted stock units and other equity-based awards to directors, officers, and key employees of the Company. 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. The outstanding restricted stock units vest 25% on each of the first four anniversaries of the date of grant. As of June 29, 2014, a total of 986,378 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 $197,000 and $138,000 for the thirteen weeks ended June 29, 2014 and June 30, 2013 and $399,000 and $236,000 for the twenty-six weeks ended June 29, 2014 and June 30, 2013, respectively.
Stock Options
A summary of stock-based compensation activity related to stock options for the twenty-six weeks ended June 29, 2014 are as follows:
 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
(Years)
 
Aggregate
Intrinsic
Value
Outstanding and expected to vest at December 29, 2013
729,874

 
$
11.45

 
 
 
 
Granted
6,780

 
38.50

 
 
 
 
Exercised
(50,004
)
 
6.05

 
 
 
 
Forfeited
(1,472
)
 
24.36

 
 
 
 
Outstanding and expected to vest at June 29, 2014
685,178

 
$
12.08

 
5.32
 
$
16,150

Exercisable at June 29, 2014
466,839

 
$
7.12

 
4.07
 
$
13,296


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 June 29, 2014 and multiplying this result by the related number of options outstanding and exercisable at June 29, 2014. The estimated fair value of the common stock as of June 29, 2014 used in the above calculation was $35.60 per share, the closing price of the Company’s common stock on June 27, 2014, the last trading day of the second quarter. The total intrinsic value of options exercised during the twenty-six weeks ended June 29, 2014 was $1.7 million.
The weighted-average grant date fair value of options granted during the twenty-six weeks ended June 29, 2014 was $13.44 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
37
%
Risk-free rate of return
1.56
%
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 $1.7 million of total unrecognized compensation costs related to options granted under the 2006 Plan and the 2012 Plan as of June 29, 2014. These costs will be recognized ratably through the year 2019. In the event of a change of control, approximately $269,000 of the Company’s unrecognized compensation costs would be immediately recognized.
Restricted Stock Units
A summary of stock-based compensation activity related to restricted stock units for the twenty-six weeks ended June 29, 2014 are as follows:
 
Shares
 
Weighted
Average
Fair Value
Outstanding and expected to vest at December 29, 2013
—

 
$
—

Granted
86,717

 
40.47

Outstanding and expected to vest at June 29, 2014
86,717

 
$
40.47


The fair value of the restricted stock units is the quoted market value of our common stock on the date of grant. As of June 29, 2014, total unrecognized stock-based compensation expense related to non-vested restricted stock units was approximately $3.2 million, which is expected to be recognized ratably over the next four years.