Stock-Based Employee Compensation | 9 Months Ended |
Sep. 03, 2013 |
Stock-Based Employee Compensation [Abstract] | |
Stock-Based Employee Compensation | |
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4 | STOCK-BASED EMPLOYEE COMPENSATION | | | | | | | | | | |
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2012 Long-Term Equity Incentive Plan |
On July 16, 2012, the Company adopted the Del Frisco’s Restaurant Group, Inc. 2012 Long-Term Equity Incentive Plan (the “2012 Plan”), which allows the Company to grant stock options, restricted stock, restricted stock units, deferred stock units and other equity-based awards to directors, officers, key employees and other key individuals performing services 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. Options are exercisable at various periods ranging from one to four years from the date of grant. The 2012 Plan has 2,232,800 shares authorized for issuance under the plan. There were 1,517,975 shares of common stock issuable upon exercise of outstanding options at September 3, 2013 and 714,825 shares available for future grants. |
The following table details the Company’s total stock option compensation cost during the 12 and 36 weeks ended September 3, 2013 and September 4, 2012 as well as where the costs were expensed (in thousands): |
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| 12 Weeks Ended | | 36 Weeks Ended |
| September 3, | | September 4, | | September 3, | | September 4, |
| 2013 | | 2012 | | 2013 | | 2012 |
Restaurant operating expenses | $ | 79 | | $ | 22 | | $ | 171 | | $ | 22 |
General and administrative costs | | 322 | | | 81 | | | 696 | | | 81 |
Total stock compensation cost | $ | 401 | | $ | 103 | | $ | 867 | | $ | 103 |
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The following table summarizes stock option activity during the 36 week period ended September 3, 2013: |
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| 36 Weeks Ended September 3, 2013 |
| Shares | | Weighted average exercise price | | Weighted average Remaining Contractual Term | | Aggregate Intrinsic Value ($000's) |
Outstanding at beginning of year | | 825,000 | | | 13.09 | | | | | | |
Granted | | 765,500 | | | 20.82 | | | | | | |
Exercised | | -17,025 | | | 13.00 | | | | | | |
Forfeited | | -55,500 | | | 13.65 | | | | | | |
Outstanding at end of period | | 1,517,975 | | | 16.97 | | | 9.4 years | | | 4,779 |
Options exercisable at end of period | | 156,600 | | | 13.00 | | | 8.9 years | | | 965 |
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A summary of the status of non-vested shares as of September 3, 2013 and changes during the 36 weeks ended September 3, 2013 is presented below: |
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| 36 Weeks Ended | | | | | | | |
| 3-Sep-13 | | | | | | | |
| Shares | | Weighted average Grant-Date Fair Value | | | | | | | |
Non-vested shares at beginning of year | 825,000 | | $ | 4.93 | | | | | | | |
Granted | 765,500 | | | 8.30 | | | | | | | |
Vested | -173,625 | | | 4.82 | | | | | | | |
Forfeited | -55,500 | | | 5.21 | | | | | | | |
Non-vested shares at end of period | 1,361,375 | | $ | 6.83 | | | | | | | |
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As of September 3, 2013, there was $8.7 million of total unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a period of approximately 3.4 years. The following table details the values from and assumptions for the Black-Scholes option pricing model for stock options issued during the 36 weeks ended September 3, 2013 and September 4, 2012: |
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| 2013 | | 2012 | | | | | | | |
Weighted average grant date fair value | $8.30 | | | $4.82 | | | | | | | |
Weighted average risk-free interest rate | 1.44% | | | 0.58% | | | | | | | |
Weighted average expected life | 5.49 years | | | 5.4 years | | | | | | | |
Weighted average volatility | 41.65% | | | 40.21% | | | | | | | |
Expected dividend | — | | | — | | | | | | | |
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The Black-Scholes option valuation model requires the input of highly subjective assumptions, including the expected life of the stock-based award. 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 with a similar expected term of options granted. Outstanding options granted under the 2012 Plan are subject to a four year vesting period and have a ten year maximum contractual term. |
In addition, the Company is required to estimate the expected forfeiture rate and only recognizes expense for those shares expected to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the share-based compensation expense could be materially different. |
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