Annual report pursuant to Section 13 and 15(d)

Note 14 - Incentive Stock Option Plans

v3.7.0.1
Note 14 - Incentive Stock Option Plans
12 Months Ended
Dec. 25, 2016
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
(14)
Incentive and Stock Option Plans
 
As of
December
25,
2016,
the Company had the following share-based compensation plans.
 
2005
Long-Term Equity Incentive Plan
 
In connection with the initial public offering, the Company adopted the Ruth’s Chris Steak House, Inc.
2005
Long-Term Equity Incentive Plan (the
2005
Equity Incentive Plan), which allows the Company’s Board of Directors 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. Initially,
2.4
million shares were authorized for issuance under the
2005
Equity Incentive Plan. The
2005
Equity Incentive 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, and restricted stock vests, at various periods ranging from
one
to
five
years from date of grant. Effective
May
 
22,
2008,
the
2005
Equity Incentive Plan was amended, with stockholder approval, to increase the number of shares authorized for issuance under the plan by
1.5
million shares. The Amended and Restated
2005
Equity Incentive Plan was adopted on
October
26,
2012,
and the number of shares authorized for issuance under the Amended and Restated
2005
Long-Term Equity Incentive Plan was increased by
2.0
million shares at the
2013
annual meeting of stockholders. Under the Amended and Restated
2005
Equity Incentive Plan there are
1.4
million shares of common stock issuable upon exercise of currently outstanding options and restricted stock awards at
December
25,
2016,
and
1.9
million shares available for future grants.
 
During fiscal year
2014,
the Company issued
275,794
shares of restricted stock to certain employees and executive officers from available shares under the Amended and Restated
2005
Equity Incentive Plan. The shares were issued with a grant date fair market value equal to the closing price of the stock on the date of the grants. Of the
275,794
shares of restricted stock issued during
2014,
125,932
shares vest on the
second
anniversary of the grant date and the remaining shares vest
one
-
third
on each of the
three
anniversary dates following the grant date.
 
During fiscal year
2015,
the Company issued
893,662
shares of restricted stock to certain employees and executive officers from available shares under the Amended and Restated
2005
Equity Incentive Plan. The shares were issued with a grant date fair market value equal to the closing price of the stock on the date of the grants. Of the
893,662
shares of restricted stock issued during
2015,
54,095
shares vest on the
second
anniversary of the grant date,
214,567
shares will vest
one
-
third
on each of the
three
anniversary dates following the grant date,
300,000
shares will vest at
25%
annually with the
first
vesting date occurring on the anniversary date in
2017
and ending on the anniversary date in
2020
and
325,000
shares will vest at
25%
annually with the
first
vesting date occurring on the anniversary date in
2018
and ending on the anniversary date in
2021.
 
During fiscal year
2016,
the Company issued
376,423
shares of restricted stock to certain employees and executive officers from available shares under the Amended and Restated
2005
Equity Incentive Plan. The shares were issued with a grant date fair market value equal to the closing price of the stock on the date of the grants. Of the
376,423
shares of restricted stock issued during
2016,
95,792
shares vest on the
second
anniversary of the grant date,
135,631
shares will vest
one
-
third
on each of the
three
anniversary dates following the grant date,
45,000
shares will vest on the
third
anniversary of the grant date and
100,000
shares will vest at
50%
annually with the
first
vesting date occurring on the anniversary date in
2018
and ending on the anniversary date in
2019.
 
The Company recorded
$5.8
million,
$4.1
million and
$2.8
million in total stock option and restricted stock compensation expense during fiscal years
2016,
2015
and
2014,
respectively that was classified primarily as general and administrative costs. The Company recognized
$378
thousand,
$743
thousand and
$1.9
million in income tax benefit related to stock-based compensation plans during fiscal years
2016,
2015
and
2014,
respectively. As of
December
25,
2016,
the Company had an
$8.3
million hypothetical Additional Paid-in Capital Pool (APIC Pool) balance. The hypothetical APIC Pool balance represents the tax benefit of the cumulative excess of corporate income tax deductions over financial accounting compensation expense recognized for equity based compensation awards which have fully vested. The hypothetical APIC Pool will increase or decrease each year, dependent upon both the vesting of restricted stock awards and the stock options exercised and/or cancelled. Shortfalls generated by the excess of compensation expense for financial accounting purposes over the corresponding corporate income tax deduction will be charged to the hypothetical APIC Pool balance rather than income tax expense. Once the hypothetical APIC Pool is fully depleted, the tax effect of any excess of financial accounting expense over the corresponding corporate income tax deduction beyond that point will be treated as income tax expense in the consolidated statements of income.
 
A summary of the status of non-vested restricted stock as of
December
25,
2016
and changes during fiscal year
2016
is presented below.
 
 
 
2016
 
 
 
Shares
 
 
Weighted-Average
Grant-Date Fair Value Per Share
 
                 
Non-vested shares at beginning of year
   
1,150,085
    $
14.93
 
Granted
   
376,423
     
16.74
 
Vested
   
(278,005
)    
12.93
 
Forfeited    
(2,667
)    
11.67
 
Non-vested shares at end of year
   
1,245,836
    $
15.93
 
 
 
As of
December
25,
2016,
there was
$13.5
million of total unrecognized compensation cost related to
1,245,836
shares of non-vested restricted stock. This cost is expected to be recognized over a weighted-average period of approximately
3.27
years. The total grant date fair value of restricted stock vested in fiscal years
2016,
2015
and
2014
was
$3.6
million,
$2.8
million and
$1.9
million, respectively.
 
The following table summarizes stock option activity for fiscal year
2016:
 
 
 
2016
 
 
 
Shares
 
 
Weighted-
Average
Exercise Price
 
 
Weighted-Average
Remaining
Contractual Term
 
 
Aggregate
Intrinsic Value
($000's)
 
                                 
Outstanding at beginning of year
   
262,748
    $
13.88
     
 
     
 
 
Granted
   
-
     
-
     
 
     
 
 
Exercised
   
(38,534
)    
5.70
     
 
     
 
 
Forfeited
   
(100,060
)    
18.75
     
 
     
 
 
                                 
Outstanding at end of year
   
124,154
    $
12.50
     
1.06
    $
799,024
 
                                 
Options exercisable at year end
   
124,154
    $
12.50
     
1.06
    $
799,024
 
 
 
As of
December
25,
2016,
there was no unrecognized compensation cost related to non-vested stock options. The total intrinsic value of options exercised in fiscal years
2016,
2015
and
2014
was
$444
thousand,
$863
thousand and
$6.3
million, respectively.
 
During fiscal years
2016,
2015
and
2014,
the Company received
$219
thousand,
$250
thousand and
$183
thousand, respectively, in cash related to the exercise of options. The exercise of shares were fulfilled from shares reserved for issuance under the Amended and Restated
2005
Equity Incentive Plan and resulted in an increase in issued shares outstanding.