IHOP 2008 Annual Report Download - page 134
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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
18. Stock-Based Incentive Plans (Continued)
the model may not be indicative of the actual fair values of the Company’s stock-based awards. The
following table summarizes the assumptions used to value options granted in the respective periods:
2008 2007 2006
Risk free interest rate ........................ 2.83% 4.39% 4.67%
Weighted average historical volatility .............. 77.9% 24.9% 28.2%
Dividend yield .............................. 3.09% 1.75% 1.96%
Expected years until exercise ................... 5 Years 5 Years 5 Years
Forfeitures ................................ 7.02% 6.72% 12.03%
Weighted average fair value of options granted ...... $ 18.70 $ 14.21 $ 13.81
Stock-Based Compensation Expense
From time to time, the Company grants stock options and restricted stock to officers, directors and
employees of the Company under the 2001 Plan and the 2005 Plan. The stock options generally vest
over a three-year period and have a maturity of ten years from the issuance date. Option exercise
prices equal the closing price on the New York Stock Exchange of the Company’s common stock on
the date of grant. Restricted stock provides for the issuance of a share of the Company’s common stock
at no cost to the holder and generally vests over terms determined by the Compensation Committee of
the Company’s Board of Directors. The restricted stock generally vests only if the employee is actively
employed by the Company on the vesting date, and unvested restricted shares are forfeited upon
termination, retirement before age 65, death or disability, unless the Compensation Committee of the
Company’s Board of Directors determines otherwise. When vested options and restricted stock are
issued, the Company generally issues new shares from its authorized but unissued share pool or utilizes
treasury stock
The following table summarizes the Company’s stock-based compensation expense included as a
component of general and administrative expenses in the consolidated financial statements:
Year Ended December 31,
2008 2007 2006
(In thousands)
Total stock-based compensation:
Pre-tax compensation expense ................. $12,089 $ 6,958 $ 3,911
Tax benefit ............................... (4,739) (2,726) (1,519)
Total stock-based compensation expense, net of tax . . . $ 7,350 $ 4,232 $ 2,392
As of December 31, 2008, $15.3 million and $6.8 million (including forfeitures) of total
unrecognized compensation cost related to restricted stock and stock options, respectively, is expected
to be recognized over a weighted average period of approximately 1.81 years for restricted stock and
2.28 years for stock options.
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