Jack In The Box 2009 Annual Report Download - page 67

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Table of Contents


including the expected volatility of the stock price. The following weighted-average assumptions were used for stock option grants in each
year:
  
Risk-free interest rate 3.01% 2.85% 4.20%
Expected dividends yield 0.00% 0.00% 0.00%
Expected stock price volatility 45.62% 45.74% 37.85%
Expected life of options (in years) 5.23 4.38 4.65
In 2009, 2008, and 2007, the risk-free interest rate was determined by a yield curve of risk-free rates based on published
U.S. Treasury spot rates in effect at the time of grant and has a term equal to the expected life of the related options.
The dividend yield assumption is based on the Company’s history and expectations of dividend payouts.
The expected stock price volatility in all years represents an average of the implied volatility and the Company’s historical volatility.
The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical
trends.
The weighted-average grant-date fair value of options granted was $10.27, $9.82, and $11.20 in 2009, 2008, and 2007,
respectively. The intrinsic value of stock options is defined as the difference between the current market value and the grant price. The
total intrinsic value of stock options exercised was $4.4 million, $12.5 million, and $47.6 million in 2009, 2008, and 2007,
respectively.
As of September 27, 2009, there was approximately $7.9 million of total unrecognized compensation cost related to stock options
granted under our stock incentive plans. That cost is expected to be recognized over a weighted-average period of 1.51 years.
Performance-vested stock awards — Performance awards represent a right to receive a certain number of shares of common stock
upon achievement of performance goals at the end of a three-year period. The expected cost of the shares is based on the fair value of our
stock on the date of grant and is reflected over the performance period with a reduction for estimated forfeitures. It is our intent to settle
these awards with shares of common stock.
The following is a summary of performance-vested stock award activity for fiscal 2009:



 
Performance-vested stock awards outstanding at September 28, 2008 329,659 $ 24.30
Granted 117,840 15.56
Issued (55,230) 17.51
Cancelled (49,602) 17.63
Forfeited (18,692) 15.56
Performance-vested stock awards outstanding at September 27, 2009 323,975 $ 15.53
Vested and subject to release at September 27, 2009 59,026 $ 15.39
As of September 27, 2009, there was approximately $0.6 million of total unrecognized compensation cost related to performance-
vested stock awards. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total fair value of awards that
vested as of September 27, 2009 was $0.7 million. We expect to issue
F-28