Buffalo Wild Wings 2013 Annual Report Download - page 27

52
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal
2013, 2012, and 2011, interest and penalties of $2, ($5), and ($18), respectively, were included in income tax expense. As of
December 29, 2013, and December 30, 2012, interest and penalties related to unrecognized tax benefits totaled $71 and $68,
respectively. Included in the balance at December 29, 2013, December 30, 2012, and December 25, 2011, are unrecognized
tax benefits of $545, $509, and $476, respectively, which if recognized, would affect the annual effective tax rate. The
difference between these amounts and the amount reflected in the reconciliation above relates to the deferred U.S. federal
income tax benefit on unrecognized tax benefits related to U.S. state income taxes.
Our income tax returns are subject to examination in both the U.S., by federal, state and local jurisdictions, and in
Canada. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations for years prior to fiscal
2010. The Canadian income tax returns are subject to review for fiscal years 2010 through 2013.
Our federal income tax return for fiscal year 2011 is currently under exam by the IRS, which resulted from a carryback
claim to 2010 that requires Joint Committee of Taxation approval. We also have various state tax jurisdictions under exam.
We regularly assess and reevaluate tax uncertainties by considering changes in current tax law, recent court decisions, and
changes in the business. Although we expect our exams will settle in the next twelve months, we cannot reasonably estimate
the potential change to our unrecognized tax benefits at this time.
(10) Stockholders’ Equity
(a) Stock Options
We have 5.4 million shares of common stock reserved for issuance under the Equity Incentive Plan (Plan) for our
employees, officers, and directors. The exercise price for stock options issued under the Plan is to be not less than the fair
market value on the date of grant with respect to incentive and nonqualified stock options. Incentive stock options become
exercisable in four equal installments from the date of the grant and have a contractual life of seven to ten years.
Nonqualified stock options issued pursuant to the Plan have varying vesting periods from immediately to four years and have
a contractual life of seven to ten years. Incentive stock options may be granted under this plan until March 12, 2022. We
issue new shares of common stock upon exercise of stock options. Option activity is summarized for the year ended
December 29, 2013 as follows:
Number
of shares
Weighted
average
exercise price
Average
remaining
contractual
life (years)
Aggregate
Intrinsic Value
Outstanding, December 30, 2012 151,897 $ 47.97 3.9 $ 4,232
Granted 39,498 87.53
Exercised (25,391) 26.57
Cancelled (2,395) 59.68
Outstanding, December 29, 2013 163,609 $ 60.67 3.9 $ 13,974
Exercisable, December 29, 2013 113,752 50.42 3.2 10,882
The aggregate intrinsic value in the table above is before applicable income taxes, based on our closing stock price of
$146.08 as of the last business day of the year ended December 29, 2013, which would have been received by the optionees
had all options been exercised on that date. As of December 29, 2013, total unrecognized stock-based compensation expense
related to nonvested stock options was approximately $1,590, which is expected to be recognized over a weighted average
period of approximately 2.4 years. During 2013, 2012, and 2011, the total intrinsic value of stock options exercised was
$2,159, $2,887, and $1,700, respectively. During 2013, 2012, and 2011, the total fair value of options vested was $1,028,
$852, and $751, respectively. During 2013, 2012, and 2011, the weighted average grant date fair value of options granted
was $37.09, $43.97, and $26.07, respectively.
53
The following table summarizes our stock options outstanding at December 29, 2013:
Options outstanding Options exercisable
Range Shares
Average
remaining
contractual
life (years)
Weighted
average
exercise
price Shares
Weighted
average
exercise
price
$14.05 – 30.87 35,113 1.6 $ 28.65 35,113 $ 28.65
31.00 – 48.35 35,685 2.8 44.29 35,685 44.29
51.42 – 53.75 28,384 4.0 53.72 20,648 53.73
87.53 – 94.42 64,427 5.6 90.26 22,306 91.41
163,609
113,752
The Plan has 1,335,277 shares available for grant as of December 29, 2013.
(b) Restricted Stock Units
Restricted stock units are granted annually under the Plan at the discretion of the Compensation Committee of the
Board of Directors.
In 2013, 2012, and 2011, we granted restricted stock units subject to three-year cliff vesting and a cumulative three-
year earnings target. The number of units which vest at the end of the three-year period is based on performance against the
target. These restricted stock units are subject to forfeiture if they have not vested at the end of the three-year period. Stock-
based compensation is recognized for the number of units expected to vest at the end of the period and is expensed beginning
on the grant date through the end of the performance period.
For each grant, restricted stock units meeting the performance criteria will vest as of the end of our fiscal year. The
distribution of vested restricted stock units as common stock typically occurs in March of the following year. The common
stock is issued to participants net of the number of shares needed for the required minimum employee withholding taxes. We
issue new shares of common stock upon the disbursement of restricted stock units. Restricted stock units are contingently
issuable shares, and the activity for fiscal 2013 is as follows:
Number
of shares
Weighted
average
grant date
fair value
Outstanding, December 30, 2012 282,093 $ 70.64
Granted 163,066 87.49
Vested (147,876) 54.99
Cancelled (18,163) 73.85
Outstanding, December 29, 2013 279,120 $ 88.57
As of December 29, 2013, the stock-based compensation expense related to nonvested awards not yet recognized was
$12,372, which is expected to be recognized over a weighted average period of 1.8 years. During fiscal years 2013 and 2012
the total grant date fair value of shares vested was $8,132 and $7,585, respectively. The weighted average grant date fair
value of restricted stock units granted during 2013, 2012, and 2011 was $87.49, $92.71, and $53.94, respectively. During
2013 and 2012, we recognized $9,899 and $6,710, respectively, of stock-based compensation expense related to restricted
stock units.
(c) Employee Stock Purchase Plan
We have reserved 600,000 shares of common stock for issuance under the ESPP. The ESPP is available to substantially
all employees subject to employment eligibility requirements. Participants may purchase our common stock at 85% of the
beginning or ending closing price, whichever is lower, for each six-month period ending in May and November. During
2013, 2012, and 2011, we issued 26,612, 26,742, and 30,127 shares, respectively, of common stock. As of December 29,
2013, we had 221,308 shares available for future issuance under the ESPP.