Cracker Barrel 2011 Annual Report Download - page 40

e liabilities under these leases are recognized on the
straight-line basis over the shorter of the useful life, with a
maximum of 35 years, or the related lease life. e Company
uses a lease life that generally begins on the date that the
Company becomes legally obligated under the lease, including
the rent holiday periods, and generally extends through
certain renewal periods that can be exercised at the Company’s
option, for which at the inception of the lease, it is reasonably
assured that the Company will exercise those renewal options.
is lease period is consistent with the period over which
leasehold improvements are amortized. e same lease life is
used for reporting future minimum lease commitments as is
used for the straight-line rent calculation.
e Company also leases its advertising billboards which
are recorded as operating leases.
Advertising – e Company expenses the costs of
producing advertising the first time the advertising takes
place. Other advertising costs are expensed as incurred.
Advertising expense was $48,889, $45,239 and $42,371 for
2011, 2010 and 2009, respectively.
Share-based compensation – Share-based compensation
is recorded in general and administrative expenses in the
Consolidated Statements of Income. Share-based compensa-
tion expense is measured at the grant date based on the
fair value of the award and is recognized as expense over the
requisite service period or to the date on which retirement
eligibility is achieved, if shorter. If a share-based compensa-
tion award is modified aer the grant date, incremental
compensation expense is recognized in an amount equal to the
excess of the fair value of the modified award over the fair
value of the original award immediately before the modification.
Incremental compensation expense for vested awards is
recognized immediately. For unvested awards, the sum of the
incremental compensation expense and the remaining
unrecognized compensation expense for the original award
on the modification date is recognized over the modified
service period. e Company’s policy is to recognize
compensation expense for awards with only service conditions
and a graded vesting schedule on a straight-line basis over
the requisite service period for the entire award. Additionally,
the Company’s policy is to issue new shares of common
stock to satisfy exercises of share-based compensation awards.
At July 29, 2011, the Company has one active compensation
plan for employees and non-employee directors which
authorizes the granting of stock options, nonvested stock and
other types of awards consistent with the purpose of the
plan; the Company also has stock options and nonvested stock
outstanding under four other compensation plans in which
no future grants may be made (see Note 11). At July 29, 2011,
the number of shares authorized for future issuance under
the Company’s active plan is 1,420,843.
Stock options are granted with an exercise price equal to
the market price of the Company’s stock on the grant date;
those option awards generally vest at a cumulative rate of 33%
per year beginning on the first anniversary of the grant date
and expire ten years from the date of grant.
e fair value of each option award is estimated on the
date of grant using a binomial laice-based option valuation
model, which incorporates ranges of assumptions for
inputs as shown in the following table. e assumptions are
as follows:
r ĉF FYQFDUFE WPMBUJMJUZ JT B CMFOE PG JNQMJFE WPMBUJMJUZ CBTFE
on market-traded options on the Company’s common
stock and historical volatility of the Company’s stock over
the contractual life of the options.
r ĉF $PNQBOZ VTFT IJTUPSJDBM EBUB UP FTUJNBUF PQUJPO FYFSDJTF
and employee termination behavior within the valuation
model; separate groups of employees that have similar
historical exercise behavior are considered separately for
valuation purposes. e expected life of options granted
is derived from the output of the option valuation model
and represents the period of time the options are expected
to be outstanding.
r ĉF SJTLGSFF JOUFSFTU SBUF JT CBTFE PO UIF 64 5SFBTVSZ
yield curve in effect at the time of grant for periods within
the contractual life of the option.
r ĉF FYQFDUFE EJWJEFOE ZJFME JT CBTFE PO UIF $PNQBOZT
current dividend yield as the best estimate of projected
dividend yield for periods within the contractual life of
the option.
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