Einstein Bros 2013 Annual Report Download - page 58

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Equity Plan for Non-Employee Directors
On December 19, 2003, the Board adopted the Stock Option Plan for Independent Directors. On May 3, 2011, the Board and the Company’ s
stockholders approved the amendment and restatement of this plan. Amongst other changes, the name of the plan was changed to the Equity Plan
for Non-Employee Directors (the “Equity Plan”). The Equity Plan provides for the granting of nonqualified stock options, restricted stock and
restricted stock units to independent directors. The Board may amend, suspend, or terminate the Equity Plan at any time, provided, however, that
no such action may adversely affect any outstanding option without the option holder’ s consent. Options are granted with an exercise price equal to
the fair market value on the date of grant, become exercisable six months after the grant date and are exercisable for five years from the date of
grant unless earlier terminated. The Equity Plan provides for the issuance of up to 500,000 shares of common stock to eligible participants. As of
December 31, 2013, there were 103,224 shares remaining available for issuance under the Equity Plan.
Stock Appreciation Rights Plan
On February 17, 2007, the Board adopted the Stock Appreciation Rights Plan (the “SAR Plan”). The SAR Plan provides for the granting of
stock appreciation rights to employees, excluding executive officers. The SAR plan has no set expiration date. The Board has the authority to
amend, modify or terminate the SAR Plan, subject to any required approval by stockholders under applicable law or upon advice of counsel,
provided that, with limited exception, no modification will adversely affect outstanding rights. The value of a share from which appreciation is
determined is 100% of the fair market value of a share on the date of grant and will be paid in stock when they are exercised by the employee. The
rights expire upon the earlier of the termination date of the SAR Plan or termination of employment, typically vest over a two-year service period
and have a contractual life of five years.
The SAR Plan provides for 150,000 shares to be issued pursuant to stock appreciation rights. As of December 31, 2013, there were 121,678
shares remaining under this authorization.
Stock Based Compensation Cost
Stock-based compensation for fiscal years 2011, 2012 and 2013 was $2.3 million, $2.4 million and $1.8 million, respectively, and is included
in general and administrative expenses.
The fair value of stock options and SARs granted during fiscal years 2011, 2012 and 2013 was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions by grant year:
Fiscal Year Ended
January 3, 2012 January 1, 2013 December 31, 2013
Expected life of options and SARs from date of grant 2.75 - 6.0 years 2.75 - 6.0 years 3.25 - 6.0 years
Risk-free interest rate 0.38% - 2.61% 0.35% - 1.16% 0.34% - 1.68%
Volatility 42 - 44% 35% - 42% 29% - 32%
Assumed dividend yield 3.31% 2.83% - 4.10% 2.85% - 3.59%
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Stock Option and SARs Activity
The weighted-average fair value of stock options and SARs issued and the total intrinsic value of options and SARs exercised were:
2011 2012 2013
(In thousands, except share prices)
Weighted-average grant date fair value $ 4.69 $ 4.03 $ 2.82
Total intrinsic value of options exercised $ 1,374 $ 1,528 $ 3,122
As a result of the Company paying a special cash dividend of $4.00 per share on December 27, 2012 to common stockholders of record on
December 17, 2012 (see Note 10), the Company reduced the exercise price of all stock options and SARs outstanding on January 8, 2013 by a
factor of 1.3 and increased the number of stock options and SARs outstanding by an equivalent factor of 1.3. This adjustment, which was based on
the closing price of the Company’ s stock on the day before and the day after December 27, 2012, was made in accordance with the anti-dilution
provisions in the Company’ s Omnibus Plan and the Company’ s SARs Plan and did not result in any additional compensation expense.