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EL POLLO LOCO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1,739,367premiumoptionsremainoutstanding.Infiscal2014and2013,theCompanygranted229,048and267,619optionswithanexercisepriceequaltothefair
valueofthecommonstockonthedateofgrant.Ofthetotaloptionsgrantedinfiscal2014,2013and2012,50%areperformancebasedandvestaccordingto
whethercertainfinancialtargetsaremet,andtheremaining50%vestoverfourorthreeyears.AsofDecember30,2015,411,847oftheseoptionsremained
outstanding.Nooptionsweregrantedinfiscal2015.Theoptionsgenerallyexpire10yearsfromthedateofgrant.Changesinstockoptionsfortheyearsended
December30,2015andDecember31,2014,areasfollows:
Shares
Weighted-Average
Exercise Price
Outstanding—December25,2013 3,338,096  $ 5.31
Grants 229,048  15.55
Exercised (496,944)  4.20
Forfeited,cancelledorexpired (24)  5.31
Outstanding—December31,2014 3,070,176  6.25
Grants —  —
Exercised (863,247)  4.93
Forfeited,cancelledorexpired (55,715)  17.25
Outstanding—December30,2015 2,151,214  $ 6.50
VestedandexpectedtovestatDecember30,2015 2,146,360  $ 6.50
ExercisableatDecember30,2015 1,728,964  $ 6.12
StockoptionsatDecember30,2015aresummarizedasfollows:
Range of Exercise Prices
Number
Outstanding
Weighted-Average
Remaining
Contractual Life
(in Years)
Weighted-
Average Exercise
Price
Number
Exercisable
Weighted-Average
Exercise Price
$4.09   209,788   7.52  $ 4.09   109,438  $ 4.09
5.84   1,739,367   6.58   5.84   1,538,657   5.84
12.72   32,386   0.75   12.72   32,386   12.72
15.00   169,673   8.57   15.00   48,483   15.00
$4.09-$15.00   2,151,214   6.74  $ 6.50   1,728,964  $ 6.12
Theintrinsicvalueofoptionsoutstandingandoptionsexercisable,calculatedasthedifferencebetweenthemarketvalueasofDecember30,2015andtheexercise
price,are$13.7millionand$11.5million,respectively.Theintrinsicvalueofoptionsexercised,calculatedasthedifferencebetweenthemarketvalueonthedate
ofexerciseandtheexerciseprice,was$14.9million,$11.5millionand$0forfiscalyears2015,2014and2013,respectively.
Optionsareaccountedforasfollows:
Employee Options
TheCompanyexpensestheestimatedfairvalueofemployeestockoptionsandsimilarawardsbasedonthegrant-datefairvalueoftheaward.Foroptionsthatare
basedonaservicerequirement,thecostisrecognizedonastraight-linebasisovertheperiodduringwhichanemployeeisrequiredtoprovideservice,usuallythe
vestingperiod.Theoptionsgrantedinfiscal2012hadathreeyearvestingperiodwhiletheoptionsgrantedinfiscal2013and2014hadafouryearvestingperiod.
Foroptionsthatarebasedonaperformancerequirement,thecostisrecognizedovertheperiodwhichtheperformancecriteriarelate.TheCompanyhasauthorized
4,402,240sharesofcommonstockforissuanceinconnectionwithstockoptions.AsofDecember30,2015,882,594shareswereavailableforgrant.Inorderto
meetthefairvaluemeasurementobjective,theCompanyutilizestheBlack–Scholesoption-pricingmodeltovaluecompensationexpenseforshare-basedawards
andhasdevelopedestimatesofvariousinputsincludingforfeiturerate,expectedtermlife,expectedvolatility,andrisk-freeinterestrate.Theforfeiturerateisbased
onhistoricalratesandreducesthecompensationexpenserecognized.Theexpectedtermofoptionsgrantedisderivedfromthesimplifiedmethod.Therisk-free
interestrateisbasedontheimpliedyieldonaU.S.TreasurysecuritywithconstantmaturitywitharemainingtermequaltotheexpectedtermoftheCompany’s
employeestockoptions.Expectedvolatilityisbasedonthecomparativeindustryentitydata.TheCompanydoesnotanticipatepayinganycashdividendsinthe
foreseeablefutureandthereforeusesanexpecteddividendyieldofzeroforoptionvaluation.Thevolatility
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