El Pollo Loco 2016 Annual Report Download - page 79

EL POLLO LOCO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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factorwasdeterminedbasedonfourpublicly-tradedcompanieswhichareinthesamemarketcategoryastheCompany.Thepeercompanieswereselectedbased
onsimilarityofmarketcapitalization,sizeandcertainoperatingcharacteristics.Thecalculatedvolatilitywasestablishedbytakingthehistoricaldailyclosing
valuespriortograntdate,overaperiodequaltotheexpectedterm,foreachofthepeercompanies.
Theweighted-averageestimatedfairvalueofemployeestockoptionsgrantedduringtheyearendedDecember31,2014was$6.23pershareusingtheBlack–
Scholesmodelwiththefollowingweighted-averageassumptionsusedtovaluetheoptiongrants:expectedvolatilityof32.4%to41.0%,expectedlifeof5.75years,
risk-freeinterestrateof1.70%to1.72%,andexpecteddividendsof0%.
Theweighted-averageestimatedfairvalueofemployeestockoptionsgrantedduringtheyearendedDecember25,2013was$1.40pershareusingtheBlack–
Scholesmodelwiththefollowingweighted-averageassumptionsusedtovaluetheoptiongrants:expectedvolatilityof40.6%,expectedlifeof6.25years,risk-free
interestratesof1.15%to1.99%,andexpecteddividendsof0%.
DuringtheyearsendedDecember30,2015,December31,2014andDecember25,2013,theCompanyrecognizedshare-basedcompensationexpenseof$0.5
million,$1.1millionand$822,000,respectively.Theseexpenseswereincludedingeneralandadministrativeexpensesconsistentwiththesalaryexpenseforthe
relatedoptioneesintheaccompanyingconsolidatedstatementsofoperations.
AsofDecember30,2015,therewastotalunrecognizedcompensationexpenseof$0.9millionrelatedtounvestedstockoptionswhichtheCompanyexpectsto
recognizeoveraweightedaverageperiodof2.1years.
Restricted Stock
Infiscal2015,wegrantedthreeofourdirectorsrestrictedstockgrantsfor2,636shareseach.Infiscal2014,wegrantedtwoofourdirectorsrestrictedstockgrants
for3,333shareseach.Restrictedstockgrantswereequivalentto$50,000dividedbythestock’svalueonthedateofgrant,whichinfiscal2015wasdeemedtobe
theprecedingday’sclosingpriceandinfiscal2014wasdeemedtobeourpublicofferingprice.Thesegrantsvestbasedoncontinuedserviceoverthreeyears.We
basetheamountofunearnedcompensationrecordedonthemarketvalueofthesharesonthedateofissuance.Infiscal2015and2014,theCompanyrecognized
share-basedcompensationexpenseof$98,000and$32,000,respectively.Thisexpensewasincludedingeneralandadministrativeexpensesintheaccompanying
consolidatedstatementsofoperations.AsofDecember30,2015,therewastotalunrecognizedcompensationexpenseof$250,000relatedtounvestedrestricted
shares,whichtheCompanyexpectstorecognizeoveraweighted-averageperiodof2.1years.
ChangesinrestrictedsharesfortheyearsendedDecember30,2015andDecember31,2014,areasfollows:
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 Shares
Weighted-Average
Fair Value
UnvestedsharesatDecember25,2013   —  $ —
Granted   6,666   34.56
Released   —   —
Forfeited,cancelled,orexpired   —   —
UnvestedsharesatDecember31,2014   6,666   34.56
Granted   7,908   18.97
Released   (2,222)   34.56
Forfeited,cancelled,orexpired   —   —
UnvestedsharesatDecember30,2015   12,352  $ 24.58
      
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13. NET INCOME (LOSS) PER SHARE
Basicnetincome(loss)pershareiscalculatedusingtheweighted-averagenumberofsharesofcommonstockoutstandingduringtheyearsendedDecember30,
2015,December31,2014,andDecember25,2013.Dilutednetincome(loss)pershareiscalculatedusingtheweighted-averagenumberofsharesofcommon
stockoutstandingandpotentiallydilutiveduringtheperiod,usingthetreasurystockmethod.
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