Jack In The Box 2006 Annual Report Download - page 75

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JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
F-25
10. SHARE-BASED EMPLOYEE COMPENSATION (continued)
The weighted-average grant-date fair value of options granted was $20.42, $13.71, and $9.66 in 2006, 2005, and
2004, respectively. The intrinsic value of stock options is defined as the difference between the current market
value and the grant price. The total intrinsic value of stock options exercised was $33,718, $25,507, and $7,533
in 2006, 2005, and 2004, respectively.
In 2006, we expensed $7,270 in connection with the Company’ s stock option awards. As of October 1, 2006,
there was approximately $12,057 of total unrecognized compensation cost related to stock options granted under
the Company’ s stock incentive plans. That cost is expected to be recognized over a weighted-average period of
2.05 years.
Performance-vested stock awards — The Company began granting performance-vested stock awards to certain
employees in fiscal year 2005. Performance awards represent a right to receive a certain number of shares of
common stock upon achievement of performance goals at the end of a three-year period. The first three-year
performance period ends September 30, 2007. The expected cost of the shares is being reflected over the
performance period and is reduced for estimated forfeitures. The expected cost for all awards granted is based on
the fair value of the Company’ s stock on the date of grant, reduced for estimated forfeitures, as it is the
Company’ s intent to settle these awards with shares of common stock.
The following is a summary of performance-vested stock award activity for fiscal year 2006:
Shares
Weighted-
average
grant date
fair value
Performance-vested stock awards outstanding at October 2, 2005 ....................................... 156,371 $ 32.36
Granted.............................................................................................................................. 73,416 52.56
Forfeited ............................................................................................................................ (12,374) 32.19
Performance-vested stock awards outstanding at October 1, 2006 ....................................... 217,413 39.19
Vested at October 1, 2006 ..................................................................................................... 629 29.91
In 2006 and 2005, the expense recognized in connection with these awards was $1,210 and $838, respectively.
As of October 1, 2006, there was approximately $6,471 of total unrecognized compensation cost related to
performance-vested stock awards. That cost is expected to be recognized over a weighted-average period of 1.92
years. To date, no shares of common stock have been issued in connection with these awards.
Nonvested stock awards — The Company generally issues nonvested stock awards to certain executives under
the Company’ s share ownership guidelines. These nonvested stock awards vest upon retirement or termination
based upon years of service as provided in the award agreement. These awards are amortized to compensation
expense over the estimated vesting period based upon the fair value of the Company’ s common stock on the
award date.