Jack In The Box 2012 Annual Report Download - page 67

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The risk-free interest rate was determined by a yield curve of risk-free rates based on published U.S. Treasury spot rates in effect at the time of grant and has
a term equal to the expected life of the related options. The dividend yield assumption is based on the Company’s history and expectations of dividend
payouts. The expected stock price volatility in all years represents an average of the implied volatility and the Company’s historical volatility. The expected life
of the options represents the period of time the options are expected to be outstanding and is based on historical trends.
As of September 30, 2012, there was approximately $2.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock options
grants which is expected to be recognized over a weighted-average period of 0.87 years. The total intrinsic value of stock options exercised was $6.0 million,
$4.2 million and $4.0 million in 2012, 2011 and 2010, respectively.
Performance share awards — Performance share awards, granted in the form of stock units, represent a right to receive a certain number of shares of
common stock based on the achievement of specified performance goals and continued employment during the vesting period. Performance share awards
issued to executives vest at the end of a three-year period and vested amounts may range from 0% to as high as 150% of targeted amounts depending on the
achievement of performance measures at the end of a three-year period. Performance share awards issued to other members of management vest at the end of a
three-year period with vested amounts ranging from 0% to 100% depending on the achievement of performance measures at the end of the first year of the three
year period. The expected cost of the shares is based on the fair value of our stock on the date of grant and is reflected over the vesting period with a reduction
for estimated forfeitures. These awards may be settled in cash or shares of common stock at the election of the Company on the date of grant. It is our intent to
settle these awards with shares of common stock.
The following is a summary of performance share award activity for fiscal 2012:





Performance share awards outstanding at October 2, 2011
380,187
$19.98
Granted
234,258
19.62
Issued
(48,105)
15.93
Forfeited
(45,465)
20.52
Canceled
(146,816)
21.05
Performance share awards outstanding at September 30, 2012
374,059
$19.79
Vested and subject to release at September 30, 2012
37,272
$17.86
As of September 30, 2012, there was approximately $3.6 million of total unrecognized compensation cost related to performance-vested stock awards which is
expected to be recognized over a weighted-average period of 1.8 years. The weighted-average grant date fair value of awards granted was $19.62, $21.74 and
$19.19 in 2012, 2011 and 2010, respectively. The total fair value of awards that vested during 2012, 2011 and 2010 was $0.5 million, $0.6 million and
$0.6 million, respectively.
Nonvested stock awards — We previously issued nonvested stock awards (“RSAs”) to certain executives under our share ownership guidelines. Effective
fiscal 2009, we no longer issue these awards which have been replaced by grants of nonvested stock units. Our RSAs vest, subject to the discretion of our
Board of Directors in certain circumstances, upon retirement or termination based upon years of service. These awards are amortized to compensation expense
over the estimated vesting period based upon the fair value of our common stock on the award date.
During fiscal 2012, there was no RSA activity. The following is detail regarding RSAs outstanding at September 30, 2012:





Nonvested stock awards outstanding
394,117
$14.81
Vested
151,878
$13.61
As of September 30, 2012, there was approximately $1.7 million of total unrecognized compensation cost related to RSAs, which is expected to be recognized
over a weighted-average period of 4.2 years. In 2012, 2011 and 2010, the total fair value of RSAs that vested in each year was $0.3 million, $0.2 million and
$0.2 million, respectively.
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