Jack In The Box 2015 Annual Report Download - page 75

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We terminated our employee stock purchase plan (“ESPP”) on February 26, 2015. The ESPP plan was available for all eligible employees to purchase shares
of common stock at 95% of the fair market value on the date of purchase. Employees could authorize us to withhold up to 15% of their base compensation
during any offering period, subject to certain limitations.
Compensation expense — The components of share-based compensation expense recognized in each year are as follows (in thousands):
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Stock options
$ 2,782
$ 2,660
$ 5,075
Performance share awards
4,229
3,923
2,311
Nonvested stock awards
156
310
430
Nonvested stock units
4,989
3,247
3,356
Deferred compensation for directors
264
218
220
Total share-based compensation expense
$ 12,420
$ 10,358
$ 11,392
Stock options — Prior to fiscal 2007, options granted had contractual terms of 10 or 11 years and employee options generally vested over a four-year period.
Beginning fiscal 2007, option grants have contractual terms of seven years and employee options vest over a three-year period. Options may vest sooner for
employees meeting certain age and years of service thresholds. All option grants provide for an option exercise price equal to the closing market value of the
common stock on the date of grant.
The following is a summary of stock option activity for fiscal 2015:
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Options outstanding at September 28, 2014
1,189,570
$26.74
Granted
123,042
$73.53
Exercised
(708,096)
$21.29
Forfeited
(10,168)
$38.74
Options outstanding at September 27, 2015
594,348
$42.72
4.66
$ 21,984
Options exercisable at September 27, 2015
285,820
$30.34
3.88
$ 14,112
Options exercisable and expected to vest at September 27, 2015
594,348
$42.72
4.66
$ 21,984
The aggregate intrinsic value in the table above is the amount by which the current market price of our stock on September 27, 2015 exceeds the exercise
price.
We use a valuation model to determine the fair value of options granted which requires the input of highly subjective assumptions, including the expected
volatility of the stock price. The following table presents the weighted-average assumptions used for stock option grants in each fiscal year, along with the
related weighted-average grant date fair value:
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Risk-free interest rate
1.78%
2.05%
1.09%
Expected dividends yield
1.09%
—%
—%
Expected stock price volatility
32.09%
39.18%
42.24%
Expected life of options (in years)
6.00
6.50
6.50
Weighted-average grant date fair value
$ 22.04
$ 20.04
$ 11.84
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 at the grant date. We declared our first dividend on May 9, 2014. The expected stock price volatility in all years represents 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 27, 2015, there was approximately $2.8 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 1.3 years. The total intrinsic value of stock options exercised was $41.8
million, $42.4 million and $25.9 million in 2015, 2014 and 2013, respectively.
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