Papa Johns 2010 Annual Report Download - page 93

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86
17. Equity Compensation (continued)
Information pertaining to option activity during 2010 is as follows (number of options and aggregate
intrinsic value in thousands):
Weighted
Weighted Average
Number Average Remaining Aggregate
of Exercise Contractual Intrinsic
Options Price Term Value
Outstanding at December 27, 2009 2,136 $25.08
Granted 445 26.95
Exercised (356) 17.97
Cancelled (294) 25.29
Outstanding at December 26, 2010
1,931
$26.80
2.73
$4,175
Vested or expected to vest at December 26, 2010 1,885 $26.85 2.80 $4,045
Exercisable at December 26, 2010 1,013 $28.67 1.92 $1,484
The following is a summary of the significant assumptions used in estimating the fair value of options
granted in 2010, 2009 and 2008:
2010 2009 2008
Assumptions (weighted average):
Risk-free interest rate 1.8% 1.3% 2.7%
Expected dividend yield 0.0% 0.0% 0.0%
Expected volatility 0.43 0.41 0.30
Expected term (in years) 3.7 3.7 3.8
The risk-free interest rate for the periods within the contractual life of an option is based on the U.S.
Treasury yield curve in effect at the time of grant. The estimated volatility is based on the historical
volatility of our stock and other factors. The expected term of options represents the period of time that
options granted are expected to be outstanding.
The weighted average grant-date fair values of options granted during 2010, 2009 and 2008 was $9.13,
$7.26 and $7.07, respectively. The Company granted 445,000, 997,000 and 618,000 options in 2010,
2009 and 2008, respectively.
Restricted Stock
In 2010 and 2009, we granted shares of restricted stock that were 100% time-based. In 2008, we granted
shares of restricted stock that were approximately 60% performance-based and 40% time-based. These
restricted shares are intended to focus participants on our long-range objectives, while at the same time
serving as a retention mechanism. Shares awarded in 2010 typically have a three-year graded or a three-
year cliff vesting schedule, shares awarded in 2009 typically have a three-year graded vesting schedule
and shares awarded in 2008 have a three-year cliff vesting schedule. The performance-based shares vest
based upon the Company’s achievement of compounded annual growth rate (CAGR) of consolidated
corporate operating income, as defined. The fair value of the restricted stock is based on the market price
of the Company’s shares on the grant date.