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Table of Contents
Class B units that vested during fiscal 2015 , 2014 and 2013 was $667 , $167 , $450 , respectively. After giving effect to the Recapitalization Transaction, the
7,227 restricted Class B units that vested in connection with our IPO equate to 158,251 LLC Interests with a weighted-average grant date fair value of $4.22 .
Stock Options
In January 2015, we adopted the 2015 Incentive Award Plan (the "2015 Plan") under which we may grant up to 5,865,522 stock options and other types of equity-
based awards to employees, directors and officers. We do not use cash to settle any of our equity-based awards, and we issue new shares upon the exercise of stock
options. In connection with the IPO, we granted 2,622,281 stock options to our directors and certain employees. The stock options were granted with an exercise
price of $21.00 per share and vest equally over periods ranging from one to five years.
The fair value of stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average
assumptions:
2015
Expected term (years) (1) 7.5
Expected volatility (2) 35.1%
Risk-free interest rate (3) 1.6%
Dividend yield (4) —%
(1) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method.
(2) Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term.
(3) The risk-free rate rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term.
(4) We have assumed a dividend yield of zero as we have no plans to declare dividends in the foreseeable future.
A summary of stock option activity for fiscal 2015 is as follows:
Stock
Options
Weighted
Average
Exercise
Price
Aggregate
Intrinsic Value
Weighted
Average
Remaining
Contractual
Life (Years)
Outstanding at beginning of period —
$ —
Granted 2,622,281
21.00
Exercised —
—
Forfeited (47,300)
(21.00)
Expired —
—
Outstanding at end of period 2,574,981
$ 21.00
$ 48,822
9.1
Options exercisable at end of period —
$ —
$ —
—
Options expected to vest 2,469,372
$ 21.00
$ 46,819
9.1
The weighted-average grant date fair value of stock options granted during fiscal 2015 was $8.53 . No stock options were granted in fiscal 2014 and fiscal 2013. As
of December 30, 2015 , there were 2,574,981 stock options outstanding, of which none were exercisable. As of December 30, 2015 , total unrecognized
compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $17,937 , which is expected to be recognized over a
weighted-average period of 4.1 years.
Shake Shack Inc. Form 10-K | 92