Stock-Based Compensation

6 Months Ended

Jul. 01, 2025

9. Stock-Based Compensation

We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors.

On March 26, 2025, our Board approved an amendment to our The Cheesecake Factory Incorporated Stock Incentive Plan (the “Plan”) to increase the number of shares of common stock authorized for issuance under the Plan by 6.0 million shares to 13.15 million shares from 7.15 million shares (the “Plan Amendment”). This Plan Amendment was approved by our stockholders at our 2025 annual meeting held on May 22, 2025.

The following table presents information related to stock-based compensation, net of forfeitures (in thousands):


	Thirteen		Thirteen		Twenty-Six		Twenty-Six
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	July 1, 2025		July 2, 2024		July 1, 2025		July 2, 2024

Labor expenses	$	2,542	$	2,566	$	4,979	$	5,061
Other operating costs and expenses		101		78		200		156
General and administrative expenses		4,546		4,182		9,591		9,258
Total stock-based compensation		7,189		6,826		14,770		14,475
Income tax benefit		1,759		1,706		3,629		3,614
Total stock-based compensation, net of taxes	$	5,430	$	5,120	$	11,141	$	10,861

Capitalized stock-based compensation ⁽¹⁾	$	59	$	56	$	113	$	105

(1)

It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets.

Stock Options

We did not issue any stock options during the second quarters of fiscal 2025 and fiscal 2024. Stock option activity during the twenty-six weeks ended July 1, 2025 was as follows:


				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual	Aggregate
	Shares	Exercise Price		Term	Intrinsic Value ⁽¹⁾
	(In thousands)	(Per share)		(In years)	(In thousands)
Outstanding at December 31, 2024	1,167	$	45.77	3.1	$	4,163.6
Granted	—		—
Exercised	(505)		45.56
Forfeited or cancelled	(154)		61.46
Outstanding at July 1, 2025	508	$	41.22	4.5	$	11,425.8

Exercisable at July 1, 2025	419	$	42.25	3.7	$	8,997.1

(1)

Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal period-end date.

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 1, 2025 was $2.8 million and $4.3 million, respectively. There were no options exercised during the thirteen and twenty-six weeks ended July 2, 2024. As July 1, 2025, total unrecognized stock-based compensation expense related to unvested stock options was $1.1 million, which we expect to recognize over a weighted-average period of approximately 3.4 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended July 1, 2025 was as follows:


		Weighted-
		Average
	Shares	Fair Value
	(In thousands)	(Per share)
Outstanding at December 31, 2024	3,239	$	38.02
Granted	628		51.89
Vested	(614)		39.69
Forfeited	(69)		38.12
Outstanding at July 1, 2025	3,184	$	40.44

Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted average fair value for restricted shares and restricted share units issued during the second quarter of fiscal 2025 and 2024 was $52.35 and $37.25, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended July 1, 2025 was $2.0 million and $24.4 million, respectively. The fair value of shares that vested during the thirteen and twenty-six weeks ended July 2, 2024 was $4.7 million and $22.5 million, respectively. As of July 1, 2025, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $72.6 million, which we expect to recognize over a weighted-average period of approximately 3.0 years.

CHEESECAKE FACTORY INC 10-Q