Brinker International (EAT)

Stock Options

        Stock options are intended to motivate participants to increase our stock price as they only have value if the market price of our stock increases over the closing price of our common stock on the date of grant. The actual compensation realized from stock options is dependent on both the increase in our stock price and each participant's decision on when to exercise. Our stock options vest 25% per year over four years and have a term of eight years. At the end of fiscal 2009, 99% of our outstanding stock options were underwater reflecting the decline in our stock price during fiscal 2009 relative to previous years.

Stock Options

        We grant stock options because they allow our officers to feel like owners of the company and since the exercise price is based on the closing price of our common stock on the date of grant, they only have value to the grantee when the market price of our common stock increases. All of our officers are eligible for annual grants of incentive and non-qualified stock options. Our stock options vest 25% per year over four years and have a term of eight years.

34

(a)    Stock Options

        Expense related to stock options issued to eligible employees under the Plans is recognized using a graded-vesting schedule over the vesting period. For options granted after the adoption of SFAS 123R on June 30, 2005, expense is recognized to the date on which retirement eligibility is achieved, if shorter than the vesting period. Stock options generally vest over a period of 1 to 4 years and have contractual terms to exercise of 8 to 10 years. Full or partial vesting of awards may occur upon a change in control (as defined in the Plans), or upon an employee's death, disability or involuntary termination.

F-30

BRINKER INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    STOCK-BASED COMPENSATION (Continued)

        Transactions during fiscal 2008 were as follows (in thousands, except option prices):

        At June 25, 2008, unrecognized compensation expense related to stock options totaled approximately $2.1 million and will be recognized over a weighted average period of 2.6 years. The intrinsic value of options exercised totaled approximately $1.5 million, $38.8 million and $23.3 million during fiscal 2008, 2007 and 2006, respectively.

(a)    Stock Options

        Expense related to stock options issued to eligible employees under the Plans is recognized using a graded-vesting schedule over the
vesting period. For options granted after the adoption of SFAS 123R on June 30, 2005, expense is recognized to the date on which retirement eligibility is achieved, if shorter than the
vesting period. Stock options generally vest over a period of 1
to 4 years and have contractual terms to exercise of 8 to 10 years. Full or partial vesting of awards may occur upon a change in control (as defined in the Plans), or upon an employee's
death, disability or involuntary termination.

F-30

BRINKER INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    STOCK-BASED COMPENSATION (Continued)

        Transactions
during fiscal 2008 were as follows (in thousands, except option prices):

        At
June 25, 2008, unrecognized compensation expense related to stock options totaled approximately $2.1 million and will be recognized over a weighted average period of
2.6 years. The intrinsic value of options exercised totaled approximately $1.5 million, $38.8 million and $23.3 million during fiscal 2008, 2007 and 2006, respectively.

Stock Options

        All of our officers are eligible for annual grants of incentive and non-qualified stock options. The exercise price of stock options is based on the closing price of our common stock on the date of grant. As a result, grantees do not receive a benefit from stock options unless and until the market price of our common stock increases. Our stock options vest 25% per year over four years and have a term of eight years.

(a)   Stock Options

        Expense related to stock options issued to eligible employees under the Plans is recognized using a graded-vesting schedule over the vesting period. For options granted after the adoption of SFAS 123R on June 30, 2005, expense is recognized to the date on which retirement eligibility is achieved, if shorter than the vesting period. Stock options generally vest over a period of 1 to 4 years and have contractual terms to exercise of 8 to 10 years.

        Transactions during fiscal 2007 were as follows (in thousands, except option prices):

        At June 27, 2007, unrecognized compensation expense related to stock options totaled approximately $3.9 million and will be recognized over a weighted average period of 2.2 years. The intrinsic value of options exercised totaled approximately $38.8 million, $23.3 million and $44.5 million during fiscal 2007, 2006 and 2005, respectively.

Stock Options

The 1999 Plan is designed to permit the granting of non-qualified options to purchase Common Stock to directors of the Company who are not employees of the Company or its subsidiaries and to certain consultants and advisors.  The administration of the 1999 Plan will be provided by the Governance and Nominating Committee of the Board of Directors which has the authority to determine the terms pursuant to which options are granted under the 1999 Plan.  The Governance and Nominating Committee determines the number of options to be granted to eligible participants, determines the exercise price, vesting period, and option period at the time the option is granted, and administers and interprets the 1999 Plan.  The 1999 Plan provides that no option shall be granted with a time period for exercise greater than 10 years from the date of grant. 

The exercise price of options is payable in cash or the holder of an option may request approval from the Governance and Nominating Committee to exercise an option or a portion thereof by tendering shares of Common Stock at the fair market value per share on the date of exercise in lieu of cash payment of the exercise price.  The 1999 Plan requires that the exercise price of an option will not be less than 100% of the fair market value of the Common Stock on the date of the grant of the option.