On March 5, 2014, our Board of Directors approved and adopted the 2014 Omnibus Equity and Incentive Compensation Plan (“Omnibus Plan”). The Omnibus Plan was approved by our shareholders on May 21, 2014. The Omnibus Plan authorizes the compensation committee of the Board of Directors to provide equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents and other awards for the purpose of providing our officers, key employees, and non-employee directors’ incentives and rewards for performance. The Omnibus Plan replaced the Flowers Foods’ 2001 Equity and Performance Incentive Plan, as amended and restated as of April 1, 2009 (“EPIP”), the Stock Appreciation Rights Plan, and the Annual Executive Bonus Plan. All outstanding equity awards that were made under the EPIP will continue to be governed by the EPIP; however, all equity awards granted after May 21, 2014 are governed by the Omnibus Plan. No additional awards will be issued under the EPIP. Awards granted under the Omnibus Plan are limited to the authorized amount of 8,000,000 shares.

The following is a summary of stock options, restricted stock, and deferred stock outstanding under the plans described above. Information relating to the company’s stock appreciation rights, which were issued under a separate stock appreciation right plan, is also described below.

Since 2012, certain key employees have been granted performance-contingent restricted stock under the EPIP and the Omnibus Plan in the form of TSR Shares. Awards granted prior to Fiscal 2019 vested approximately two years from the date of grant (after the filing of the company’s Annual Report on Form 10-K) while the awards granted since the beginning of Fiscal 2019 vest approximately three years

from the date of grant. These shares become non-forfeitable if, and to the extent that, on that date the vesting conditions are satisfied. The total shareholder return (“TSR”) is the percent change in the company’s stock price over the measurement period plus the dividends paid to shareholders. The performance payout is calculated at the end of each of the last four quarters (averaged) in the measurement period. Once the TSR is determined for the company (“Company TSR”), it is compared to the TSR of our food company peers (“Peer Group TSR”). The Company TSR compared to the Peer Group TSR will determine the payout as set forth below (the “TSR Modifier”):

For performance between the levels described above, the degree of vesting is interpolated on a linear basis. The table below presents the payout percentage for vested TSR awards:

The TSR shares vest immediately if the grantee dies or becomes disabled. However, if the grantee retires at age 65 (or age 55 with at least 10 years of service with the company) or later, on the normal vesting date the grantee will receive a pro-rated number of shares based upon the retirement date and measured at the actual performance for the entire performance period. In addition, if the company undergoes a change in control, the TSR shares will immediately vest at the target level, provided that if 12 months of the performance period have been completed, vesting will be determined based on Company TSR as of the date of the change in control without application of four-quarter averaging. During the vesting period, the grantee has none of the rights of a shareholder. Dividends declared during the vesting period will accrue and will be paid at vesting on the shares that ultimately vest. The fair value estimate was determined using a Monte Carlo simulation model, which utilizes multiple input variables to estimate the probability of the company achieving the market condition discussed above. Inputs into the model included the following for the company and comparator companies: (i) TSR from the beginning of the performance cycle through the measurement date; (ii) volatility; (iii) risk-free interest rates; and (iv) the correlation of the comparator companies’ TSR. The inputs are based on historical capital market data. The 2020 TSR award is expected to payout at 148%.

On May 23, 2019, the company’s CEO received an award of TSR Shares that brings his total grant equal to the CEO’s target award (“promotion award”). This grant is measured under the same guidelines as the December 30, 2018 grant of TSR Shares described above.

The following performance-contingent TSR Shares have been granted under the Omnibus Plan and have service period remaining (amounts in thousands, except price data):


Grant Date	Shares Granted		Vesting Date	Fair Value per Share
12/29/2019		331	2/28/2023	$	25.00
4/19/2020		8	2/28/2023	$	23.14
07/12/2020		2	2/28/2023	$	21.97
10/4/2020		5	2/28/2023	$	24.63
01/03/2021		365	3/1/2024	$	26.75
10/10/2021		18	3/1/2024	$	24.47
1/2/2022		331	3/1/2025	$	31.97
4/24/2022		16	3/1/2025	$	27.38
07/17/2022		3	3/1/2025	$	27.06
10/9/2022		3	3/1/2025	$	24.55

As of December 31, 2022, there was $10.9 million of total unrecognized compensation cost related to nonvested TSR Shares granted under the Omnibus Plan. That cost is expected to be recognized over a weighted-average period of 1.79 years.

Since 2012, certain key employees have been granted performance-contingent restricted stock under the EPIP and the Omnibus Plan in the form of ROIC Shares. Awards granted prior to Fiscal 2019 vested approximately two years from the date of grant (after the filing of the company’s Annual Report on Form 10-K) while the awards granted since the beginning of Fiscal 2019 vest approximately three years from the date of grant. These shares become non-forfeitable if, and to the extent that, on that date the vesting conditions are satisfied. Return on Invested Capital is calculated by dividing our profit, as defined, by the invested capital (“ROIC”). Generally, the performance condition requires the company’s average ROIC to exceed its average weighted cost of capital (“WACC”) by between 1.75 to 4.75 percentage points (the “ROI Target”) over the three fiscal year performance period. If the lowest ROI Target is not met, the awards are forfeited. The shares can be earned based on a range from 0% to 125% of target as defined below (the “ROIC Modifier”):

For performance between the levels described above, the degree of vesting is interpolated on a linear basis. The table below presents the payout percentage for vested ROIC awards:

The ROIC Shares vest immediately if the grantee dies or becomes disabled. However, if the grantee retires at age 65 (or age 55 with at least 10 years of service with the company) or later, on the normal vesting date the grantee will receive a pro-rated number of shares based upon the retirement date and actual performance for the entire performance period. In addition, if the company undergoes a change in control, the ROIC Shares will immediately vest at the target level. During the vesting period, the grantee has none of the rights of a shareholder. Dividends declared during the vesting period will accrue and will be paid at vesting on the shares that ultimately vest. The fair value of this type of award is equal to the stock price on the grant date. Since these awards have a performance condition feature the expense associated with these awards may change depending on the expected ROI Target attained at each reporting period. The 2020 award is being expensed at our current estimated payout percentage of 125% of the ROI target, and the 2021 and 2022 awards are being expensed at 100% of the ROI target.

On May 23, 2019, the company’s CEO received a promotion award of ROIC Shares. This grant is measured under the same guidelines as the December 30, 2018 grant of ROIC Shares described above.


Grant Date	Shares Granted		Vesting Date	Fair Value per Share
12/29/2019		331	2/28/2023	$	21.74
4/19/2020		8	2/28/2023	$	23.14
07/12/2020		2	2/28/2023	$	21.97
10/4/2020		5	2/28/2023	$	24.63
01/03/2021		365	3/1/2024	$	22.63
10/10/2021		18	3/1/2024	$	24.47
1/2/2022		331	3/1/2025	$	27.47
4/24/2022		16	3/1/2025	$	27.38
07/17/2022		3	3/1/2025	$	27.06
10/9/2022		3	3/1/2025	$	24.55

As of December 31, 2022, there was $9.5 million of total unrecognized compensation cost related to nonvested ROIC Shares granted under the Omnibus Plan. This cost is expected to be recognized over a weighted-average period of 1.79 years.

The table below presents the TSR Modifier share adjustment, ROIC Modifier share adjustment, accumulated dividends on vested shares, and the tax windfall/shortfall at vesting of the performance-contingent restricted stock awards (amounts in thousands except for share data):


Award granted	Fiscal year vested	TSR Modifier increase shares		ROIC Modifier increase shares		Dividends at vesting (thousands)		Tax benefit		Fair value at vesting
2019	2022		109,729		74,154	$	1,843	$	2,196	$	22,143

A summary of the status of all of the company’s nonvested shares for performance-contingent restricted stock (including the TSR Shares and the ROIC Shares) for Fiscal 2022, 2021, and 2020 is set forth below (amounts in thousands, except price data):


	Fiscal 2022					Fiscal 2021					Fiscal 2020
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value
Balance at beginning of year		1,972		$	22.89		1,264		$	21.85		662		$	20.16
Initial grant		706		$	29.41		766		$	24.66		693		$	23.37
Vested		(778	)	$	20.25		—		$	—		—		$	—
Grant increase for achieving the ROIC modifier		74		$	29.41		—		$	—		—		$	—
Grant increase for achieving the TSR modifier		110		$	29.41		—		$	—		—		$	—
Forfeitures		(75	)	$	25.48		(58	)	$	23.27		(91	)	$	21.26
Balance at end of year		2,009		$	25.83		1,972		$	22.89		1,264		$	21.85

As of December 31, 2022, there was $20.4 million of total unrecognized compensation cost related to nonvested restricted stock granted under the Omnibus Plan. This cost is expected to be recognized over a weighted-average period of 1.79 years.

Certain key employees have been granted time-based restricted stock units (“TBRSU Shares”). These awards vest on the fifth of January each year in equal installments over a three-year period beginning in Fiscal 2020. Dividends earned on shares are held by the company during the vesting period and paid in cash when the awards vest and shares are distributed.

On May 23, 2019, the company’s CEO was granted TBRSU Shares of approximately $1.0 million pursuant to the Omnibus Plan. This award will vest 100% on the fourth anniversary of the date of grant provided the CEO remains employed by the company during this period. Vesting will also occur in the event of the CEO’s death or disability, but not his retirement if prior to the fourth anniversary of the grant date. Dividends will accrue on the award and will be paid to the CEO on the vesting date for all shares that vest. There were 43,330 shares issued for this award at a fair value of $23.08 per share.


Grant Date	Shares Granted		Vesting Date	Fair Value per Share
5/23/2019		43	5/23/2023	$	23.08
12/29/2019		220	Equally over 3 years	$	21.74
1/03/2021		256	Equally over 3 years	$	22.63
10/10/2021		6	Equally over 3 years	$	24.79
01/02/2022		205	Equally over 3 years	$	27.47

The TBRSU Shares activity for Fiscal 2022, 2021 and Fiscal 2020 is set forth below (amounts in thousands, except price data):


	Fiscal 2022					Fiscal 2021					Fiscal 2020
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value
Nonvested shares at beginning of year		492		$	21.87		387		$	20.64		270		$	19.06
Granted		205		$	27.47		262		$	22.68		220		$	21.74
Vested		(215	)	$	21.03		(137	)	$	19.98		(74	)	$	18.29
Forfeitures		(20	)	$	24.39		(20	)	$	21.56		(29	)	$	20.14
Nonvested shares at end of year		462		$	24.62		492		$	21.87		387		$	20.64

Non-employee directors may convert their annual board retainers into deferred stock equal in value to 100% of the cash payments directors would otherwise receive and the vesting period is a one-year period to match the period of time that cash would have been received if no conversion existed. Accumulated dividends are paid upon delivery of the shares. During Fiscal 2022, non-employee directors elected to receive, and were granted, an aggregate grant of 3,640 common shares for board retainer deferrals pursuant to the Omnibus Plan which vested during the fourth quarter of Fiscal 2022.

Non-employee directors also receive annual grants of deferred stock. This deferred stock vests over one year from the grant date. During Fiscal 2021, non-employee directors were granted an aggregate of 66,550 shares, of which 18,150 shares were deferred, for their annual grant pursuant to the Omnibus Plan that vested during Fiscal 2022. During the second quarter of Fiscal 2022, non-employee directors received 58,300 shares for their annual grant pursuant to the Omnibus Plan. Additionally, during Fiscal 2022, non-employee directors received 16,260 shares of previously deferred award grants. The deferred stock will be distributed to the grantee at a time designated by the grantee at the date of grant.

The deferred and restricted stock activity for Fiscal 2022, 2021, and 2020 is set forth below (amounts in thousands, except price data):


	Fiscal 2022					Fiscal 2021					Fiscal 2020
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Fair Value
Nonvested shares at beginning of year		67		$	24.00		52		$	23.21		49		$	22.31
Granted		62		$	27.37		69		$	23.96		54		$	23.15
Vested		(67	)	$	24.00		(54	)	$	23.19		(51	)	$	22.28
Nonvested shares at end of year		62		$	27.37		67		$	24.00		52		$	23.21
Vested and deferred shares at end of year (1)		212					208					194

(1)

The vested and deferred shares at the end of the year include 82,779 shares, 89,949 shares, and 97,509 shares granted and deferred under the EPIP for Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively.

The vested and deferred shares at the end of the year include 128,978 shares, 118,360 shares, and 96,924 shares granted and deferred under the Omnibus Plan for Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively.

As of December 31, 2022, there was $0.6 million of total unrecognized compensation cost related to deferred and restricted stock awards. This cost is expected to be recognized over a weighted-average period of 0.40 years. The intrinsic value of deferred stock awards that vested during Fiscal 2022 was $1.7 million. There was an immaterial tax windfall on the exercise of deferred share awards during fiscal 2022.

The following table summarizes the company’s stock-based compensation expense, all of which was recognized in selling, distribution, and administrative expense, for Fiscal 2022, 2021, and 2020 (amounts in thousands):


	Fiscal 2022		Fiscal 2021		Fiscal 2020
Performance-contingent restricted stock awards	$	18,943	$	15,061	$	8,656
TBRSU shares		5,184		4,747		3,039
Deferred stock awards		1,695		1,535		1,160
Total stock-based compensation expense	$	25,822	$	21,343	$	12,855