The Company’s current equity incentive plan, named the Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”), benefits certain of the Company’s employees and members of the Company’s Board of Directors. As of January 1, 2023, the maximum number of shares that may be granted under the 2004 Equity Incentive Plan is 15,600,000 shares of voting common stock of which 2,406,835 shares were authorized for grant but have not been granted.

The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated statements of income based on the estimated fair value of the awards and is amortized over the requisite service period of each award. All non-cash compensation expense amounts are recorded in general and administrative expense. The Company accounts for forfeitures as they occur.

The Company recorded total non-cash compensation expense of $28.7 million, $28.7 million and $24.2 million in 2022, 2021 and 2020, respectively. The Company recorded a deferred tax benefit related to non-cash compensation expense of $4.9 million, $4.3 million and $3.6 million in 2022, 2021 and 2020, respectively.

As of January 1, 2023, the number of stock options granted and outstanding under the 2004 Equity Incentive Plan was 672,142 options. Stock options granted in fiscal 2013 through fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over four years from the date of grant, generally subject to the holder’s continued employment. Stock options granted in fiscal 2021 and 2022 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over three years from the date of grant, generally subject to the holder’s continued employment. Additionally, all stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age requirements.

Stock option activity related to the 2004 Equity Incentive Plan is summarized as follows:


	Common Stock Options
	Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Life		Aggregate Intrinsic Value
						(Years)		(In thousands)
Stock options at December 29, 2019		1,546,411		$	94.21
Stock options granted		52,730			413.80
Stock options forfeited		(9,792	)		268.94
Stock options exercised		(756,683	)		40.93
Stock options at January 3, 2021		832,666		$	160.82
Stock options granted		42,742			367.79
Stock options forfeited		(11,990	)		333.61
Stock options exercised		(199,301	)		98.76
Stock options at January 2, 2022		664,117		$	189.64
Stock options granted		49,716			393.44
Stock options forfeited or expired		(8,712	)		375.23
Stock options exercised		(32,979	)		100.44
Stock options at January 1, 2023		672,142		$	206.69		4.6	$	99,869
Exercisable at January 1, 2023		584,860		$	181.20		4.0	$	99,098

The total intrinsic value of stock options exercised was $8.8 million, $77.4 million and $249.7 million in 2022, 2021 and 2020, respectively. Cash received from the exercise of stock options was $3.3 million, $19.7 million and $31.0 million in 2022, 2021 and 2020, respectively. The tax benefit realized from stock options exercised was $1.9 million, $17.6 million and $59.1 million in 2022, 2021 and 2020, respectively.

The Company recorded total non-cash equity-based compensation expense of $4.2 million, $5.7 million and $6.3 million in 2022, 2021 and 2020, respectively, related to stock option awards. As of January 1, 2023, there was $5.8 million of total unrecognized compensation cost related to unvested stock options granted under the 2004 Equity Incentive Plan which generally will be recognized on a straight-line basis over the related vesting period. This unrecognized compensation cost is expected to be recognized over a weighted average period of 1.9 years.

Management estimated the fair value of each option grant made during 2022, 2021 and 2020 as of the date of the grant using the Black-Scholes option pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The expected life is based on several factors, including, among other things, the vesting term and contractual term as well as historical experience. The expected volatility is based principally on the historical volatility of the Company’s share price. Option valuation models require the input of highly subjective assumptions and changes in assumptions can significantly affect the estimated fair value of the Company’s stock options.

The weighted average assumptions used in estimating the fair value of each stock option granted in 2022, 2021 and 2020 using the Black-Scholes option pricing method are presented in the following table:


	2022			2021			2020
Risk-free interest rate		2.0	%		1.0	%		0.3	%
Expected life	5.25 years			5.25 years			5.5 years
Expected volatility		31.0	%		30.0	%		30.0	%
Expected dividend yield		1.1	%		1.0	%		0.8	%
Weighted average fair value per stock option	$	109.05		$	93.46		$	105.76

The Company granted 3,792 shares, 3,292 shares and 3,630 shares of restricted stock in 2022, 2021 and 2020, respectively, to members of its Board of Directors. Restricted stock awards granted to members of the Company’s Board of Directors were granted with a fair value equal to the market price of the Company’s common stock on the grant date and generally vest one year from the date of grant, generally subject to the director’s continued service. These awards also contain provisions for accelerated vesting upon the retirement eligibility of holders that have achieved specified service and age requirements. The Company recorded total non-cash equity-based compensation expense of $1.4 million, $1.4 million and $1.2 million in 2022, 2021 and 2020, respectively, related to these restricted stock awards. As of January 1, 2023, there was $0.2 million of total unrecognized compensation cost related to these restricted stock grants.

The Company granted 81,739 and 49,963 restricted stock units in 2022 and 2021, respectively, to certain employees of the Company. These restricted stock units were granted with a fair value equal to the market price of the Company’s common stock on the grant date. These restricted stock units are generally separated into three tranches and have time-based vesting conditions with the last tranche of the award vesting three years from the grant date, generally subject to the holder’s continued employment. These awards generally also contain provisions for accelerated vesting upon the retirement eligibility of holders that have achieved specified service and age requirements. The Company recorded total non-cash equity-based compensation expense of $11.1 million and $5.4 million in 2022 and 2021, respectively, related to these restricted stock units. As of January 1, 2023, there was $22.5 million of total unrecognized compensation cost related to these restricted stock units.

The Company granted 8,921 and 6,546 performance-based restricted stock units in 2022 and 2021, respectively, to certain employees of the Company. These restricted stock units were granted with a fair value equal to the market price of the Company’s common stock on the grant date, adjusted for the estimated fair value of the market condition included in the award. These performance-based restricted stock units may vest three years from the date of grant, generally subject to the holder’s continued employment, and have time and performance-based vesting conditions which provide for potential payouts of the target award amount between zero percent and two hundred percent, based on the Company’s three-year cumulative achievement as compared to the specified target performance conditions. The performance-based restricted stock units also include provisions for a potential modifier (upward or downward) based on the Company’s cumulative three-year common stock total shareholder return performance relative to that of a pre-established peer group. These awards also contain provisions for accelerated vesting of the time-based vesting condition upon the retirement eligibility of holders that have achieved specified service and age requirements. Management estimated the fair value of each performance-based restricted stock unit using a Monte-Carlo simulation pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The Monte-Carlo simulation also includes assumptions for expected volatility based principally on the historical volatility of the Company’s share price, as well as the correlation of the Company’s share price as compared to that of the pre-established peer group. The Company recorded total non-cash equity-based compensation expense of $3.4 million and $1.4 million in 2022 and 2021, respectively, related to these performance-based restricted stock units. As of January 1, 2023, there was $5.5 million of total estimated unrecognized compensation cost based on current attainment projections related to these performance-based restricted stock units.

The Company granted 39,150 shares of performance-based restricted stock in 2020 to certain employees of the Company. These performance-based restricted stock awards are separated into four tranches and have time-based and performance-based vesting conditions with the last tranche vesting four years from the issuance date, generally subject to the holder’s continued employment. These awards also contain provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age requirements. These awards are considered granted for accounting purposes when the performance target is established, which is generally in the fourth quarter of each year. The Company recorded total non-cash equity-based compensation expense of $8.0 million, $12.7 million and $14.6 million in 2022, 2021 and 2020, respectively, related to these awards. As of January 1, 2023, there was an estimated $4.2 million of total unrecognized compensation cost related to performance-based restricted stock.

In 2018, the Company granted 28,570 shares of restricted stock to two executives of the Company. These awards had a fair value equal to the market price of the Company’s common stock on the grant date and vested in 2022, four years from the date of the grant. The Company recorded total non-cash equity-based compensation expense of $0.6 million in 2022, and $2.1 million in each of 2021 and 2020 related to these restricted stock awards.

Activity related to restricted stock awards and units and performance-based restricted stock awards and units awarded under the 2004 Equity Incentive Plan is summarized as follows in the table below. The unrecognized compensation cost related to restricted stock awards and units and performance-based restricted stock awards and units is expected to be recognized over a weighted average period of 2.1 years.


	Shares			Weighted Average Grant Date Fair Value (1)
Nonvested at December 29, 2019		171,070		$	251.29
Shares granted		42,780			398.08
Shares forfeited		(8,345	)		273.70
Shares vested		(58,743	)		221.58
Nonvested at January 3, 2021		146,762		$	304.69
Shares granted		59,801			382.79
Shares forfeited		(12,924	)		340.94
Shares vested		(48,378	)		287.41
Nonvested at January 2, 2022		145,261		$	339.37
Shares granted		94,452			389.49
Shares forfeited		(18,563	)		375.36
Shares vested		(75,506	)		312.90
Nonvested at January 1, 2023		145,644		$	381.00