Stock-Based Compensation

2015 Omnibus Incentive Plan

In connection with the approval of the Business Combination, the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, other stock-based awards, other cash-based compensation and performance awards. Under the 2015 Plan, there are 3,300,000 shares of common stock reserved and authorized. At January 1, 2019, there were 900,976 shares of common stock available for grant under the 2015 Plan.

Stock-Based Compensation Expense

The total compensation expense related to the 2015 Plan was $6.1 million for the fifty-two weeks ended January 1, 2019, $4.9 million for the fifty-two weeks ended January 2, 2018 and $4.1 million for the fifty-three weeks ended January 3, 2017.

Restricted Stock Awards

During the fifty-two weeks ended January 1, 2019, 594,619 shares of restricted stock were granted to certain directors, officers and employees of the Company under the 2015 Plan. These restricted stock awards vest on a straight-line basis in equal annual installments over four years from the grant date.

A summary of outstanding and unvested restricted stock activity as of January 1, 2019 and changes during the period from January 2, 2018 through January 1, 2019 are as follows:



	Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 2, 2018	1,088,910		$	11.92
Granted	594,619		13.88
Vested	(425,873	)	11.85
Forfeited	(23,125	)	13.09
Nonvested at January 1, 2019	1,234,531		$	12.87

During the fifty-two weeks ended January 1, 2019 and January 2, 2018, the Company made payments of $2.4 million and $1.9 million, respectively, related to tax withholding obligations for the vesting of restricted stock awards in exchange for 168,484 and 140,209 shares withheld, respectively. As of January 1, 2019, there was $10.3 million of unrecognized compensation expense, net of estimated forfeitures, related to restricted stock, which is expected to be recognized over a weighted-average period of 2.5 years. The weighted average grant date fair value of restricted stock awards granted was $13.88, $13.64 and $9.30 during the fifty-two weeks ended January 1, 2019, fifty-two weeks ended January 2, 2018 and fifty-three weeks ended January 3, 2017, respectively. The total fair value of awards that became fully vested during the fifty-two weeks ended January 1, 2019, fifty-two weeks ended January 2, 2018 and fifty-three weeks ended January 3, 2017 was $5.9 million, $5.4 million and $2.4 million, respectively.

Stock Options

During the fifty-two weeks ended January 1, 2019, 106,000 stock options were granted to certain employees of the Company under the 2015 Plan. The stock options vest on a straight-line basis in equal annual installments over four years from the grant date.

A summary of stock option activity as of January 1, 2019 and changes during the period from January 2, 2018 through January 1, 2019 are as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at January 2, 2018	417,000		$	11.04	5.5	$	641
Granted	106,000		14.04
Exercised	(21,750	)	10.22
Forfeited / Expired	(48,000	)	11.43
Options outstanding at January 1, 2019	453,250		$	11.74	5.0	$	77
Options exercisable at January 1, 2019	187,996		$	10.57	4.3	$	38
Options exercisable and expected to vest at January 1, 2019	425,954		$	11.65	4.9	$	74

The aggregated intrinsic value in the table above is the amount by which the current market price of the Company's stock exceeds the exercise price on January 1, 2019 and January 2, 2018, respectively.

The following table reflects the weighted-average assumptions used in the Black-Scholes option-pricing model to value the stock options granted in the fifty-two weeks ended January 1, 2019, the fifty-two weeks ended January 2, 2018 and the fifty-three weeks ended January 3, 2017:



	52 Weeks Ended January 1, 2019			52 Weeks Ended January 2, 2018			53 Weeks Ended January 3, 2017
Expected volatility	36.29		%	36.09		%	37.64		%
Risk-free rate of return	2.71		%	1.86		%	1.12		%
Expected life (in years)	4.74			4.75			5.50
Dividend yield	—			—			—
Fair value per share at date of grant	$	4.92		$	4.63		$	3.31

Since the Company does not have a substantial history of traded common stock activity, expected volatility was based on historical data from selected peer public company restaurants. The risk-free rate is based on published U.S. Treasury rates in effect at the time of grant with a similar duration of the expected life of the options. The expected life of options granted is derived from the average of the contractual term of the option and the vesting periods. The Company has not paid any dividends to date, therefore, the Company used an expected dividend yield of zero for option valuation purposes.

As of January 1, 2019, there was $0.8 million of total unrecognized compensation expense, net of estimated forfeitures, related to stock options grants which is expected to be recognized over a weighted-average remaining period of 2.4 years. The total intrinsic value of stock options exercised was $51,000, $25,000 and $2,000 during the fifty-two weeks ended January 1, 2019, fifty-two weeks ended January 2, 2018 and fifty-three weeks ended January 3, 2017, respectively.