Equity Compensation

12 Months Ended

Dec. 29, 2024

Share-Based Payment Arrangement [Abstract]

Equity Compensation

20. Equity Compensation

We award time-based restricted stock, performance-based restricted stock units, and stock options from time to time under the Papa John’s International, Inc. 2018 Omnibus Incentive Plan. There were approximately 2.0 million shares of common stock authorized for issuance and remaining available under the 2018 Omnibus Incentive Plan as of December 29, 2024, which includes 5.9 million shares transferred from the Papa John’s International 2011 Omnibus Incentive Plan.

We recorded stock-based employee compensation expense of $9.6 million in 2024, $17.9 million in 2023 and $18.4 million in 2022. At December 29, 2024, there was $17.4 million of unrecognized compensation cost related to unvested awards, of which the Company expects to recognize $10.9 million in 2025, $4.7 million in 2026, $1.4 million in 2027 and $0.4 million in 2028.

Stock Options

Options exercised, which were issued from authorized shares, included 23,000 shares in 2024, 43,000 shares in 2023 and 82,000 shares in 2022. The total intrinsic value of the options exercised during 2024, 2023 and 2022 was $0.5 million, $1.2 million and $3.4 million, respectively.

There were no options granted in 2024, 2023 or 2022. Information pertaining to option activity during 2024 is as follows (number of options and aggregate intrinsic value in thousands):

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2023	191	$	57.35
Exercised	(23)	46.64
Cancelled	(5)	61.01
Outstanding at December 29, 2024	163	$	58.70	2.61	$	—
Exercisable at December 29, 2024	163	$	58.70	2.61	$	—

Restricted Stock

We granted shares of restricted stock that are time-based and generally vest in equal installments over three years (301,000 in 2024, 190,000 in 2023 and 165,000 in 2022). Upon vesting, the shares are issued from treasury stock. These restricted

shares are intended to focus participants on our long-range objectives, while at the same time serving as a retention mechanism. We consider time-based restricted stock awards to be participating securities because holders of such nonvested awards receive non-forfeitable dividends. We declared dividends totaling $0.6 million ($1.84 per share) in 2024, $0.5 million ($1.76 per share) in 2023 and $0.5 million ($1.54 per share) in 2022 to holders of time-based restricted stock.

We granted 22,000, 14,000 and 69,000 restricted stock units that are time-based and vest over a period of one to three years in 2024, 2023 and 2022, respectively. Upon vesting, the units are issued from treasury stock. Total dividends declared for these awards were insignificant to the results of our operations.

The fair value of time-based restricted stock units is based on the market price of the Company’s shares on the grant date.

Additionally, we granted stock-settled performance-based restricted stock units to executive management (250,000 units in 2024, 80,000 units in 2023, and 64,000 units in 2022).

Historically, the performance-based restricted stock units required the achievement of certain performance and market factors, which consist of the Company’s Total Shareholder Return (“TSR”) relative to a predetermined peer group. Starting in 2024, awards granted include a cumulative system-wide sales metric as measured over the fiscal years 2024, 2025, and 2026 in addition to the TSR metric. Therefore, these awards are comprised of two distinct components each representing 50% of the total award that each have a separate grant date fair value. The grant-date fair value of the TSR metric was determined using the Monte Carlo simulation model and compensation expense is recognized over the vesting period regardless of the metric being achieved. The grant-date fair value of the cumulative system-wide sales metric was set at the grant date stock price and compensation expense is recognized over the vesting period based on the Company’s expectation of achieving the performance metric. Additional one-time performance-based restricted stock units with a four year cliff vesting period were also granted in 2024, which require the satisfaction of applicable stock price hurdles. The grant-date fair value of these one-time awards were determined through the use of a Monte Carlo simulation model.

The following is a summary of the significant assumptions used in estimating the fair value of the performance-based restricted stock units granted in 2024, 2023 and 2022:

Assumptions:	2024	2023		2022
Risk-free interest rate	3.6 - 4.4%	4.5	%	1.5	%
Expected volatility	34.0 - 34.8%	38.6	%	45.0	%

The risk-free interest rate for the periods within the contractual life of the performance-based restricted stock unit is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility was estimated using the Company’s historical share price volatility for a period similar to the expected life of the performance-based restricted stock unit.

The performance-based restricted stock units granted generally vest over three years (cliff vest) and are expensed over the vesting period. The weighted average grant-date fair value of performance-based restricted stock units granted during 2024, 2023 and 2022 was $37.87, $88.43 and $113.90, respectively.

Information pertaining to time-based restricted stock and performance-based restricted stock units during 2024 is as follows (shares in thousands):

	Shares	Weighted Average Grant-Date Fair Value
Total as of December 31, 2023	483	$	93.27
Granted	574	51.11
Forfeited	(225)	86.29
Vested	(185)	93.43
Total as of December 29, 2024	647	$	58.05