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Stock-Based Compensation
9 Months Ended
Sep. 29, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

(9) Stock-Based Compensation

Stock options

On May 16, 2019, the Company’s stockholders approved the Potbelly Corporation 2019 Long-Term Incentive Plan (the “2019 Plan”) and, in connection therewith, all equity awards made after that date were made under the 2019 Plan. On June 10, 2019, the Company registered 1,200,000 shares of its common stock reserved for issuance under the 2019 Plan. All remaining shares of common stock reserved for issuance under the previous Amended and Restated 2013 Long-Term Incentive Plan (the “2013 Plan”) are available for issuance under the 2019 Plan and no future awards will be made under the 2013 Plan. The fair value of stock options is determined using the Black-Scholes option pricing model. There were no stock options granted during the 13 weeks and 39 weeks ended September 29, 2019.

 

A summary of stock option activity for the 39 weeks ended September 29, 2019 is as follows:

 

Options

 

Shares

(Thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Aggregate

Intrinsic

Value

(Thousands)

 

 

Weighted

Average

Remaining

Term

(Years)

 

Outstanding—December 30, 2018

 

 

2,150

 

 

$

11.49

 

 

$

378

 

 

 

5.13

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

(22

)

 

 

7.93

 

 

 

 

 

 

 

 

 

Canceled

 

 

(260

)

 

 

13.15

 

 

 

 

 

 

 

 

 

Outstanding—September 29, 2019

 

 

1,868

 

 

$

11.30

 

 

$

 

 

 

4.78

 

Exercisable—September 29, 2019

 

 

1,489

 

 

$

11.03

 

 

$

 

 

 

3.89

 

 

Stock-based compensation related to stock options is measured at the grant date based on the calculated fair value of the award, and is recognized as expense over the requisite employee service period, which is generally the vesting period of the grant with a corresponding increase to additional paid-in capital. For the 13 weeks and 39 weeks ended September 29, 2019, the Company recognized stock-based compensation expense related to stock options of $0.1 million and $0.7 million, respectively. For the 13 weeks and 39 weeks ended September 30, 2018, the Company recognized stock-based compensation expense related to stock options of $0.1 million and $1.1 million, respectively. As of September 29, 2019, unrecognized stock-based compensation expense for stock options was $1.1 million, which will be recognized through fiscal year 2022. The Company records stock-based compensation expense within general and administrative expenses in the condensed consolidated statements of operations.

Restricted stock units

The Company awards restricted stock units (“RSUs”) to certain employees of the Company and certain non-employee members of its Board of Directors. The Board of Director grants have a vesting schedule of 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. The employee grants vest in one-third increments over a three-year period. For the 13 weeks and 39 weeks ended September 29, 2019, the Company recognized stock-based compensation expense related to RSUs of $0.3 million and $1.2 million, respectively. For the 13 weeks and 39 weeks ended September 30, 2018, the Company recognized stock-based compensation expense related to RSUs of $0.1 million and $1.4 million, respectively. As of September 29, 2019, unrecognized stock-based compensation expense for RSUs was $1.8 million, which will be recognized though fiscal year 2022.

A summary of RSU activity for the 39 weeks ended September 29, 2019 is as follows:

 

RSUs

 

Number of RSUs

(Thousands)

 

 

Weighted Average

Fair Value per Share

 

Non-vested as of December 30, 2018

 

 

247

 

 

$

11.99

 

Granted

 

 

331

 

 

 

6.80

 

Vested

 

 

(94

)

 

 

6.10

 

Canceled

 

 

(23

)

 

 

7.55

 

Non-vested as of September 29, 2019

 

 

461

 

 

$

8.48

 

 

Performance stock units

The Company awards performance share units (“PSUs”) to eligible employees; the PSUs are subject to service and performance vesting conditions. In March of 2019 the Company issued 188,414 PSUs with a grant date fair value of $8.46 per share. The PSUs will vest based on the Company’s achievement of certain targets related to adjusted EBITDA and same store sales goals. The PSUs will vest fully on the third anniversary of the grant date. The quantity of shares that will vest ranges from 0% to 200% of the targeted number of shares. If the defined minimum targets are not met, then no shares will vest. For the 13 weeks and 39 weeks ended September 29, 2019, the expense associated with the PSUs was not material.