SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Effective September 30, 2017, the Company adopted the 2017 Omnibus Equity Incentive Plan (the “Plan”). The Plan was amended on December 20, 2022 to increase the number of shares available for issuance under the Plan. The Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The Plan provides a maximum of 5,000,000 shares available for grant.

The Company has periodically issued stock options under the Plan. All of the stock options issued by the Company to date have included a vesting period of three years, with one-third of each grant vesting annually. The Company’s stock option activity for fiscal year ended December 31, 2023 can be summarized as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Stock options outstanding at December 25, 2022	2,748,906	$	10.06	8.3
Grants	795,723	$	5.80	9.4
Forfeited	(501,277)	$	8.48	8.6
Exercised	(153,180)	$	5.02	6.4
Stock options outstanding at December 31, 2023	2,890,172	$	9.39	7.8
Stock options exercisable at December 31, 2023	1,525,531	$	10.52	7.0

The range of assumptions used in the Black-Scholes valuation model to value to options granted in 2023 are as follows:


Expected dividend yield	7.9% - 10.4%
Expected volatility	81.0	%
Risk-free interest rate	3.4% - 4.9%
Expected term (in years)	6.0

During the year ended December 31, 2023, the Company granted 25,000 restricted shares of Class A common stock to an employee. One-third of the shares vested immediately and the remaining shares will vest over the next 2 years in equal installments at the anniversary date of grant. The grantees are entitled to any common dividends relating to the granted shares

during the vesting period. The granted shares were valued at $0.1 million as of the date of grant. The related compensation expense will be recognized over the vesting period.

The Company recognized share-based compensation expense in the amount of $3.6 million and $7.7 million during the fiscal years ended December 31, 2023 and December 25, 2022, respectively. As of December 31, 2023, there remains $2.3 million of share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period, subject to future forfeitures.