Stockholder's Deficit

12 Months Ended

Dec. 26, 2021

Stockholders' Deficit

Stockholders' Deficit

6. Stockholders’ Deficit

Shares Authorized and Outstanding

The Company has authorized 5.0 million shares of preferred stock (of which none were issued or outstanding at December 26, 2021 or December 27, 2020, respectively) and 100.0 million shares of common stock as of December 26, 2021 and December 27, 2020, respectively.  The Company’s outstanding shares of common stock, net of repurchased common stock, were 35.8 million shares at December 26, 2021 and 32.5 million shares at December 27, 2020.

On May 11, 2021, the Company entered into a Share Repurchase Agreement with certain funds affiliated with, or managed by, Starboard Value LP (collectively, “Starboard”), pursuant to which (i) the Company repurchased from Starboard 78,387 shares of the Series B Convertible Preferred Stock, par value $0.01 per share, of the Company (“Series B Preferred Stock”) and (ii) Starboard converted the remaining 171,613 shares of Series B Preferred Stock that it owned into 3,458,360 shares of the Company’s common stock pursuant to the terms of the Certificate of Designation of the Series B Preferred Stock.  On June 3, 2021, the Company entered into agreements with certain franchisee investors to repurchase 1,000 shares of the outstanding Series B Preferred Stock and convert the remaining 1,530 shares of Series B Preferred Stock into 30,769 shares of common stock.  The Company paid Starboard and the franchisee investors aggregate one-time cash payments of $188.6 million for the repurchase and conversion of all of the outstanding shares of Series B Preferred Stock.  The excess of the cash payment over the carrying value of the respective Series B Preferred Stock redeemed resulted in $109.9 million of dividends on redemption of Series B Preferred Stock in the Consolidated Statement of Operations, which reduced net income attributable to common stockholders and also reduced diluted earnings per share by $3.10 for the year ended December 26, 2021.

On August 3, 2021, the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware to eliminate the Series B Preferred Stock.  Effective upon filing, the Certificate of Elimination eliminated from the Company’s Amended and Restated Certificate of Incorporation all matters set forth in the Certificate of Designation with respect to the Series B Preferred Stock.  The shares that were designated to such series were returned to the status of authorized but unissued shares of preferred stock, par value $0.01 per share, of the Company, without designation as to series.  As a result of the repurchase and conversion, there were no shares of Series B Preferred Stock authorized or outstanding at December 26, 2021 compared to 260,000 and 252,530 shares of Series B Preferred

Stock authorized and outstanding, respectively, at December 27, 2020.  The Series B Preferred Stock was classified as temporary equity on the Consolidated Balance Sheet as of December 27, 2020.  

The following table summarizes changes to our Series B Preferred Stock (in thousands):

Balance at December 29, 2019	$	251,133
Tax deduction on issuance costs		702
Accretion		66
Balance at December 27, 2020	$	251,901
Accretion		629
Redemption		(252,530)
Balance at December 26, 2021	$	—

Share Repurchase Program

On October 28, 2021, our Board of Directors approved a share repurchase program with an indefinite duration for up to $425.0 million of the Company’s common stock.  This share repurchase program operated alongside our previous $75.0 million share repurchase authorization, which began on November 4, 2020 and expired on December 26, 2021.  

The following table summarizes our repurchase activity for the years ended December 26, 2021 and December 27, 2020, respectively (none in 2019):

							Maximum Dollar
	Total		Average		Aggregate		Value of Shares
	Number		Price		Cost of		that May Yet Be
(in thousands, except average price per share)	of Shares		Paid per		Shares		Purchased Under the
Year Ended	Purchased		Share		Purchased		Plans or Programs
December 26, 2021	594	$	121.96	$	72,499	$	424,800
December 27, 2020	32	$	83.90	$	2,701	$	72,299

Subsequent to year-end, we acquired an additional 109,000 shares at an aggregate cost of $13.3 million.  Approximately $411.5 million remained available under the Company’s share repurchase program as of February 17, 2022.

The timing and volume of share repurchases under the Company’s share repurchase programs may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements. Repurchases under the programs may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate. Repurchases under the Company’s share repurchase programs may be commenced or suspended from time to time at the Company’s discretion without prior notice.  Funding for the share repurchase programs will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents.  

Dividends

The Company recorded dividends of approximately $46.0 million for the year ended December 26, 2021 consisting of the following:

● $40.4 million paid to common stockholders ($1.15 per share);

● $3.0 million in preferred dividends on the Series B Preferred Stock (3.6% of the investment per annum);

● $1.5 million of common stock deemed dividend distributions in conjunction with the repurchase and conversion of the Series B Preferred Stock; and

● $1.1 million in common stock “pass-through” dividends paid to Series B Preferred Stockholders on an as-converted basis ($0.45 per share).

The Company paid aggregate common stock dividends of $29.4 million and $28.6 million in 2020 and 2019, respectively.  Additionally, the Company paid common stock “pass-through” dividends on an as-converted basis to Series B Preferred Stockholders of $4.6 million and $4.3 million, and preferred dividends on the Series B Preferred Stock of $9.1 million and $5.7 million, in 2020 and 2019, respectively.

On January 27, 2022, our Board of Directors declared a first quarter dividend of $0.35 per share of common stock, representing an approximate $12.7 million aggregate dividend that was paid on February 18, 2022 to common stockholders of record as of the close of business on February 7, 2022.  The declaration and payment of any future dividends will be at the discretion of our Board of Directors.