PAPA JOHNS INTERNATIONAL INCPZZA
PAPA JOHNS INTERNATIONAL INC Stock Compensation Disclosure
19. 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 6.0 million shares of common stock authorized for issuance and remaining available under the 2018 Omnibus Incentive Plan as of December 28, 2025.
We recorded stock-based employee compensation expense of $15.0 million in 2025, $9.6 million in 2024 and $17.9 million in 2023. At December 28, 2025, there was $17.5 million of unrecognized compensation cost related to unvested awards, of which the Company expects to recognize $11.1 million in 2026, $5.5 million in 2027, $0.9 million in 2028.
Stock Options
Options exercised, which were issued from authorized shares, included 9,000 shares in 2025, 23,000 shares in 2024 and 43,000 shares in 2023. The total intrinsic value of the options exercised during 2025, 2024 and 2023 was $0.1 million, $0.5 million and $1.2 million, respectively.
There were no options granted in 2025, 2024 or 2023. Information pertaining to option activity during 2025 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 29, 2024 | 163 | $ | 58.70 | |||||||||||||||||||||||
| Exercised | (9) | 43.71 | ||||||||||||||||||||||||
| Cancelled | (40) | 63.20 | ||||||||||||||||||||||||
| Outstanding at December 28, 2025 | 114 | $ | 58.41 | 1.8 | $ | — | ||||||||||||||||||||
| Exercisable at December 28, 2025 | 114 | $ | 58.41 | 1.8 | $ | — | ||||||||||||||||||||
Restricted Stock
We granted shares of restricted stock that are time-based and generally vest in equal installments over three years (383,000 in 2025, 301,000 in 2024 and 190,000 in 2023). 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 $0.9 million ($1.84 per share) in 2025, $0.6 million ($1.84 per share) in 2024 and $0.5 million ($1.76 per share) in 2023 to holders of time-based restricted stock.
We also granted 25,000, 22,000 and 14,000 restricted stock units that are time-based and vest over a period of one year in 2025, 2024 and 2023, respectively. 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 (119,000 units in 2025, 250,000 units in 2024, and 80,000 units in 2023).
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 performance period in addition to the TSR metric. Therefore, these awards are comprised of two distinct components each representing 50% of the total award, with each having 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 requisite service 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 requisite service period based on the Company’s current 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 2025, 2024 and 2023:
| Assumptions: | 2025 | 2024 | 2023 | |||||||||||||||||
| Risk-free interest rate | 3.5 - 3.9% | 3.6 - 4.4% | 4.5 | % | ||||||||||||||||
| Expected volatility | 37.7 - 44.5% | 34.0 - 34.8% | 38.6 | % | ||||||||||||||||
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 requisite service period if the performance measure is probable to be achieved. The weighted average grant-date fair value of performance-based restricted stock units granted during 2025, 2024 and 2023 was $52.88, $37.87 and $88.43, respectively.
Information pertaining to time-based restricted stock and performance-based restricted stock units during 2025 is as follows:
| (shares in thousands) | Shares | Weighted Average Grant-Date Fair Value | ||||||||||||
| Total as of December 29, 2024 | 647 | $ | 58.05 | |||||||||||
| Granted | 527 | 46.12 | ||||||||||||
| Forfeited | (137) | 54.06 | ||||||||||||
| Vested | (240) | 61.21 | ||||||||||||
| Total as of December 28, 2025 | 797 | $ | 49.08 | |||||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.