Stockholders' Equity

6 Months Ended

Jul. 02, 2023

Purchase of Treasury Stock

In 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an

additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 14,746 shares of common stock valued at approximately $0.2 million during the six months ended July 3, 2022. As of July 2, 2023, 137,462 shares of common stock remain available for purchase under the share repurchase program. Additionally, as a result of net share settlement to satisfy the minimum statutory tax withholding requirements in connection with the vesting of restricted stock grants for certain employees, the Company repurchased 67,505 shares of common stock valued at approximately $0.6 million during the six months ended July 2, 2023. The repurchased shares are held as treasury stock at cost.

Stock-Based Compensation

During the six months ended July 2, 2023, the Company granted certain employees and non-employee directors a total of 353,438 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (the "Fiesta Plan"). The shares granted to employees vest and become non-forfeitable over a four-year vesting period. The shares granted to non-employee directors vest and become non-forfeitable over a one-year vesting period, or for an initial grant to a new director, over a five-year vesting period. The weighted average fair value at grant date for non-vested shares issued during the six months ended July 2, 2023 and July 3, 2022 was $7.93 per share and $8.83 per share, respectively.

During the six months ended July 2, 2023, the Company granted certain employees a total of 134,258 restricted stock units under the 2021 Plan subject to performance conditions. The restricted stock units vest and become non-forfeitable at the end of a three-year vesting period. The weighted average fair value at grant date for the restricted stock units granted during the six months ended July 2, 2023 and July 3, 2022 was $8.05 per share and $9.02 per share, respectively.

Stock-based compensation expense from continuing operations for the three and six months ended July 2, 2023 was $0.6 million and $1.2 million, respectively, and for the three and six months ended July 3, 2022 was $1.4 million and $2.0 million, respectively. Stock-based compensation expense from discontinued operations for the six months ended July 3, 2022 was $(0.1) million. At July 2, 2023, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $5.2 million. At July 2, 2023, the remaining weighted average vesting period for non-vested restricted shares was 2.7 years and restricted stock units was 2.1 years.

A summary of all non-vested restricted shares and restricted stock units activity for the six months ended July 2, 2023 is as follows:


	Non-Vested Shares			Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2023	617,747	$	9.61	103,814	$	12.09
Granted	353,438	7.93		134,258	8.05
Vested and released	(395,344)	9.23		—	—
Forfeited	(20,292)	10.10		—	—
Outstanding at July 2, 2023	555,549	$	8.80	238,072	$	9.81

The fair value of non-vested restricted shares and restricted stock units granted during the six months ended July 2, 2023 is based on the closing stock price on the date of grant.

During the six months ended July 2, 2023, 395,344 non-vested restricted shares vested. A portion of these vested stock awards were net share settled. Based upon the Company's closing stock price on the vesting date, the Company withheld 67,505 shares related to previously non-vested restricted shares to settle the employees' minimum statutory obligation for the applicable income and other employment taxes upon vesting of such restricted shares. Subsequently, the Company remitted the required funds to the appropriate taxing authorities.

Total payments for the employees' tax obligations to the relevant taxing authorities were $0.6 million for the six months ended July 2, 2023 and are reflected as a financing activity within the consolidated statements of cash flows. The payments were used for tax withholdings related to the net share settlements of previously non-vested shares. The payments related to the non-vested restricted shares were treated as share repurchases and recorded as an addition to treasury stock.

Fiesta Restaurant Group, Inc. 10-Q