Share-Based Employee Compensation

12 Months Ended

Sep. 29, 2024

Share-Based Payment Arrangement, Noncash Expense [Abstract]

SHARE-BASED EMPLOYEE COMPENSATION

Stock incentive plans — We offer share-based compensation plans to attract, retain, and motivate key officers, employees, and non-employee directors to work toward the financial success of the Company.

Our stock incentive plans are administered by the Compensation Committee of the Board of Directors and have been approved by the stockholders of the Company. The terms and conditions of our share-based awards are determined by the Compensation Committee for each award date and may include provisions for the exercise price, expirations, vesting, restriction on sales, and forfeitures, as applicable. We issue new shares to satisfy stock issuances under our stock incentive plans.

Our Amended and Restated 2004 Stock Incentive Plan (“Prior Plan”) authorized the issuance of up to 11,600,000 common shares in connection with the granting of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, or performance units to our employees and directors. As of January 1, 2023, no additional awards were granted under the Prior Plan. Our Jack in the Box Inc. 2023 Omnibus Incentive Plan (“Plan”) authorizes the issuance of up to 2,500,000 common shares plus Prior Plan returning shares in connection with outstanding awards as of January 6, 2023 that on or following such date are not issued, settled in cash, or fail to vest. The Plan is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company, and provide a means by which such persons may benefit from increases in value of the common stock. The Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, or performance stock awards, to our employees and directors. There were 1,987,156 shares of common stock available for future issuance under this plan as of September 29, 2024.

We also maintain a deferred compensation plan for non-management directors under which those who are eligible to receive fees or retainers may choose to defer receipt of their compensation. The deferred amounts are converted to stock equivalents. The plan requires settlement in shares of our common stock based on the number of stock equivalents and dividend equivalents at the time of a participant’s separation from the Board of Directors. This plan provides for the issuance of up to 350,000 shares of common stock in connection with the crediting of stock equivalents. There were 106,576 shares of common stock available for future issuance under this plan as of September 29, 2024.

Compensation expense — The components of share-based compensation expense, included within “Selling, general, and administrative expenses” in our consolidated statements of earnings, in each fiscal year are as follows (in thousands):


	2024		2023		2022
Nonvested restricted stock units	$	10,128	$	7,598	$	4,544
Stock options	—		4		19
Performance share awards	3,308		3,195		1,835
Nonvested restricted stock awards	—		166		434
Non-management directors’ deferred compensation	35		242		290
Total share-based compensation expense	$	13,471	$	11,205	$	7,122

Nonvested restricted stock units — Nonvested restricted stock units (“RSUs”) are generally issued to employees and non-employee directors. Grants to executive officers of time-vesting RSUs vest ratably over four years or three years, are subject to a stock holding requirement of 50% of after-tax net shares resulting from the vesting of RSUs, and must be held until the multiple of base salary stock ownership is met. There were 22,582 RSU’s vesting over four years, and 104,419 RSU’s vesting over three years, outstanding as of September 29, 2024. RSUs issued to non-management directors vest 12 months from the date of grant, or upon termination of board service, including RSUs for which the director elected to defer receipt until termination of board service, and totaled 77,470 units outstanding as of September 29, 2024. RSUs issued to certain other employees either cliff vest or vest ratably over three years and totaled 177,267 units outstanding as of September 29, 2024. These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date discounted by the present value of the expected dividend stream over the vesting period.

The following is a summary of RSU activity for fiscal 2024:


	Shares	Weighted- Average Grant Date Fair Value
RSUs outstanding at October 1, 2023	328,536	$	70.97
Granted	204,908	$	67.74
Released	(113,773)	$	69.90
Forfeited	(37,933)	$	70.70
RSUs outstanding at September 29, 2024	381,738	$	69.59

As of September 29, 2024, there was approximately $11.8 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.7 years. The weighted-average grant date fair value of awards granted was $67.74, $68.56, and $78.28 in fiscal years 2024, 2023, and 2022, respectively. In fiscal years 2024, 2023, and 2022, the total fair value of RSUs that vested and were released was $8.0 million, $4.6 million, and $2.5 million, respectively.

Stock options — Option grants have contractual terms of seven years and employee options vest over a three-year period. Options may vest sooner upon retirement from the Company for employees meeting certain age and years of service thresholds. All option grants provide for an option exercise price equal to the closing market value of the common stock on the date of grant.

The following is a summary of stock option activity for fiscal 2024:


	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at October 1, 2023	28,950	$	94.92



Expired	(14,939)	$	104.95
Options outstanding at September 29, 2024	14,011	$	84.23	1.12	$	—
Options exercisable at September 29, 2024	14,011	$	84.23	1.12	$	—

The aggregate intrinsic value in the table above is the amount by which the current market price of our stock on September 29, 2024 exceeds the weighted-average exercise price.

We use a valuation model to determine the fair value of options granted that requires the input of highly subjective assumptions, including the expected volatility of the stock price. No stock option awards were granted in fiscal 2024, 2023, or 2022.

As of September 29, 2024, there was no unrecognized compensation cost related to stock options grants. There were no stock options exercised in fiscal year 2024. The total intrinsic value of stock options exercised was less than $0.1 million in fiscal years 2023 and 2022, respectively.

Performance share awards — Performance share awards, granted in the form of stock units, represent a right to receive a certain number of shares of common stock based on the achievement of corporate performance goals and continued employment during the vesting period. Performance share awards issued to executives vest at the end of a three-year period and vested amounts may range from 0% to a maximum of 150% of targeted amounts depending on the achievement of performance measures at the end of a three-year period. If the awardee ceases to be employed by the Company prior to the last day of the performance period due to retirement, disability, or death, the performance share awards become vested pro-rata based on the number of full accounting periods the awardee was continuously employed by the Company during the performance period. The expected cost of the shares is based on the fair value of our stock on the date of grant and is reflected over the vesting period with a reduction for estimated forfeitures. These awards may be settled in cash or shares of common stock at the election of the Company on the date of grant. It is our intent to settle these awards with shares of common stock.

The following is a summary of performance share award activity for fiscal 2024:


	Shares	Weighted- Average Grant Date Fair Value
Performance share awards outstanding at October 1, 2023	107,174	$	72.51
Granted	62,103	$	70.19
Issued	(29,922)	$	88.88
Forfeited	(4,162)	$	69.26
Performance adjustments	9,974	$	88.88
Performance share awards outstanding at September 29, 2024	145,167	$	70.53

As of September 29, 2024, there was approximately $3.0 million of total unrecognized compensation cost related to performance share awards, which is expected to be recognized over a weighted-average period of 1.9 years. The weighted-average grant date fair value of awards granted was $70.19, $65.74, and $78.95 in fiscal years 2024, 2023, and 2022, respectively. The total fair value of awards that became fully vested during fiscal years 2024, 2023, and 2022 was $2.7 million, $1.8 million, and $0.1 million, respectively.

Nonvested restricted stock awards — As part of the Merger Agreement, on the Closing Date, the Company assumed Del Taco’s historical equity compensation plans. The awards under Del Taco’s historical equity compensation plans that were not subject to accelerated vesting were exchanged for replacement awards of the Company, which included Del Taco’s non-accelerating restricted stock awards. Immediately following the Merger, these replacement awards were modified to accelerate the remaining vesting period to be one year following the Closing Date, other than the awards already scheduled to vest on June 30, 2022.

As of September 29, 2024, there was no unrecognized compensation cost related to nonvested stock awards. The total fair value of awards that vested and were released during fiscal 2023 was $0.4 million.

Non-management directors’ deferred compensation — All awards outstanding under our directors’ deferred compensation plan are accounted for as equity-based awards and deferred amounts are converted into stock equivalents based on a per share price equal to the average of the closing price of our common stock for the 10 trading days immediately preceding the date the deferred compensation is credited to the director’s account. During fiscal 2024, 2023, and 2022, 36,342 shares of common stock were issued in connection with a director retirement.

The following is a summary of the stock equivalent activity for fiscal 2024:


	Stock Equivalents	Weighted- Average Grant Date Fair Value
Stock equivalents outstanding at October 1, 2023	122,981	$	47.16
Deferred directors’ compensation	756	$	69.40
Dividend equivalents	4,490	$	60.33
Stock distribution	(36,342)	$	37.71
Stock equivalents outstanding at September 29, 2024	91,885	$	61.53