UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN

PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the registrant  ☒                             Filed by a party other than the registrant  ☐

Check the appropriate box:

Potbelly Corporation

(Name of registrant as specified in its charter)

Payment of the filing fee (check the appropriate box):

March 23, 2017May 20, 2020

Dear Fellow Stockholder:Shareholder:

You are cordially invited to attend virtually our Annual Meeting of StockholdersShareholders (including any adjournments or postponements thereof, the “Annual Meeting”) on May 11, 2017. We will holdJune 24, 2020. Due to the emerging public health impact of the coronavirus outbreak(COVID-19), and to support the health and well-being of the Company’s employees and shareholders, the meeting at 8:00 a.m., Central Time, atwill be held in a virtual meeting format only via live audio webcast. Included with this letter are the Westin O’Hare Hotel, 6100 N. River Road, Rosemont, Illinois 60018. Detailsnotice of annual meeting of shareholders, a proxy statement detailing the business to be conducted at the Annual Meeting, and a proxy card. You may also find electronic copies of these documents online at www.proxyvote.com.

Regardless of whether you plan to attend our virtual Annual Meeting, it is important that your voice be heard. We encourage you to vote in advance of the meeting by telephone, by Internet or by signing, dating and returning your proxy card by mail. You may also vote by attending the virtual annual meeting athttp://www.virtualshareholdermeeting.com/PBPB2020 and voting online. Full instructions are givencontained in the notice of meeting and Proxy Statement that follow.

Please vote promptly by followingproxy statement or the instructions in this Proxy Statement or in the Notice of Internet Availability of Proxy Materials that was sent to you.enclosed proxy card.

Sincerely,

Aylwin Lewis

Chairman of the Board and Chief Executive Officer

Dan Ginsberg Chairman of the Board		Alan Johnson President and Chief Executive Officer

111 North Canal Street, Suite 850

Chicago, Illinois 60606

NOTICE OF ANNUAL MEETING OF

STOCKHOLDERSSHAREHOLDERS

TO BE HELD ON MAY 11, 2017JUNE 24, 2020

To our Stockholders:Shareholders:

The 20172020 Annual Meeting of StockholdersShareholders (including any adjournments or postponements thereof, the “Annual Meeting”) of Potbelly Corporation (the “Company”) will be held on May 11, 2017,June 24, 2020, at 8:00 a.m. Central Time,local time exclusively via live webcast at the Westin O’Hare Hotel, 6100 N. River Road, Rosemont, Illinois 60018http://www.virtualshareholdermeeting.com/PBPB2020, for the following purposes:

These items of business are more fully described in the Proxy Statement accompanying this Notice.

The Board of Directors (the “Board”) has set the close of business on March 15, 2017June 11, 2020 as the record date for determining Stockholdersshareholders of the Company entitled to notice of and to vote at the Annual Meeting. AYou may examine our shareholder list of the Stockholders as of the record date will be available for inspection by Stockholders, for any purpose germane toduring the Annual Meeting atby following the Company’s offices and atinstructions provided on the offices of American Stock Transfer & Trust Company LLC, the Company’s independent share transfer agent,meeting website during normal business hours for a period of 10 days prior to the Annual Meeting. The list will also be available for inspection by Stockholders at the Annual Meeting.

All Stockholdersshareholders are cordially invited to attend the virtual Annual Meeting. To participate in the virtual Annual Meeting, in person.you will need the16-digit control number that appears on your proxy card or the instructions that accompanied your proxy materials.EVEN IF YOU CANNOT ATTEND THE VIRTUAL ANNUAL MEETING, PLEASE TAKE THE TIME TO PROMPTLY VOTE YOUR PROXY BY CAREFULLY FOLLOWING THE INSTRUCTIONS ON THE NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS. ALTERNATIVELY,CARD. IF YOU HAVE REQUESTED WRITTENWISH TO VOTE USING A PAPER PROXY MATERIALS,CARD, PLEASE SIGN, DATE AND RETURN THE PROXY CARD IN THE RETURN ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE.

Important Notice Regarding theof Internet Availability of Proxy Materials for the Annual Meeting to be Held on May 11, 2017: theJune 24, 2020: The Proxy Statement for the Annual Meeting and the Annual Report to Stockholderson Form10-K for the fiscal year ended December 29, 2019 are available atwww.proxyvote.com.

By order of the Board of Directors,

Matthew Revord

Senior Vice President, Chief Legal Officer, General CounselChief People Officer and Secretary

March 23, 2017May 20, 2020

IMPORTANT

TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE VIRTUAL ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGEPRE-PAID ENVELOPE PROVIDED, OR VOTE BY TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL MEETING. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE THE PROXIES YOU APPOINTED CAST YOUR VOTES.

PROXY STATEMENT

Table of Contents

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POTBELLY CORPORATIONiii

PROXYSTATEMENT

The Board of Directors (the “Board“Board of Directors”Directors” or “Board”“Board”) of Potbelly Corporation, a Delaware corporation (the “Company”), is using this Proxy Statement to solicit your proxy for use at our 2017 Annual Meeting. We are sending a Notice Regarding the Availability of Proxy Materials for the2020 Annual Meeting and making proxy materials available to stockholders (or, for those who request, a paper copy of this Proxy Statement andShareholders (including any postponements or adjournments thereof, the form of proxy) on or about March 23, 2017, to our stockholders of record as of the close of business on March 15, 2017.“Annual Meeting”). References in this Proxy Statement to “Potbelly,” the “Company,” “we,” “us,” “our” and similar terms refer to Potbelly Corporation.

We are sending this Proxy Statement, the enclosed proxy card and our Annual Report on Form10-K for the fiscal year ended December 29, 2019 (collectively, the “Proxy Materials”) to our shareholders of record as of the close of business on June 11, 2020, the record date. Shareholders of record at the close of business on the record date will be entitled to vote at the Annual Meeting. As of May 19, 2020, the latest practicable date prior to the publication of this Proxy Statement, 23,812,999 shares of our common stock, $0.01 par value per share, were outstanding. Shareholders are entitled to one vote for each share of common stock held. A majority of these shares present virtually or represented by proxy at the Annual Meeting will constitute a quorum for the transaction of business.

The Proxy Materials are first being mailed to our shareholders of record on or about May 20, 2020.

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

Annual Meeting Information

Matters to be Voted on at the Annual Meeting and Board Recommendations

Board Highlights

The following tables provide summary information about our current Board of Directors, including their ages as of December 31, 2019.

Corporate Governance Highlights

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Important Notice Regarding the AvailabilityWhy am I receiving these materials?

Our Board of Proxy Materials forDirectors is soliciting proxies in connection with the Annual Meeting toMeeting. The Company will bear the cost of preparing, printing and mailing the materials in connection with this solicitation of proxies. The Company has retained DF King for certain advisory and solicitation services at a fee of approximately $10,000. Proxies also may be Held on May 11, 2017

This Proxy Statement and our Annual Report for the year ended 2016, which includes our Annual Report on Form10-K, are availablesolicited on the Internet atwww.proxyvote.com. PursuantCompany’s behalf by officers and other employees. The Company will reimburse banks and brokers for their reasonableout-of-pocket expenses related to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to ourforwarding proxy materials over the Internet. Accordingly, weto beneficial owners of stock or otherwise in connection with this solicitation. We are sending a Notice Regarding the Availability of Proxy Materialsmailing these proxy materials to our stockholdersshareholders of record as of the close of business on March 15, 2017. All stockholders will haveJune 11, 2020, the abilityrecord date.

You are receiving this Proxy Statement as a shareholder of the Company. We request that you promptly use the enclosed proxy card to access our proxy materials on the website referred tovote, by telephone, Internet, or mail, in the Notice Regardingevent you desire to express your support of or opposition to the Availability of Proxy Materials (www.proxyvote.com) or to request to receive a printed set of our proxy materials. Instructions on how to access our proxy materials over the Internet or request a printed copy of our proxy materials may be found in the Notice Regarding Availability of Proxy Materials. In addition, stockholders may request to receive proxy materials in printed form or by email on an ongoing basis by calling1-800-579-1639 or via email tosendmaterial@proxyvote.com.proposals.

Why am I receiving these materials?THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE TEN DIRECTOR NOMINEES NAMED IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3 AND 4.

Our Board of Directors is soliciting proxies for the 2017 Annual Meeting of Stockholders. On or about March 23, 2017, we expect to begin mailing these proxy materials to stockholders of record as of the close of business on March 15, 2017, the record date. On the record date, there were 25,063,935 shares of our common stock outstanding.

Where and when is the Annual Meeting of Stockholders?Meeting?

We will hold the Annual Meeting of Stockholders on Thursday, May 11, 2017,June 24, 2020, at 8:00 a.m.,am, Central Time, atexclusively via live webcast. Please go towww.virtualshareholdermeeting.com/PBPB2020 for instructions on how to participate in the Westin O’Hare Hotel, 6100 N. River Road, Rosemont, Illinois 60018.Annual Meeting.

Was the Annual Meeting previously announced for another date?

The Company previously disclosed in a Current Report filed on 8K on May 12, 2020 that the Annual Meeting would be held on June 9, 2020. Due to reasons relating to the COVID-19 pandemic, the Board decided to postpone the Annual Meeting to June 24, 2020.

What am I being asked to vote on at the meeting?Annual Meeting?

We are asking our stockholdersshareholders to consider the following items:proposals at the Annual Meeting:

Who can vote?

Shareholders of record at the close of business on June 11, 2020, the record date, may vote at the Annual Meeting.

As of May 19, 2020, the latest practicable date prior to the publication of this Proxy Statement, there were 23,812,999 shares of our common stock outstanding.

How many votes do I have?

You have one vote for each share of our common stock that you owned at the closeas of business on the record date. These shares include:

What is the difference between holding shares as a “stockholder“shareholder of record” and as a “beneficial owner”?

If your shares are registered directly in your name with our transfer agent, you are considered the “stockholder“shareholder of record” with respect to those shares. We have sent these proxy materials directly to you.

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of the shares held in street name. Your broker, bank or other nominee who is considered the stockholdershareholder of record with respect to those shares has forwarded these proxy materials to you. As the beneficial owner, you have the right toYou should direct your broker, bank or other nominee on how to vote your shares by using the voting instruction cardform included in the mailing or by following their instructions for voting by telephone or the Internet.

How can I vote my shares?

You can vote by proxy or in person.

What is a proxy?

It is your legal designation ofIf you legally designate another person to vote the stockshares you own. That otherown at a meeting of shareholders according to your instruction, that person is called ayour proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated two of our officers to serve as proxies for the Annual Meeting of Stockholders to be held on May 11, 2017.Meeting. These officers are Aylwin LewisAlan Johnson and Matthew Revord.

How You Can Votecan I vote my shares?

StockholdersShareholders of Record.StockholdersShareholders of record may vote their shares or submit a proxy to have their shares voted by one of the following methods:

Beneficial Owners.If you are the beneficial owner of your shares of common stock (that is, you hold your shares in “street name” through an intermediary such as a broker, bank or other nominee), you will receive instructionsa voting instruction form from your bank, broker bank or other nominee.

Your bank, broker bank or other nominee will not vote your shares of stock on any mattersProposals 1, 3 or 4 unless you provide them instructions on how to vote your shares of stock.shares. You should instruct your bank, broker or other nominee how to vote your shares of stock by following the

directions provided by your broker or nominee. Alternatively, you may obtain a proxy from your bank, broker or other holder of record and bring it with you to hand in with a ballot in order to be able to vote your shares at the meeting. If you choose to vote at the meeting, you must bring the following: (i) proof of identification, (ii) an account statement or letter from the broker, bank or other nominee indicating that you are the owner of the stock and (iii) a signed proxy from the stockholder of record giving you the right to vote the stock. The account statement or letter must show that you were the beneficial owner of the stock on March 15, 2017.nominee.

General.If you submit your proxy using any of the methods above, Aylwin LewisAlan Johnson or Matthew Revord will vote your shares in the manner you indicate. You may specify whether your shares should be voted for all, some, or none of the nominees for director, and for, against or againstabstain from voting for Proposals 2, 3, 4 and any other proposals properly introduced at the Annual Meeting. If you vote by telephone or Internet and choose to vote with the recommendation of our Board of Directors, or if you vote by mail, sign your proxy card, and do not indicate specific choices, your shares will be voted “FOR”FOR the election of each of the ten director nominees for director, and “FOR”(Proposal 1);FOR ratification of the appointment of Deloitte & Touche LLP to serve as our independent public accounting firm.firm (Proposal 2);FOR thenon-binding resolution to approve our 2019 named executive officer compensation (Proposal 3); andFOR the amendment and restatement of the Potbelly Corporation 2019 Long-Term Incentive Plan (Proposal 4).

If any othera matter to be considered at the Annual Meeting is presented,timely submitted pursuant toRule 14a-4(c)(1) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), your proxy will authorize Aylwin LewisAlan Johnson or Matthew Revord to vote your shares in accordancetheir discretion with their best judgment.respect to any such matter subsequently raised at the Annual Meeting. At the time this Proxy Statement was filed, we knew of no matters to be considered at the Annual Meeting other than those referenced in this Proxy Statement.

How can I revoke my proxy?

You may revoke a proxy in any one of the following three ways:

IsIf I have already voted by proxy on one or more proposals, can I change my vote confidential?vote?

Yes. Voting tabulations are confidential exceptTo change your vote by proxy, simply sign, date and return the enclosed proxy card or voting instruction form in extremely limited circumstances. Such limited circumstances include contested solicitationthe accompanyingpostage pre-paid envelope, or vote by proxy via telephone or the Internet in accordance with the instructions on the proxy card or voting instruction form. We strongly urge you to vote by proxy “FOR” the election of proxies, when disclosure is required by law, to defend a claim against us or to assert a claim by useach of the ten director nominees named in Proposal 1, and when a stockholder’s written comments appear on a“FOR” Proposals 2, 3 and 4. Only your latest dated proxy or other voting material.will count at the Annual Meeting.

What “quorum” is required for the Annual Meeting?

In order to have a valid stockholdershareholder vote, a quorum must exist at the Annual Meeting. For us,At the Annual Meeting a quorum exists when stockholdersshareholders holding a majority of the issued and outstanding shares entitled to vote are present in person or represented by proxy at athe meeting.

Votes withheld, abstentions andbroker-non votes (discussed below under “– What is the effect of abstentions andbroker non-votes?”) will be counted as present or represented for purposes of determining whether a quorum exists. In the absence of a quorum, the Annual Meeting may be adjourned by a majority of the votes entitled to be cast either present in person or represented by proxy or by any officer entitled to preside at the Annual Meeting.

What vote is required to approve each item?proposal?

How are the voting results determined?

InFor the election of Class I Directors,directors, your vote may be cast “FOR”“for” each of the nominees or your vote may be “WITHHELD”“withheld” with respect to one or more of the nominees. The nominees receiving the largest number of “FOR”“for” votes will be elected as directors, up to the maximum number of directors to be chosen for election. InEach of Proposals 2, 3 and 4 will pass if the ratificationtotal votes cast “for” such proposal exceed the total number of votes cast “against” such proposal and “abstain” for such proposal.

What is the effect of abstentions and brokernon-votes?

Because the election of directors is determined on the basis of a plurality of the votes cast, abstentions have no effect on the outcome of the election of ten nominees to the Board of Directors (Proposal 1), although abstentions will result in directors receiving fewer votes.

Because the approval of a majority of shares present and entitled to vote is required to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, youraccountants for the fiscal year ending December 27, 2020 (Proposal 2), to approve on an advisory basis,the non-binding resolution to approve our 2019 named executive officer compensation (Proposal 3), and to adopt an amendment and restatement to the Potbelly Corporation 2019 Long-Term Incentive Plan (Proposal 4), abstentions have the effect of a vote may be cast “FOR,” “AGAINST” or “ABSTAIN” with respect to that proposal.

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

If you are a record holder and you sign (including electronic confirmations in the case of Internet or telephone voting) your proxy card with no instructions on how to vote, your stock will be voted in accordance with the recommendations of the Board. If you are a beneficial owner and you sign (including electronic confirmation in the case of Internet or telephone voting) your broker voting instruction card with no instructions on how to vote, your stock will be voted in the broker’s discretion only with respect to “routine” matters but will not be voted with respect to“non-routine” matters.against those proposals.

Brokernon-votes occur occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” onparticular“non-routine” “non-routine” proposals, proposals including the election of directors, and the “beneficial owner”owner�� of those shares has not instructed the broker to vote on those proposals. If you are a beneficial owner, your broker, bank or other nominee is permitted to vote your shares only with regard to ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, even if the holder does not receive voting instructions from you. Shares registered in the name of a broker, bank or other nominee, for which proxies are voted on some, but not all matters, will be considered to be represented at the Annual Meeting and voted only as to those matters for which the broker, bank or other nominee has authority to vote.Broker non-votes will

Because the election of directors is determined on the basis of a plurality of the votes cast, abstentions have no effect on the outcome of the election of Class I directors, although they will result in a director receiving fewer votes. Because the approval of a majority of shares present and entitled to vote is required to ratify the appointment of Deloitte & Touche LLP as our independent public accountants, abstentions have the effect of a vote against those proposals. Brokernon-votes will have no direct effect on the outcome of the election of Classdirectors, the advisory resolution on executive compensation or the approval of amendments to the Potbelly Corporation 2019 Long-Term Incentive Plan.

Will my shares be voted if I directors,do nothing?

If your shares are registered in your name, you must sign and return a proxy card in order for your shares to be voted, unless you vote via telephone or the Internet or vote online at the Annual Meeting. If you submit (including by telephone or Internet) your proxy card with no instructions on how to vote, your shares will be voted in accordance with the recommendations of the Board.

If your shares of our common stock are held in “street name,” your bank, broker or other nominee has enclosed a proxy card or voting instruction form with this Proxy Statement. We strongly encourage you to authorize your bank, broker or other nominee to vote your shares by following the instructions provided on the proxy card or voting instruction form. If you sign (including electronic confirmation in the case of Internet or telephone voting) your broker voting instruction form with no instructions on how to vote, your stock will be voted in the broker’s discretion only with respect to “routine” matters but will not be voted with respectto “non-routine” matters. The only routine matter on the ballot for the Annual Meeting is the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accountants.accounting firm for the fiscal year ending December 27, 2020 (Proposal 2).

Please return your proxy card or voting instruction form to your bank, broker or other nominee by proxy by signing, dating and returning the enclosed proxy card or voting instruction form in the accompanying postagepre-paid envelope or vote by proxy via telephone or the Internet in accordance with the instructions in the proxy card or voting instruction form. Please contact the person responsible for your account to ensure that a proxy card or voting instruction form is voted on your behalf.

We strongly urge you to vote by proxy “FOR” the election of each of the ten director nominees named in Proposal 1, and “FOR” Proposals 2, 3 and 4 by signing, dating and returning the enclosed proxy card in the envelope provided. You may also vote by proxy by telephone using the toll-free number on the proxy card or by Internet using the website address on the proxy card. If your shares are held in “street name,” you should follow the instructions on the voting instruction form provided by your bank, broker or other nominee, and provide specific instructions to your bank, broker or other nominee to vote as described above.

Has the Company received notice from one or more shareholders that they are intending to nominate director candidates at the Annual Meeting?

Intrinsic Investment Holdings, LLC, the Vann A. Avedisian Trust U/A 8/29/85, Vann A. Avedisian, KGT Investments, LLC, The Khimji Foundation, Mahmood Khimji, Bryant L. Keil and Neil Luthra (the foregoing, collectively with each of their respective affiliates, the “Vann Group”) had notified the Company of its intention to nominate a slate of nominees for election as directors at the Annual Meeting. However, the Vann Group withdrew its nomination notice as part of a settlement with the Company. Please see “Corporate Governance—Resolution of Shareholder Nominations” on page  11 for further details.

What are the fiscal year end dates?

This Proxy Statement provides information about the matters to be voted on at the 2017 Annual Meeting of Stockholders and additional information about Potbelly and its executive officers and directors. Some of the information is provided as of the end of our 20152017, 2018 or 20162019 fiscal years as well as some information being provided as of a more current date. Our fiscal year 20152017 ended on December 27, 201531, 2017; our fiscal year 2018 ended on December 30, 2018 and our fiscal year 20162019 ended on December 25, 2016.29, 2019.

Where can I find the voting results?

We intend to announce preliminary voting results at the Annual Meeting. We will publishdisclose the finalpreliminary results in a Current Report on Form8-K, which we expect to file on or before May 17, 2017.June 30, 2020. You can obtain a copy of the Form8-K by logging on to our website athttp://investorsinvestors.potbelly.com/financial-information/sec-filings.potbelly.com/sec.cfm, or by calling the SEC at800-SEC-0330 for the location of the nearest public reference room,, or through the EDGAR system atwww.sec.gov. Information on our website does not constitute part of this Proxy Statement.

CORPORATE GOVERNANCE

Overview

All of our corporate governance materials, including our corporate governance guidelines, our ethics code of conduct and Board committee charters, are published under the Governance section of our Investor website atwww.potbelly.comhttp://investors.potbelly.com/corporate-governance/governance-documents. Information on our website does not constitute part of this Proxy Statement. These materials are also available in print to any stockholdershareholder without charge upon request made by telephone at (312)951-0600 or by mail to our principal executive offices at Potbelly Corporation, 111 North Canal Street, Suite 850, Chicago, Illinois 60606, Attention: Corporate Secretary. The Board of Directors regularly reviews these materials, Delaware law, the rules and listing standards of the Nasdaq Global Select Market (“NASDAQ”NASDAQ”) and SEC rules and regulations, as well as best practices suggested by recognized governance authorities, and modifies the materials as it believes is warranted.

Governance Highlights

Director Independence

Our Board of Directors reviews the independence of the current and potential members of the Board of Directors in accordance with independence requirements set forth in the NASDAQ rules and applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”).Act. During its review, the Board of Directors considers transactions and relationships between each

director and potential director, as well as any member of his or her immediate family, and the Company and its affiliates, including those related-party transactions contemplated by Item 404(a) ofRegulationS-K under under the Exchange Act. The Board of Directors must affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, stockholdershareholder or officer of an organization that has a relationship with the Company, that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The purpose of this review is to determine whether any such relationships or transactions exist that are inconsistent with a determination that the director is independent. Our Board of Directors has determined that all current directorsnominees except Aylwin LewisAlan Johnson, our President and Chief Executive Officer, are “independent” as such term is defined by NASDAQ rules, our corporate governance standards and the federal securities laws. Our Board

Corporate Environmental and Social Responsibility

We are committed to improving the world by improving the communities we serve. That means bring a responsible community member in each of our neighborhoods and always looking for ways to reduce our footprint and improve our relationships with people. We believe it is important to conduct our business in an ethical, legal and socially responsible manner and have undertaken a number of initiatives to reduce our environmental impact and to ensure a healthy and safe workplace. Examples of our green initiatives can be found in the “Corporate Responsibility” section of the “About Us” page of our website atwww.potbelly.com. We also determined that Dan Levitan, who served onexpect our Boardsuppliers and business partners to adhere to these ideals and to promote these values, and have adopted a Supplier Code of Directors until February  19, 2016, was “independent” as so defined.Conduct specifying the standards and principles we expect all of our suppliers to adhere to. A copy of the Supplier Code of Conduct and related information can be found in the “Corporate Responsibility” section of the “About Us” page of our website atwww.potbelly.com.

Ethics Code of Conduct

We have a written ethics code of conduct that applies to our directors, officers and employees. A copy of this code is available athttp://investors.potbelly.com/governance-documents.cfmcorporate-governance/governance-documents. We will disclose information regarding any amendment to or waiver from the provision of this code by posting it on the same portion of our website.

Conflicts of Interest

Pursuant to our ethics code of conduct and our related party transaction policy, each director and executive officer has an obligation not to engage in any transaction that could be deemed a conflict of interest. Our directors may not engage in any transaction that could impact their independence on the Board of Directors. See “Related Party Transactions.Transactions,” on page 61 of this Proxy Statement.

Resolution of Shareholder Nominations

On May 10, 2020, we entered into a Settlement Agreement (the “Settlement Agreement”) with the Vann Group.

Effective upon the execution of the Settlement Agreement, our Board (i) increased the size of the Board from eight to ten members, (ii) appointed David Near and Todd Smith to the Board (together, the “Designees”), and (iii) appointed David Near to the Compensation Committee of the Board and Todd Smith to the Nominating and Corporate Governance Committee of the Board. Our Board also agreed to include David Near and Todd Smith in the Company’s slate of nominees for election to the Board at the Annual Meeting. Also effective upon execution of the Settlement Agreement, the Vann Group withdrew its notice of intent to nominate director candidates for election to the Board at the Annual Meeting.

The Settlement Agreement further provides, among other things, that:

Structure of the Board of Directors

Our Board of Directors currently consists of eight members, comprised of Aylwin Lewis, Peter Bassi,Ann-Marie Campbell, Susan Chapman-Hughes, Dan Ginsberg, Marla Gottschalk, Harvey Kanter and Carl Warschausky. Our certificate of incorporation provides that our Board of Directors shall consist of not more than twelve directors, with the exact number as determined from time to time by resolution of the Board.

Our Board is divided into three classes with staggered terms. However, at our 2018 annual stockholder meeting, our classified board structure will be phased outof Directors currently consists of ten members, comprised of Joseph Boehm, Adrian Butler, Susan Chapman-Hughes, David Head, Dan Ginsberg, Marla Gottschalk, Alan Johnson, David Near, Benjamin Rosenzweig and beginning at such meeting, allTodd Smith. All current directors shall be electedare nominees for election for a term expiring at the next annual stockholder meeting. Mr. Lewis, Mr. Bassi and Ms. Gottschalk are Class I directors and are current nominees for election

CORPORATE GOVERNANCE

with a term expiring at our 2018 annual meeting of stockholders. Ms. Chapman-Hughes and Mr. Warschausky serve as Class II directors with a term expiring at our 2018 annual meeting of stockholders. Ms. Campbell, Mr. Ginsberg and Mr. Kanter serve as Class III directors with a term expiring at our 2018 annual meeting of stockholders.

2021 Annual Meeting. Our amended and restated bylaws (our “Bylaws”) provide that directors may only be removed for cause. To remove a director for cause,66-2/3% of the voting power of the outstanding voting stock must vote as a single class to remove the director at an annual or special meeting. Additionally, our certificate of incorporation provides that if a director is removed or if a vacancy occurs, due to either an increase in the size of the Board or the death, resignation, disqualification or other cause, the vacancy willmay be filled solely by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum remain.quorum.

Board Leadership Structure

Mr. LewisGinsberg currently serves as both our Chief Executive Officer and our Chairman of the Board. The Board appointed Mr. Ginsberg to the role of Chairman in May of 2019. Prior to that appointment, Mr. Ginsberg had been a member of our Board of Directors since 2014. Our Board of Directors has carefully considered its leadership structure and believes at this time that the Company and its stockholdersshareholders are best served by having one person serve both positions. We believe that combining the roles fosters accountability, effective decision-making and alignment between interestsoffices of Chairman of the Board of Directors and management. Mr. Lewis also is able to use thein-depth focus and perspective gained in his executive function to assist our Board of Directors in addressing both internal and external issues affecting the Company.

Our Board of Directors determined asCEO held by different individuals. As part of our corporate governance principles, and as required in our Bylaws, thatin the event the Chairman of the Board and CEO positions are ever recombined, or the Chairman of the Board is not otherwise independent, the Board of Directors shall appoint onean independent director to serve as lead independent

director. Mr. Bassi is our lead director and his responsibilities include presiding over periodic meetings of our independent directors and overseeing the function of our Board of Directors and committees. The lead director is also responsible for providing leadership to our Board if any circumstances arise in which the role of the chairman may be, or may be perceived to be, in conflict. The Bylaws also provide that the chairperson of each of our committees will rotate at least once every three years. Our Board of Directors believes that these and other structural features of our Board structure provide for substantial independent oversight of the Company’s management.

Our Board of Directors recognizes that depending on future circumstances, other leadership models may become more appropriate. Accordingly, our Board of Directors will continue to periodically review its leadership structure.

Director Biographies

The following is a list of our current directors and candidates for director, their ages as of December 31, 2016,2019, their occupation during the last five years and certain other biographical information:

		JOSEPH BOEHM Age: 33 Director Since: 2017 Committees: Audit, Nominating & Corporate Governance
				Turkey Club

Aylwin Lewis,Experience 62,

Joseph Boehm,33, has served as our Chief Executive Officer and President and a director since June 2008. From September 2005 to February 2008,October 2017. Mr. Lewis served as Chief Executive Officer and President of Sears Holdings Corporation.Boehm has been a Portfolio Manager at Ancora Advisors, LLC, a registered investment advisor, since April 2014. Prior to that,his current role, Mr. LewisBoehm was President of Sears Holdingsan Analyst at Sigma Capital Management, a hedge fund, from February 2013 through March 2014. From 2010 to 2013, Mr. Boehm was an associate at Deutsche Bank, an investment bank.

Skills and Chief Executive Officer of Kmart and Sears Retail following Sears’ acquisition of Kmart Holding Corporation in 2005. Mr. Lewis had been president and Chief Executive Officer of Kmart since October 2004 until that acquisition. From January 2003 to October 2004, he was President, Chief Multi-Branding and Operating Officer of Yum! Brands, Inc. and served as Chief Operating Officer of Yum! Brands from December 1999 to January 2003. Mr. Lewis has nearly 30 years of experience in the restaurant industry. Mr. Lewis is also a member of the board of directors of The Walt Disney Company and Marriott International, Inc. Qualifications

Our Board of Directors believes Mr. Lewis’Boehm’s qualifications to serve as a member of our Board include his role as Chief Executive Officer and President, his extensive experience in the restaurant industry and his leadership experience as an executive at publicly-traded companies in the restaurant and retail sectors.financial industries experience.

		ADRIAN BUTLER Age: 49 Director Since: 2019 Committees: Audit
				Italian

Peter Bassi,Experience67,

Adrian Butler, 49, has served as our director since January 2009.May 2019. Since August 2015, he has served as Senior Vice President and Chief Information Officer for Dine Brands Global, Inc. From 2011 to 2015, Mr. Bassi retiredButler was Vice President in 2005 as Chairman of Yum! Restaurants International (“YRI”), the internationalTechnology Services division of Yum! Brands, Inc., where he served as President beginning in July 1997Target Corporation.

Skills and was in charge of YRI’s Asian business prior to that. Yum! was created in 1997 in aspin-off from PepsiCo, Inc. Mr. Bassi joined PepsiCo in 1972 and served in various assignments at Pepsi Cola International, Pizza Hut (U.S. and International), Frito Lay and Taco Bell. From 2002 to 2009, Mr. Bassi served on the board of The Pep Boys – Manny, Moe & Jack; from 2008 to 2010, he served on the board of El Pollo Loco, Inc.; and from 2013 to 2015, he served on the board of AmRest Holdings SE. Mr. Bassi currently serves on the board of BJ’s Restaurants, Inc., Mekong Capital, a Vietnam private equity firm, and Yum China Holdings, Inc. Qualifications

Our Board of Directors believes Mr. Bassi’sButler’s qualifications to serve as a member of our Board includeincludes his extensiveexpertise in information technology and experience in the restaurant industry and his years of experience in his leadership roles as a director and executive officer.food industry.

		MARLA GOTTSCHALK Age: 59 Director Since: 2009 Committees: Audit (Chair); Compensation
				Mediterranean with chicken on FLATS

Experience

Marla Gottschalk, 56,59, has served as our director since November 2009. Ms. Gottschalk was Chief Executive Officer of The Pampered Chef Ltd., a marketer of kitchen tools, food products and cookbooks for preparing food in the home, from May 2006 until December 2013 and its President and Chief Operating Officer from December 2003 until May 2006. Ms. Gottschalk joined Pampered Chef from Kraft Foods, Inc., where she worked for 14 years in various management positions, including Senior Vice President of Financial Planning and Investor Relations for Kraft, Executive Vice President and General Manager of Post Cereal Division and Vice President of Marketing and Strategy of Kraft Cheese Division. Ms. Gottschalk is currently a member of the board of trustees of Underwriters Laboratories, a world leader in safety testing and certification, a strategic board advisor for Ocean Spray Cranberries, Inc., and sits on the board of directors for Big Lots, Inc. and Reynolds Consumer Products. She has previously served as a director of GATX Corp. and as a director of Visteon Corp.

Skills and Qualifications

Our Board of Directors believes Ms. Gottschalk’s qualifications to serve as a member of our Board include her extensive experience with global companies, her expertise in the food industry and her years of experience in operations and strategic management.

		DAVID HEAD Age: 63 Director Since: 2019 Committees: Compensation
				A Wreck

Harvey Kanter,Experience 55,

David Head, 63, has served as our director since August 2015. Since January 2014,2019. Mr. KanterHead has served as Chairman Chief Executive Officer and PresidentCEO of Blue Nile,Primanti Brothers since 2013. Mr. Head’s previous roles include CEO of O’Charley’s from 2010 to 2012 and CEO of Captain D’s LLC from 2006 to 2010. Prior to O’Charley’s, Mr. Head also served as the CEO of Romacorp and Houlihan’s Restaurant Group. Mr. Head previously served as a director of Bob Evans Farms, O’ Charley’s, Inc., an online retailer of diamondsCaptain D’s / Sagittarius Brands, and fine jewelry. Mr. Kanter joined Blue Nile in March 2012 as its Chief Executive OfficerImvescor.

Skills and President. Prior to joining Blue Nile, from January 2009 through March 2012, Mr. Kanter was the Chief Executive Officer and President of Moosejaw Mountaineering and Backcountry Travel, Inc., a premium outdoor apparel and gear retailer. Mr. Kanter serves on the board of directors for Blue Nile, Inc. (and certain of its subsidiaries), for thenon-profit organization Jewelers for Children, as a brand ambassador for the Fred Hutch Cancer Research Institute, and as an advisory board member to the Seattle University Executive MBA Program. Qualifications

Our Board of Directors believes Mr. Kanter’s qualifications to serve as a member of our Board include his deep retail industry experience, brand expertise and leadership skills.

Carl Warschausky, 57, has served as our director since May 2015. Since January 2013, Mr. Warschausky has been the President and Chief Executive Officer of World Kitchen, LLC, a global housewares and consumer products manufacturer. Mr. Warschausky has been with World Kitchen, LLC since 2008, serving in various roles including Chief Operating Officer, President of the North America division, and Chief Financial Officer. Mr. Warschausky serves on the board of directors for World Kitchen, LLC. Our Board of Directors believes Mr. Warschausky’sHead’s qualifications to serve as a member of our Board include his extensive financeknowledge and general managementproven restaurant industry experience in dynamic industries, as well as his global perspectiverestaurant operations, food service and experience.production.

CORPORATE GOVERNANCE		ALAN JOHNSON Age: 60 Director Since: 2017 Committees: None
				Turkey Club on FLATS with avocado

Experience

Alan Johnson, 60, has served as our President and Chief Executive Officer and a director since November 2017. Mr. Johnson was previously the founder of AJ Consulting, a consulting services firm, from September 2015 through November 2017. Prior to that, he was the Chief Executive Officer of BevMo!, a specialty retailer of alcoholic beverages and related products, from April 2007 through September 2015. From 2005 to 2007, Mr. Johnson served as Chief Operating Officer and Chief Financial Officer of Forth & Towne, a division of Gap Inc. Prior to his service with Gap Inc., Mr. Johnson held various executive leadership positions, including at Walt Disney Parks & Resorts, Regal Theaters, PepsiCo and Pizza Hut International. Mr. Johnson is on the Board of Directors of Saucey, a wine, beer and spirits on-demand delivery start-up. Mr. Johnson has over 30 years of executive leadership experience across a variety of blue chip organizations.

Skills and Qualifications

Our Board of Directors believes Mr. Johnson’s qualifications to serve as a member of our Board include his role as Chief Executive Officer and President, his leadership experience as an executive at publicly-traded companies in the restaurant and retail sectors and his extensive experience in the retail industry.

		DAVID NEAR Age: 50 Director Since: 2020 Committees: Compensation
				A Wreck

Experience

David Near,50, has served as our director since May 2020. Mr. Near has been the managing partner of Ramen Tatsuya Holdings LLC since 2014, as well as the owner and co-president of Pisces Foods, L.P., a restaurant operating company, since 1995. In addition, Mr. Near previously operated The Wendy’s Company restaurants as a franchisee from 1995 to 2012. From 2006-2009, Mr. Near served as the Chief Operations Officer at The Wendy’s Company, where he was responsible for global operations, franchising, new store development, and served as a board member of Wendy’s National Advertising Program.

Skills and Qualifications

Our Board of Directors believes Mr. Near’s qualifications to serve as a member of our Board include his experience and expertise in operations and franchising in the restaurant industry.

		BENJAMIN ROSENZWEIG Age: 34 Director Since: 2018 Committees: Compensation
				Turkey Breast

Experience

Benjamin Rosenzweig, 34, has served as our director since April 2018. Mr. Rosenzweig is a Partner at Privet Fund Management, LLC. Mr. Rosenzweig joined Privet Fund Management LLC in September 2008. He has been an Independent Director of Cicero Inc., a provider of desktop activity intelligence, since February 23, 2017; Hardinge Inc., a designer, manufacturer and distributor of machine tools, since October 14, 2015; and PFSweb, Inc., a global commerce service provider, since May 2013. Mr. Rosenzweig served on the Board of Directors of StarTek, Inc., a customer engagement business process outsourcer, from May 2011 to December 2018. During his time on the Board for StartTek, Mr. Rosenzweig was Chairman of the Audit Committee. He served as a Director of RELM Wireless Corporation, a manufacturer of wireless communications equipment, from September 2013 to September 2015. Prior to joining Privet in September 2008, Mr. Rosenzweig served as an investment banking analyst in the Corporate Finance group of Alvarez and Marsal, where he completed multiple distressed mergers and acquisitions, restructurings, capital formation transactions and similar financial advisory engagements across several industries.

Skills and Qualifications

Our Board of Directors believes Mr. Rosenzweig’s qualifications to serve as a member of our Board include his financial advisory experience across multiple industries.

		TODD SMITH Age: 42 Director Since: 2020 Committees: Nominating & Corporate Governance
				A Wreck on BIGs with extra mayo and mustard

Experience

Todd Smith, 42, has served as our director since May 2020. Mr. Smith has been the Chief Concept Officer of Cafe Rio Mexican Grill, and a partner in CoreLife Eatery since 2017. Mr. Smith worked at Sonic Drive-in from 2012 to 2017, ultimately serving as its President and Chief Marketing Officer. Prior to Sonic Drive-in, Mr. Smith also worked in the marketing divisions for Yum! Brands and Wendy’s International.

Skills and Qualifications

Our Board of Directors believes Mr. Smith’s qualifications to serve as a member of our Board includes his leadership and marketing experience in the restaurant industry.

Board Meetings

Our Board of Directors held sixthirteen meetings during fiscal 2016.2019. In 2016,2019, each of our directors attended at least 75% of the aggregate number of meetings held by the Board of Directors, and the committees on which the director served, when such director was a member of the Board of Directors.Directors or such committee. Under our corporate governance guidelines, each director is expected to make every effort to attend each Board meeting and each meeting of any committee on which he or she sits.

The Company’s directors are encouraged to attend our annual meeting of stockholders,shareholders, but we do not currently have a policy relating to directors’ attendance at these meetings. All of our directors serving at the time attended our 2016 annual meeting2019 Annual Meeting of stockholders.Shareholders.

Board Committees

Our Board of Directors has established three standing committees to assist it with its responsibilities. The composition and responsibilities of each committee are described below. The membership and responsibilities of each committee comply with the listing requirements of NASDAQ. Members serve on these committees until their resignation or until otherwise determined by our Board of Directors. A new chairperson of each committee is appointed at least once every three years. In the future, the Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.

Audit Committee

The purpose of the audit committeeAudit Committee is set forth in the audit committeeAudit Committee charter and is primarily to assist the Board in overseeing:

The audit committeeAudit Committee currently consists of Ms. Chapman-Hughes, Mr. Ginsberg,Boehm, Mr. Butler, and Ms. Gottschalk, and Mr. Warschausky and the chairperson is Mr. Warschausky.Ms. Gottschalk. Our Board of Directors has affirmatively determined that each of these audit committeeAudit Committee members meets the additional heightened independence criteria applicable to directors serving on the audit committeeAudit Committee under NASDAQ and SEC rules. Our Board of Directors has also determined that each of Ms. Chapman-Hughes, Mr. Ginsberg, Ms. Gottschalk, and Mr. Warschauskythese Audit Committee members meet the requirements for financial literacy under the applicable NASDAQ rules and that each is an “audit committee financial expert” under SEC rules. Our Board of Directors has adopted a written charter under which the audit committeeAudit Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and NASDAQ, is available on our website athttp://investors.potbelly.com/governance-documents.cfmcorporate-governance/governance-documents.

The audit committeeAudit Committee held fivefour meetings during fiscal year 2016.2019.

Nominating and Corporate Governance Committee

The purpose of the nominatingNominating and corporate governance committeeCorporate Governance Committee is set forth in the nominatingNominating and corporate governance committeeCorporate Governance Committee charter and is primarily to:

The nominatingNominating and corporate governance committeeCorporate Governance Committee consists of Mr. Bassi,Boehm, Ms. Chapman-Hughes, Mr. Ginsberg and Mr. GinsbergSmith, and the chairperson is Mr. Bassi.Ginsberg. Our Board of Directors has affirmatively determined that each of these Nominating and Corporate Governance Committee members meets the independence criteria applicable to directors serving on the Nominating and Corporate Governance Committee under NASDAQ and SEC rules. Our Board of Directors has adopted a written charter under which the nominatingNominating and corporate governance committeeCorporate Governance Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and NASDAQ, is available on our website athttp://investors.potbelly.com/governance-documents.cfmcorporate-governance/governance-documents.

Included in the incumbent directors nominated for re-election are Mr. Adrian Butler and Mr. David Head, who were each appointed by the Board as a director effective May and August, 2019, respectively. Mr. Butler was identified by JPMorgan Chase & Co’s director advisory services group, and Mr. Head was recommended by a member of the Board.

The nominatingNominating and corporate governance committeeCorporate Governance Committee held foureleven meetings during fiscal year 2016.2019.

Compensation Committee

The purpose of the compensation committeeCompensation Committee is set forth in the compensation committeeCompensation Committee charter and is primarily to:

For more information regarding the process and procedures regarding the determination of executive and director compensation, see “Executive“Director Compensation” and Director Compensation.such information regarding named executive officer compensation, see “Compensation Discussion and Analysis.”

The compensation committeeCompensation Committee consists of Ms. Campbell,Chapman-Hughes, Ms. Gottschalk, Mr. Head, Mr. Near and Mr. KanterRosenzweig, and the chairperson is Ms. Gottschalk.Chapman-Hughes. Our Board of Directors has affirmatively

determined that each of these compensation committeeCompensation Committee members meets the additional, heightened independence criteria applicable to directors serving on the compensation committeeCompensation Committee under NASDAQ and SEC rules. Our Board of Directors has adopted a written charter under which the compensation committeeCompensation Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and NASDAQ, is available on our website athttp://investors.potbelly.com/governance-documents.cfmcorporate-governance/governance-documents.

The compensation committeeCompensation Committee held sixeight meetingsduring fiscal year 2016.2019.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committeeCompensation Committee is, or has at any time been, an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or our compensation committeeCompensation Committee during fiscal 2016.2019. No directors served on our compensation committeeCompensation Committee in 20162019 other than Ms. Campbell,Chapman-Hughes, Ms. Gottschalk, Mr. Head and Mr. Kanter,Rosenzweig, the directors currently serving on such committee, and Dan Levitan,Ms. Campbell and Mr. Kanter, who resigned as a directordecided not to stand forre-election in the 2019 Annual Meeting of the Company in February 2016.Shareholders.

Board’s Role in Risk Oversight

The entire Board of Directors is engaged in risk management oversight. At the present time, the Board of Directors has not established a separate committee to facilitate its risk oversight responsibilities. The Board of Directors expects to continue to monitor and assess whether such a committee would be appropriate. The audit committeeAudit Committee assists the Board of Directors in its oversight of our risk management and the process established to identify, measure, monitor, and manage risks, in particular major financial risks. The compensation committeeCompensation Committee assesses risks arising from our compensation policies and practices. The Board of Directors receives regular reports from management, as well as from the audit committeeAudit Committee and compensation committee,Compensation Committee, regarding relevant risks and the actions taken by management to address those risks.

Policy for Director Recommendations

Our nominatingNominating and corporate governance committeeCorporate Governance Committee is responsible for reviewing and making recommendations to our Board of Directors regarding nominations of candidates for election as a director of the Company. The nominatingNominating and corporate governance committeeCorporate Governance Committee identifies new director candidates through a variety of sources. The committee will consider director candidates recommended by stockholdersshareholders in the same manner it considers other candidates, but it has no obligation to

CORPORATE GOVERNANCE

recommend such candidates. A stockholdershareholder that wants to recommend a candidate for election to the Board of Directors should send a recommendation in writing to Potbelly Corporation, 111 North Canal Street, Suite 850, Chicago, Illinois 60606, Attention: Corporate Secretary. Such recommendation should describe the candidate’s qualifications and other relevant biographical information and provide confirmation of the candidate’s consent to serve as director.

StockholdersShareholders may also nominate directors at the annual meeting by adhering to the advance notice procedure described under “Stockholder“Shareholder Proposals for the 20182021 Annual Meeting” elsewhere inon page 65 of this Proxy Statement.

The nominatingNominating and corporate governance committeeCorporate Governance Committee works with the Board on an annual basis to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members. In evaluating the suitability of individual Board members, the Board and the nominatingNominating and corporate governance committeeCorporate Governance Committee will take into account factors such as the individual’s general understanding of disciplines relevant to the success of a publicly traded company; understanding of Potbelly’s business; education and professional background, including current employment and other board memberships; reputation for integrity; and any other factors they consider to be relevant. The Pursuant to the provisions of our Corporate Governance Guidelines, the

Board will endeavor to reflect the diversity of Potbelly’s stockholders,shareholders, employees and customers and the communities it serves. Additionally, in determining whether to recommend a director forre-election, the nominatingNominating and corporate governance committeeCorporate Governance Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of the Board.

If the nominatingNominating and corporate governance committeeCorporate Governance Committee determines that an additional or replacement director is required, the committee may take such measures that it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation and engagement of an outside search firm to gather additional information. From time to time for a fee, Potbelly has used the executive search firm, Amrop Knightsbridge,Spencer Stuart, to identify and evaluate or assist in identifying and evaluating potential candidates for election as directors. Amrop Knightsbridge has recommended candidates for director in the past.

Communication with the Board

StockholdersShareholders and other parties interested in communicating directly with one or more individual directors or with thenon-management directors as a group, may do so by writing to the individual director or group, c/o Potbelly Corporation, 111 North Canal Street, Suite 850, Chicago, Illinois 60606, Attention: Corporate Secretary. The Board has directed our corporate secretary to forward stockholdershareholder communications to our chairman and any other director to whom the communications are directed. In order to facilitate an efficient and reliable means for directors to receive all legitimate communications directed to them regarding our governance or operations, our corporate secretary will use his discretion to refrain from forwarding the following: sales literature; defamatory material regarding us and/or our directors; incoherent or inflammatory correspondence, particularly when such correspondence is repetitive and was addressed previously in some manner; and other correspondence unrelated to the Board of Director’s corporate governance and oversight responsibilities.

Director Stock Ownership Guidelines

The Board believes that all directors should hold a significant equity interest in Potbelly. Toward this end, the Board expects that all directors own, or acquire within five years of first becoming a director, shares of Potbelly common stock (including restricted shares, but not options, under Potbelly’s equity-linked incentive plans) having a market value of at least four times the annual cash compensation for directors (excluding any additional retainer received for service as Chairman of the Board or Lead Director, or as Chair of any Board committee) offered to directors (regardless of whether the director elects to receive such compensation in cash).

PROPOSAL No. 1

ELECTION OF DIRECTORSElection of Directors

ThreeTen candidates have been nominated for election as Class I directorswill be elected at the Annual Meeting to serve fora one-year term that will expire at the 2021 Annual Meeting and until their successors shall have been elected and qualified. The election of directors requires the affirmative vote of a plurality of our shares of common stock present in person or by proxy at the Annual Meeting.

Our Board of Directors has nominated Peter Bassi,Joseph Boehm, Adrian Butler, Susan Chapman-Hughes, Dan Ginsberg, Marla Gottschalk, David Head, Alan Johnson, David Near, Benjamin Rosenzweig and Aylwin LewisTodd Smith forre-election election as Class I directors for aone-year term that will expire at our fifth annual meeting of stockholders in 2018.directors. The Board of Directors is not aware that any nominee will be unwilling or unable to serve as a director. All nominees have consented to be named in this Proxy Statement and to serve as a director of the Company if elected. If, however, a nominee is unavailable for election, your proxy authorizes us to vote for a replacement nominee if the Board of Directors names one. As an alternative, the Board of Directors may reduce the number of directors to be elected at the meeting. Proxies may not be voted for a greater number of persons than the nominees presented.

Our Board currently consists of eight members: Mr. Lewis, Mr. Bassi, Ms. Campbell, Ms. Chapman-Hughes, Mr. Ginsberg, Ms. Gottschalk, Mr. Kanter and Mr. Warschausky. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

The Board’s nominees possess the requisite experience and skills to successfully oversee the Company’s strategy and business, in the Board’s view. The Board, and its nominees, are dedicated to analyzing objectively the Company’s strategy, business operations, capital allocation and configuration and acting to maximize shareholder value.

For more information on the structure of our Board of Directors and our Board members and nominees, see “Corporate Governance.” The qualifications and experience of each nominee that led our Board and the Nominating and Corporate Governance Committee to conclude that such nominee should serve or continue to serve as director are discussed at the end of each of the nominees’ biographies.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”“FOR” EACH OF THESE NOMINEES.

PROPOSAL 2

Ratification of Appointment of Independent Registered Public Accounting Firm

PROPOSAL No. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The audit committeeAudit Committee of our Board of Directors is responsible for recommending, for stockholdershareholder approval, our independent registered public accounting firm. The audit committeeAudit Committee has selected the accounting firm of Deloitte & Touche LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017.27, 2020. Deloitte & Touche LLP has served as our independent registered public accounting firm since before our Initial Public Offering and has also providednon-audit services from time to time.

Although ratification is not required by our Bylaws or otherwise, our Board of Directors is submitting the selection of Deloitte & Touche LLP to our stockholdersshareholders for ratification because we value our stockholders’shareholders’ views on our independent registered public accounting firm and as a matter of good corporate practice. The audit committeeAudit Committee will consider the outcome of this vote in its decision to appoint an independent registered public accounting firm but is not bound by our stockholders’shareholders’ vote. Even if the selection of Deloitte & Touche LLP is ratified, the audit committeeAudit Committee may change the appointment at any time during the year if it determines a change would be in the best interests of the Company and our stockholders.shareholders.

The following table sets forth the fees pertaining to audit services for the fiscal years ended December 25, 201629, 2019 and December 27, 201530, 2018 and for other services during those fiscal years:

Policy on Audit Committee Approval of Audit andNon-Audit Services

The audit committee’sAudit Committee’s policy is to approve all audit and permissiblenon-audit services prior to the engagement of our independent registered public accounting firm to provide such services. The audit committeeAudit Committee annually approves, pursuant to detailed approval procedures, certain specific categories of permissiblenon-audit services. Such procedures include the review of (i) a detailed description by our independent registered public accounting firm of the particular services to be provided and the estimated fees for such services and (ii) a regular report to the committee regarding the services provided and the fees paid for such services. The audit committeeAudit Committee must approve on aproject-by-project basis any permissiblenon-audit services that do not fall within apre-approved category and any fees forpre-approved permissiblenon-audit services that materially exceed the previously approved amounts. In making the determinations aboutnon-audit services, the audit committeeAudit Committee considers whether the provision ofnon-audit services is compatible with maintaining the auditor’s independence.

All services provided to the Company by Deloitte & Touche LLP in fiscal 20162019 and fiscal 20152018 and related fees werepre-approved by the audit committee.Audit Committee.

Representatives of Deloitte & Touche LLP are expected to be present at the 2017 Annual Meeting and to be available to respond to your questions. They have advised us that they do not presently intend to make a statement at the 2017 Annual Meeting, although they will have the opportunity to do so.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”“FOR” RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

PROPOSAL 3

Advisory Vote on a Resolution To Approve Our 2019 Named Executive Officer Compensation

We are asking shareholders to approve, on an advisory basis,a non-binding resolution (commonly referred to asa “say-on-pay” resolution) to approve the Company’s 2019 named executive officer compensation as reported in this Proxy Statement.

We urge shareholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and our Board of Directors believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in aligning the interests of our officer team with those of shareholders.

We have committed toholding say-on-pay votes at each year’s annual meeting. In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking shareholders to approve the following advisory resolution at the Annual Meeting:

“RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed under the “Compensation Discussion and Analysis” and “2019 Compensation Tables” headings of this proxy statement.”

This resolutionis non-binding on the Board of Directors.Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding executive compensation.

THE BOARD OF DIRECTORS RECOMMENDS AN ADVISORY VOTE “FOR” THE RESOLUTION TO APPROVE OUR 2019 NAMED EXECUTIVE OFFICER COMPENSATION

PROPOSAL 4

Approval of the Amendment and Restatement of the Potbelly Corporation 2019 Long-Term Incentive Plan

The Board recommends approval of the amendment and restatement of the Potbelly Corporation 2019 Long-Term Incentive Plan (the “Plan”), which, if approved by our shareholders, will be effective as of June 24, 2020. The Plan, prior to the amendment and restatement, was initially approved by shareholders on May 16, 2019 (the “Prior Approval Date”). We are submitting the Plan, as amended and restated, to shareholders for approval in order to increase the current share reserve under the Plan by 900,000 shares and make certain other technical changes.

As of May 19, 2020, the latest practicable date prior to the publication of this Proxy Statement, there were 1,218,239 shares available for issuance under the existing long-term incentive plan. The Board believes approval of the amended and restated Plan is necessary to enable us continue to attract, retain and motivate our officers and employees.

We believe that equity awards are critical incentives to attracting, retaining and motivating our officers and employees. The increase in the share reserve will enable us to continue to be able to grant equity awards authorized by the Plan to deserving individuals and remain competitive with our industry peers. If this proposal is not approved, we believe we would be at a significant disadvantage against our competitors for attracting, retaining and motivating those individuals who are critical to our success, and we could be forced to increase cash compensation at a time when we are seeking to be careful in our uses of cash, reducing resources available to meet our other business needs.

A summary of the principal features of the amended and restated Plan is provided below, but it is qualified in its entirety by reference to the full text of the amended and restated Plan that is attached to this Proxy Statement asAppendix A.

Background

The purpose of the Plan is to (a) align the interests of our shareholders and the recipients of awards under the plan by increasing the proprietary interest of such recipients in our growth and success; (b) advance our interests by attracting and retaining qualified employees, outside directors and other persons providing services to us and/or our related companies; and (c) motivate such persons to act in the long-term best interests of our shareholders and our Company.

The Board approved an amendment and restatement of the Plan on May 15, 2020. The following are the most significant changes to the Plan included in the amendment and restatement, subject to approval of our shareholders, as more fully described under the heading “Summary of Plan” below:

On May 19, 2020, the latest practicable date prior to the publication of this Proxy Statement, the closing price of a share of our common stock on NASDAQ was $2.10.

If the amendment and restatement of the Plan is not approved by the Company’s shareholders, the Company will continue to operate the Plan in accordance with its existing terms.

As of December 31, 2019, six executive officers, sevennon-employee members of the Board of Directors and approximately 35 other employees and consultants were eligible to participate in the Plan.

Rationale

Equity is Essential to Talent Acquisition and Retention

The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with us with respect to talent. The additional shares, if approved, would be used for grants not only to our executive officers, but also to recruit and retain employees in our corporate headquarters. We firmly believe that employees with a stake in the future success of our business are highly motivated to achieve long-term growth and are well-aligned with the interests of our other equity-holders to increase shareholder value. It is essential that we continue the use of equity compensation to better position us in the market and allow us to retain our skilled employees while attracting talented new employees to help us achieve our objectives, which include increasing shareholder value by growing the business. The use of shares would enable us reduce cash compensation costs while leveraging equity to retain employees critical to the long-term success of the Company. Without the approval of an addition to our share reserve, we will be very challenged to continue to compete in this highly competitive market. This would ultimately result in the loss of critical talent and inhibit our ability to meet our future growth objectives.

The Size of Our Share Reserve Request is Reasonable

The Compensation Committee thoughtfully evaluated the appropriate number of shares for which to seek shareholder approval. The Compensation Committee conducted this evaluation at a time of significant volatility in the stock market and a material decline in our stock price due to unprecedented business disruption resulting from the COVID-19 pandemic and related macroeconomic factors. Because of the lower stock price at the time of the Compensation Committee’s decision and continuing uncertainty in relation to the timing of the market’s recovery, the Compensation Committee determined that 900,000 additional shares should be requested to allow the Company flexibility to retain and incentivize personnel that are critical to our success. The Compensation Committee is committed to being careful stewards of shareholder capital.

If our request to amend and restate the Plan and increase its share reserve is approved, we will have approximately 2.1 million shares available for grant after June 24, 2020. We currently anticipate that this reserve will be a sufficient amount of equity for attracting, motivating and retaining employees, directors and consultants for approximately one year. In addition to the number of shares we plan to reserve for issuance under the Plan, we also note that the Plan, as amended and restated, does not contain a “fungible ratio,” which was included previously in the Plan. Under this “fungible ratio,” full-value awards, such as PSUs and RSUs, are charged against the plan limit on a higher basis than 1:1 as a means of equating full value awards and options. Absent a fungible ratio, if the Compensation Committee grants full-value awards in the future, they will be charged against the Plan limit on aone-for-one basis. When an outstanding award under the Plan, prior to the amendment and restatement, or under the Amended and Restated Potbelly Corporation 2013 Long-Term Incentive Plan (the “Prior Plan”) expires or is canceled, forfeited, settled in cash or otherwise terminated without a delivery to the participant of the shares to which the award related, such undelivered shares would return to the Plan at the same rate at which they were originally charged against the plan limit, notwithstanding that the ratio for new awards would beone-to-one.

We Have Responsibly Managed Our Annual Burn Rate

Our three-year average annual burn rate from 2017 to 2019 was 2.2%, calculated for each year as the number of shares issuable pursuant to equity awards granted in such year divided by the respective weighted-average common shares outstanding during 2017, 2018 and 2019. We believe our three-year average annual burn rate is reasonable for a company of our size in our industry, given our broad-based use of equity awards to compensate our employees. We will continue to monitor our equity use in future years to ensure our burn rate is within competitive market norms.

Our CurrentEquity-Pay Mix Aligns Executive Incentives with Shareholder Gains

Our executive compensation consists of base salary payable in cash, annual cash bonuses based on the performance of each executive as well as that of the Company, and long-term incentives payable in the form of equity awards. Beginning with grants in 2019, our long-term performance based equity incentive award mix for executive officers changed from 50% stock options and 50% restricted stock units to 50% performance stock units and 50% restricted stock units. The change from stock options to performance stock units, while requiring the issuance of more shares, served to further align the interests of our shareholders and our executive officers by increasing the proprietary interest of our executive officers in the Company’s growth and success, advance the Company’s interests by attracting and retaining qualified employees over time, and motivate our executives to act in the long-term best interests of our shareholders. We believe these equity awards provide effective incentives to motivate our executives to take actions designed to increase our stock price. If we are unable to offer equity awards to new and existing executives, we may need to increase the cash component of our compensation.

Promotion of Good Corporate Governance Practices

The Plan includes a number of responsible corporate governance provisions which will remain in place in this Proposal Four. These include, but are not limited to, the following:

Summary of Plan

Administration. The Plan generally is administered by the Compensation Committee of our Board. The Compensation Committee selects award recipients under the Plan who will thereby become participants, the types of awards to be granted and the applicable terms, conditions, performance criteria, restrictions and other provisions of such awards, not inconsistent with the plan. The Compensation Committee also has the authority to conclusively interpret the Plan. Subject to the applicable securities exchange rules and applicable law, the Compensation Committee may delegate all or any portion of its responsibilities or powers under the Plan to persons selected by it.

Authorized Shares. If shareholder approval of the Plan is obtained, the total number of shares that will be available for issuance under the Plan will be equal to 900,000 shares plus the number of shares that were available under the Prior Plan immediately prior to Prior Approval Date. Shares of stock covered by an award will only be counted to the extent that they are actually used. Shares subject to substitute awards (i.e., awards or shares granted in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by us or any of our affiliates) will not be counted against the shares reserved for issuance under the Plan. Any shares of our common stock that (1) are subject to an award under the Plan or (2) are subject to awards that were granted under the Prior Plan and that are outstanding on the approval date, in any case that terminate by reason of expiration, forfeiture, cancellation, or otherwise, without the issuance of such shares, or that are settled in cash (collectively referred to as “Recycled Shares”) will be again available for grant under the Plan. Recycled Shares shall be added back to the number of shares of common stock reserved for issuance under the Plan on the same basis that they were charged to the number of shares reserved for issuance under the Plan or the Prior Plan, as applicable, at the time the award relating thereto was granted. The following shares of common stock may not again be made available for issuance under the Plan: (i) shares of common stock not issued or delivered as a result of the net settlement of an outstanding award; (ii) shares delivered to or withheld to pay the exercise price of an option or Stock Appreciation Right (“SAR”) or to pay the withholding taxes with respect to an award; (iii) shares of common stock repurchased on the open market with the proceeds of the exercise price of an option; or (iv) shares subject to substitute awards.

Additional Limits. No more than 1,200,000 shares of common stock may be subject to incentive stock options (“ISOs”) granted under the Plan. The aggregate value of all awards granted under the Plan to any outside director for any calendar year shall not exceed (y) $300,000 in total value or (z) in the event such outside director is first appointed or elected to the Board in such calendar year, $400,000 in total value.

Adjustments. In the event of a corporate transaction, including a stock dividend, stock split, reverse stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation,split-up,spin-off, exchange of shares, sale of assets or subsidiaries, combination or other corporate transaction, that affects our common stock such that the Compensation Committee determines that an adjustment is warranted in order to preserve the benefits or prevent the enlargement of benefits of awards under the Plan, the Compensation Committee will make adjustments to awards in a manner that it determines to be equitable in its discretion. Actions that the

Compensation Committee may take are: (i) adjustment of the number and kind of shares which may be delivered under the Plan (including adjustments to the individual limitations described above); (ii) adjustment of the number and kind of shares subject to outstanding awards; (iii) adjustment of the exercise price of outstanding options and SARs; and (iv) any other adjustments that the Compensation Committee determines to be equitable, which may include, without limitation, (A) replacement of awards with other awards which the Compensation Committee determines have comparable value and which are based on stock of a company resulting from the transaction, and (B) cancellation of the award in return for cash payment of the current value of the award, determined as though the award is fully vested at the time of payment, provided that in the case of an option or SAR, the amount of such payment may be the excess of the value of the shares of common stock subject to the option or SAR at the time of the transaction over the exercise price.

Eligibility. The Compensation Committee may grant awards under the Plan to any officer, director, employee, consultant, independent contractor or agent of the Company and/or a related company, and persons who are expected to become an officer, director, employee, consultant, independent contractor or agent of the Company or a related company. Awards to a person who is expected to become a service provider to the Company or a related company cannot be effective prior to the date on which such person’s service begins. ISOs may only be granted to employees of the Company and its corporate related companies which satisfy certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”). As of May 19, 2020, we had approximately 5,300 employees and ten directors, all of whom would be eligible to participate in the Plan if selected by the Compensation Committee.

Types of Awards. The Plan will provide for grants of options (including nonqualified stock options (“NQOs”) and ISOs), SARs, and Full Value Awards.

Special Vesting Rules. Except for (a) awards granted under the Plan with respect to shares of common stock which do not exceed, in the aggregate, fivepercent of the total number of shares of common stock reserved for issuance pursuant to the Plan, (b) awards granted in lieu of other compensation, and (c) awards that are a form of payment of earned performance awards or other incentive compensation provided that the performance period relating to such performance or incentive awards was at least one year, if a participant’s right to become vested in an award is conditioned on the completion of a specified period of service with the us or our affiliates being required, then the required period of service shall be at least one (1) year, except if accelerated in the event of the participant’s death or disability, or involuntary termination.

Transferability. Awards under the plan generally may not be transferred except through will or by the laws of descent and distribution; provided, however, that unless otherwise provided by the Compensation Committee, awards (other than an ISO) may be transferred to or for the benefit of the participant’s family (including, without limitation, to a trust or partnership for the benefit of a participant’s family) in accordance with rules established by the Compensation Committee.

Change in Control. In the event that (i) a participant is employed or in service on the date of a Change in Control (as defined in the Plan) and the participant’s employment or service, as applicable, is terminated by us, our successor or a related company that is the participant’s employer for reasons other than cause (as defined in the Plan) within 24 months following the Change in Control, or (ii) the Plan is terminated by us or our successor following a Change in Control without provision for the assumption, continuation or substitution of outstanding awards under the Plan, all options, SARs and related awards which have not otherwise expired will become immediately exercisable and all other awards will become fully vested; provided, however, that all awards with conditions and restrictions relating to the attainment of performance goals shall become vested assuming the higher of (A) achievement of all relevant performance goals at the target level of performance(pro-rated based upon the length of time within the performance period that has elapsed prior to the Change of Control) or (B) actual achievement of the performance goals as of the date of the Change of Control. A participant’s employment or service will be deemed to have been terminated by us or our successor for reasons other than for cause if the participant terminates employment or service after a substantial adverse alteration in the nature of the participant’s status or responsibilities from those in effect immediately prior to the Change in Control or a material reduction in the participant’s annual base salary and target bonus, or in the case of an outside director his annual compensation, as in effect immediately prior to the Change in Control. Special rules apply if, upon a Change in Control, awards in other shares or securities are substituted for outstanding awards under the Plan and if, immediately prior to the Change in Control, the participant becomes an employee or a director of, as applicable, the successor to us.

Amendment and Termination. The Board may, at any time, amend or terminate the Plan, and the Board or the Compensation Committee may amend any award agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected participant (or, if the participant is not then living, the affected beneficiary), adversely affect the rights of any participant or beneficiary under any award granted under the Plan prior to the date such amendment is adopted by the Board (or the Compensation Committee, if applicable). Adjustments to the Plan and awards on account of business transactions (as described above) are not subject to the foregoing prohibition. The provisions of the Plan that prohibit repricing of options and SARs or exchanges of an option or SAR for another award or cash payment if the exercise price is below fair market value on the date of the repricing or exchange cannot be amended unless the amendment is approved by our shareholders. No other amendment may be made to the Plan without approval of our shareholders if such approval is required by law or the rules of any stock exchange on which the stock is listed.

U.S. Federal Income Tax Implications of the Plan

The discussion that follows is a summary, based on U.S. federal tax laws and regulations presently in effect, of some significant U.S. federal income tax considerations relating to awards under the Plan. The applicable laws and regulations are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the Plan. This summary does not discuss state, local or foreign laws.

Stock Options. The tax treatment of a stock option depends on whether the option is an NQO or an ISO.

The grant of an NQO will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares of stock acquired over the exercise price for those shares of common stock, and we will be entitled to a corresponding deduction.

The grant of an ISO will not result in taxable income to the participant. The exercise of an ISO will not result in taxable income to the participant provided that the participant was, without a break in service, an employee of us and our eligible subsidiaries (determined under tax rules) during the period beginning on the date of the grant of the ISO and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Code).

The excess of the fair market value of the shares of common stock at the time of the exercise of an ISO over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the ISO is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares of common stock acquired pursuant to the ISO exercise, the participant will have a basis in those shares of common stock equal to the fair market value of the shares of common stock at the time of exercise.

If the participant does not sell or otherwise dispose of the shares of common stock within two years from the date of the grant of the ISO or within one year after receiving the transfer of such shares of common stock, then, upon disposition of such shares of common stock, any amount realized in excess of the exercise price will be taxed to the participant as capital gain, and we will not be entitled to any deduction for Federal income tax purposes.

If the foregoing holding period requirements are not met, the participant will generally realize ordinary income, and a corresponding deduction will be allowed to us, at the time of the disposition of the shares of common stock, in an amount equal to the lesser of (a) the excess of the fair market value of the shares of common stock on the date of exercise over the exercise price, or (b) the excess, if any, of the amount realized upon disposition of the shares of common stock over the exercise price.

Special rules apply if an option is exercised through the exchange of previously acquired stock

SARs. A participant will not be deemed to have received any income upon the grant of a SAR. Generally, when a SAR is exercised, the excess of the market price of common stock on the date of exercise over the exercise price will be taxable to a participant as ordinary income. We are entitled to a deduction in the year of exercise equal to the amount of income taxable to the individual.

Full Value Awards. The federal income tax consequences of a Full Value Award will depend on the type of award. The tax treatment of the grant of shares of common stock depends on whether the shares are subject to a substantial risk of forfeiture (determined under Code rules) at the time of the grant. If the shares are subject to a substantial risk of forfeiture, the participant will not recognize taxable income at the time of the grant and when the restrictions on the shares lapse (that is, when the shares are no longer subject to a substantial risk of forfeiture), the participant will recognize ordinary taxable income in an amount equal to the fair market value of the shares at that time. If the shares are not subject to a substantial risk of forfeiture or if the participant elects to

be taxed at the time of the grant of such shares under Code Section 83(b), the participant will recognize taxable income at the time of the grant of shares in an amount equal to the fair market value of such shares at that time, determined without regard to any of the restrictions. If the shares are forfeited before the restrictions lapse, the participant will be entitled to no deduction on account thereof. The participant’s tax basis in the shares is the amount recognized by him or her as income attributable to such shares. Gain or loss recognized by the participant on a subsequent disposition of any such shares is capital gain or loss if the shares are otherwise capital assets.

In the case of other Full Value Awards, such as restricted stock units or performance stock units, the participant generally will not have taxable income upon the grant of the award provided that there are restrictions on such awards that constitute a substantial risk of forfeiture under applicable Code rules. Participants will generally recognize ordinary income when the restrictions on awards lapse, on the date of grant if there are no such restrictions or, in certain cases, when the award is settled. At that time, the participant will recognize taxable income equal to the cash or the then fair market value of the shares issuable in payment of such award, and such amount will be the tax basis for any shares received. In the case of an award which does not constitute property at the time of grant (such as an award of units), participants will generally recognize ordinary income when the award is paid or settled.

We generally will be entitled to a tax deduction in the same amount, and at the same time, as the income is recognized by the participant.

Section 162(m) and Section 280G. Compensation that qualifies as “Performance-Based Compensation” is excluded from the $1 million deductibility cap of Code Section 162(m), and therefore remains fully deductible by the Company paying it. The Tax Reform and Jobs Act of 2017 (the “Act”) eliminated the Performance-Based Compensation exception of Code Section 162(m) for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible (assuming that it would have had the exception not been eliminated). Although an exception applies for certain awards in effect in place as of November 2, 2017, we do not believe that awards under the Plan will be covered by the exception.

Compensation to certain employees resulting from the earning or vesting of awards in connection with a change in control or termination following a change in control also may benon-deductible under Code Sections 4999 and 280G.

The foregoing provides only a general description of the application of federal income tax laws to certain awards under the Plan. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the Plan, as the consequences may vary with the types of awards made, the identity of the recipients and the method of payment or settlement.

New Plan Benefits

The following table sets forth time-vesting restricted stock units and performance-vesting performance stock units granted by the Company to the persons and groups named below under the Potbelly Corporation 2019 Long-Term Incentive Plan, contingent on shareholder approval of the amendment and restatement of our Plan. Should shareholder approval not be obtained, these awards will be automatically forfeited. The time-vesting RSUs vest over three years, beginning on the first anniversary of the grant date. The performance-vesting PSUs will vest in 25% increments contingent upon the Company’s common stock hitting certain share price hurdles. The number of PSUs included in the table below assumes that the applicable performance goal is achieved. The Company has not granted awards to other employees or non-executive directors subject to shareholder approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE PLAN.

Equity Compensation Plan Information

The following table presents certain information related to our equity incentive plans under which our equity securities are authorized for issuance as of December 31, 2019:

EXECUTIVE OFFICERS

BelowIn addition to Alan Johnson, our President and Chief Executive Officer, whose biography is a list ofincluded under the names,heading “Director Biographies,” our executive officers, their ages as of December 25, 2016, positions,29, 2019, and a brief account of thetheir business experience of the individuals who serve as our executive officers.follows:

Name		Age					Position
	Aylwin LewisSTEVEN CIRULUS			62			Chairman, Chief Executive Officer and President
	Michael Coyne			53			Senior Vice President and Chief Financial Officer
Julie Younglove-Webb			46			Senior Vice President, Operations
Matthew Revord			53			Senior Vice President, Chief LegalFinancial Officer General Counsel and SecretaryChief Strategy Officer Age: 49
Nancy Turk			A Wreck
	52

Experience

Steven Cirulis has been our Senior Vice President, Chief Financial Officer and Chief Strategy Officer since April 2020. Mr. Cirulis previously served in a strategic planning, finance and analytical consulting role for the Company since December 2019. Prior to that, Mr. Cirulis served as Senior Vice President, Strategic Projects at Panera Bread from 2017 to 2018. Prior to his role at Panera Bread, Mr. Cirulis was the Global Vice President, Corporate Strategy, at McDonald’s Corporation from 2011 to 2016. Prior to joining McDonald’s, Mr. Cirulis was the Senior Director of Strategy, Business Development and Insights, for Gap Brand at Gap, Inc. from 2006 to 2011.

		JULIE YOUNGLOVE-WEBB Senior Vice President, Chief PeopleRestaurant Operations Officer and Corporate Communications Age: 49
	Anne Ewing			TKY on FLATS – no cheese, add mushroom
		52			Senior Vice President, Development
Sherry Ostrowski			47			Senior Vice President, Brand and Sales Development

Aylwin LewisExperience has served as our Chief Executive Officer and President and a director since June 2008. From September 2005 to February 2008, Mr. Lewis served as Chief Executive Officer and President of Sears Holdings Corporation. Prior to that, Mr. Lewis was President of Sears Holdings and Chief Executive Officer of KMart and Sears Retail following Sears’ acquisition of KMart Holding Corporation in 2005. Mr. Lewis had been president and Chief Executive Officer of KMart since October 2004 until that acquisition. From January 2003 to October 2004, he was President, Chief Multi-Branding and Operating Officer of Yum! Brands, Inc. and served as Chief Operating Officer of Yum! Brands from December 1999 to January 2003. Mr. Lewis has nearly 30 years of experience in the restaurant industry. Mr. Lewis is also a member of the board of directors of The Walt Disney Company and Marriott International, Inc.

Michael CoyneJulie Younglove-Webb has been our Senior Vice President and Chief Financial Officerof Restaurant Operations since May 2015. Prior to joining Potbelly, Mr. Coyne was at CNA Financial from 2005 until 2015, most recentlyDecember 2018, having served as Senior Vice President, Small Business and prior to that as divisional Chief Financial Officer of CNA’s Property & Casualty Operations business. Prior to CNA, Mr. Coyne spent seven years at Sears Holding Company, culminating as Vice President and Treasurer.

Julie Younglove-Webb has been our Senior Vice President of Operations since May 2015. Ms. Younglove-Webb joined Potbelly in 2008 first learning operations as a General Manager, then serving as a District Manager before assuming various operations roles before being promoted to Central Zone Vice President.reaching her current position. Prior to joining Potbelly, Ms. Younglove-Webb was Senior Vice President and General Manager of Sears Essentials at Sears Holding Corporation, a role she assumed in 2005 after Sears’ acquisition of KMart Holding Corporation. Prior to that acquisition, Ms. Younglove-Webb held various roles of increasing responsibility beginning when she joined KMart in 1999 as Manager, Information Technology and culminating with her role as Vice President, Marketing.

		BRANDON RHOTEN Senior Vice President, Chief Marketing Officer Age: 40
				Wrecking Ball

Experience

Brandon Rhoten has been our Senior Vice President and Chief Marketing Officer since June 2018. He is responsible for all marketing activities, including brand marketing, digital & social media and consumer insights. Mr. Rhoten joined Potbelly from Papa John’s International, Inc., where he served as Global Chief Marketing Officer from May 2017 through May 2018. Prior to Papa John’s, Mr. Rhoten was Vice President of Advertising, Media and Digital/Social at Wendy’s International from May 2011 through May 2017. Mr. Rhoten started his career in marketing at the advertising agency Gyro.

		MATTHEW REVORD Senior Vice President, Chief Legal Officer, Chief People Officer and Secretary Age: 56
				Chicken Salad

Experience

Matthew Revordhas been our Senior Vice President, Chief Legal Officer, General CounselChief People Officer and Secretary since February 2014May 2018 and oversees all legal matters and human resources matters of the Company and international development.Company. In February 2014 Mr. Revord became the Company’s Chief Legal Officer having joined Potbelly in January 2007 as our Senior Vice President, General Counsel and Secretary. From January 2002 to January 2007, Mr. Revord served as Deputy General Counsel of Brunswick Corporation and General Counsel of Brunswick New Technologies.

		Daniel Lecocq Senior Vice President, Franchise & Corporate Development Age: 58
				BLTA with mayo and extra avocado

Nancy TurkExperience

Daniel Lecocq has been our Senior Vice President, Chief People Officer andFranchise & Corporate CommunicationsDevelopment since February 2014. Ms. TurkJanuary 2020. Mr. Lecocq joined Potbelly in July 2008 as our Senior Vice President, Human Resources and Corporation Communications. From 2005 to July 2008, Ms. TurkCompany from Dine Brands Global, where he served as the Divisional Vice President of Corporate CommunicationsDevelopment and Finance for Dine Brands’ international business since 2016. Prior to Dine Brands, Mr. Lecocq was the Vice President, Business Development at Sears Holdings,Coffee Bean and held various human resources leadership roles at Sears Holdings since 1993, where she was involved in divestitures, mergers and acquisitions with Sears Credit, Lands’ End and KMart.

Anne Ewing has been our SeniorTea Leaf from 2014-2015. Prior to that, Mr. Lecocq served as the Vice President, Development since October 2013. Ms. Ewing joined Potbelly in March 2007 and Administration at Krispy Kreme Doughnut Corporation from 2005-2014. Mr. Lecocq has held various leadershipmanagement positions in Operationsat Williams-Sonoma, The Gap and Marketing. In November 2012, Ms. Ewing was promoted to VP, Development. Prior to joining Potbelly, Ms. Ewing spent 13 years with Starbucks in various leadership positions including Vice President of Operations for the Northeast and Vice President of New Store Development for the Midwest.Yum International.

Sherry Ostrowski has been our Senior Vice President, Brand and Sales Development since March 2016. Ms. Ostrowski joined Potbelly in November 2012 as Vice President of Marketing. She is responsible for all marketing activities, including brand marketing, menu innovation, calendar development, digital & social media and consumer insights. Prior to joining Potbelly, Ms. Ostrowski was at Taco Bell from 2000 through 2012, where she held various roles culminating with her position as Sr. Director, Marketing (Brand Execution, Field Marketing &Non-Traditional Channels). She worked on the advertising agency-side of the business prior to 2000.

EXECUTIVECOMPENSATION DISCUSSION AND DIRECTOR COMPENSATIONANALYSIS

This Compensation Discussion and Analysis section is intended to provide our shareholders with a clear understanding of our compensation philosophy, objectives and practices; our compensation setting process; our executive compensation program components; and the decisions made with respect to the 2019 compensation of each of our Named Executive Officers (“NEOs”). For 2019 our NEOs were:

IntroductionExecutive Summary

Performance Overview for 2019. Fiscal year 2019 was a transition year for our business and our leadership team as we continued to execute our strategies to return to sustainable and long-term profitable growth. We launched initiatives to increase our sales and traffic, which included rolling out new menu options, addingoff-premise sales options, and increasing marketing and brand awareness programs. We made the investments required and tested new ideas to drive brand awareness, interest and purchase intent, and to support our topline, margin, profitability and growth aspirations. While we achieved meaningful progress toward our objectives, and the fourth quarter of fiscal year 2019 represented our best comparable same-store sales in over three years, we recognized that there is still work to be done as our actions did not translate into share price performance in 2019.

Our incentive compensation plans worked as intended in 2019. The payouts under those plans were strongly aligned with our financial and stock price performance – demonstrating our commitment to structure an executive compensation program that pays for performance.

2019 Pay Actions. As a result of the above, our 2019 executive compensation was significantly impacted. There were no cash bonuses to our named executive officers and base salary increases were limited. In addition, the long-term incentive equity awards granted to our executive officers were restructured to 50% performance units and 50% restricted stock units, which further tied executive pay to the Company’s and individual’s annual performance.

Compensation Philosophy and Objectives

Our compensation philosophy is to pay for performance, rewarding employees when performance targets are met. Merit increases, annual incentive compensation, equity awards, and incremental paid time off are all tied to performance and results. Our compensation programs are designed to attract, retain, motivate, and reward employees. PayOur pay program is designed to compensate employees commensurate with the scope and influence of the employee’s role and the extent to which an employee contributes to the achievement of key initiatives and financial targets, and demonstrates our values. All of our compensation programs are designed to align and reward actions that we believe contribute to our competitiveness and encourage superior performance.

For 2013, in preparation for our IPO, management engaged compensation consultants, Aon Hewitt, to conduct an analysis of our compensation programs and provide recommendations for how best the executive pay programs could be designed after our IPO. In addition to providing advice about broad-based plans generally available to all salaried employees, Aon Hewitt provided:

The compensation committee considered Aon Hewitt’s recommendations as well as relevant market practices when setting executive compensation to align our executive compensation program with the market for which we compete for executive talent. Our market for executive recruiting is generally other restaurant or retail concepts. Fornon-operations executives, we look at the general restaurant industry. In evaluating the competitiveness of our executive compensation program, we target compensation against the restaurant industry, specifically the limited-service restaurant segment, and national and local competitors to help ensure we are competitive, focusing on items such as equity awards, merit pay, incentive pay and paid time off. We evaluate our executives on a scale of one through five. A score of three means the executive is a “Contributor,” four is a “High Contributor” and five is a “Star.” Annual cash compensation varies based on the executive’s score, other individual performance measures, Company performance, and contributions to Potbelly.

Executive pay is tied to both the Company’s and the individual’s annual performance. Merit increases, annual incentive compensation, stock options,equity compensation, when granted, and paid time off are generally awarded in March

or April of each year, following completion of the first quarter annual performance review cycle, the annual financial audit and approval from the compensation committee.Compensation Committee. The employment agreements of our named executive officers specify each executive’s annual incentive bonus target under our current bonus program. In addition, at the discretion of the compensation committeeCompensation Committee in the case of our Chief Executive Officer, and at the discretion of our Chief Executive Officer and upon the approval of the compensation committeeCompensation Committee in the case of our other executive officers, there may be an increase or decrease applied to the annual bonus awarded to an executive, including the other named executive officers, in order to account for exceptional circumstances. However, it is anticipated that such bonuses would only be awarded under unusual circumstances to further the objectives of our compensation program. For example,

Elements of Executive Compensation

The following table provides information regarding the named executive officers received a discretionary cash bonus for the performance in fiscal year 2016. See“–Non-Equity Incentive Awards–2016 Discretionary Bonus” below.

In 2015, the compensation committee engaged Aon Hewitt to conduct an analysis of and provide recommendations for our director compensation programs. The compensation committee considered the benchmarking analysis provided by Aon Hewitt as well as market practice when forming their recommendation to the Board of Directors concerning appropriate compensation for memberselements of our Board of Directors. Theexecutive compensation committee also engaged Aon Hewitt in 2015 to conduct a competitive analysis of executive compensation. In 2016, Aon Hewitt provided consulting services modeling possible equity plan share request size and compliance with institutional shareholder advisor governance guidelines. Aon Hewitt is currently benchmarking executive equity compensation and is also engaged in a review of the CEO’s executive employment agreement. Aon Hewitt also provides the Company with consulting services concerning employee benefit plans.program.

Other Compensation Policies. In addition to the principal compensation elements described above, we provide our executive officers with access to the same benefits we provide all of our full-time employees. Our officers also receive certain limited perquisites and other personal benefits that we believe are reasonable and consistent with our compensation objectives. These perquisites have been identified in the “Summary Compensation Table.” We also providesign-on bonuses andnew-hire equity awards (subject to a time-based vesting period) when the Compensation Committee determines it is necessary and appropriate to advance the Company’s interests, including to attracttop-executive talent from other companies.Sign-on bonuses and new hire equity awards are an effective means of offsetting the compensation opportunities executives forfeit when they leave a former employer to join the Company.

Our Executive Compensation Process

Compensation for our executive officers is comprised of base salary, target value of long-term incentive, and target annual incentive bonus. Executive compensation is designed to be competitive with peer companies and market data, as explained below under “Role of Market Data and Our Peer Group.”

Roles and Responsibilities of the Compensation Committee, Compensation Consultant and the CEO in Setting Executive Officer Compensation.

Compensation Committee

The Compensation Committee reports to the Board. In accordance with its obligations as set forth in its charter, the Compensation Committee retains independent consultants and counsel to assist it in evaluating compensation

as well as working with the CEO and the CFO to set performance goals. The Compensation Committee determines and approves executive compensation annually, with base salaries, bonus payments (for performance the prior fiscal year), performance goals for long-term incentive grants and annual incentive bonuses approved during the first quarter of the fiscal year. This process allows the Compensation Committee to consider comprehensive information, including the Company’s performance and each named executive officer’s individual performance during the prior fiscal year, when making final compensation decisions.

Compensation Consultant

In 2019, the Compensation Committee retained the Rewards Solutions practice at Aon plc to provide executive compensation consulting services. Aon attended Compensation Committee meetings when requested and worked with management as necessary to gather and review information required to carry out its obligations. Aon also advised the Compensation Committee on the appropriateness and competitiveness of our compensation programs relative to market practice, our strategy and our internal processes.

CEO

Mr. Johnson, our CEO, and other members of the management team support the Compensation Committee in the executive compensation process and regularly attend portions of committee meetings. Mr. Johnson provides the Compensation Committee with his perspective regarding the performance of his executive leadership team, including the other named executive officers. Mr. Johnson makes recommendations to the Compensation Committee on the full range of annual executive compensation decisions, except with regard to his own compensation. In accordance with NASDAQ rules, Mr. Johnson was not present when his compensation for fiscal 2019 was being discussed and did not vote on executive compensation matters, and neither Mr. Johnson nor other members of management attended executive sessions of the Compensation Committee.

Role of Market Data and Our Peer Group. As part of the annual executive compensation process, the Compensation Committee reviews compensation levels and practices for executives holding comparable positions at peer group companies and also includes broader compensation survey data. Our market for executive recruiting is generally other restaurant or retail companies. In evaluating the competitiveness of our executive compensation program, we compare our executive’s compensation against the restaurant industry, specifically the limited-service restaurant segment, and national and local competitors to help ensure we are competitive, focusing on items such as equity awards, merit pay, incentive pay and paid time off.

The Compensation Committee does not explicitly benchmark our executive officers’ compensation to the peer group, but the peer group data is one of multiple reference points used to evaluate our executive compensation programs.

2019 Peer Group. Our peer group consists of casual dining, fine dining, quick casual and quick service restaurants with similar market capitalization and revenue. The Compensation Committee and independent directors considered the peer group in connection with their fiscal 2019 executive compensation decisions. The Compensation Committee reviews the composition of the peer group periodically and will make adjustments to the peer group in response to changes in the size of business operations of the Company and of companies in the peer group, companies in the peer group being acquired or taken private, and other companies in the restaurant industry becoming public. The table below lists the companies that were considered for fiscal 2019.

2016 Summary Compensation TableBase Salary

The following table summarizesCompensation Committee generally reviews and approves base salaries annually during its meetings in the first quarter with new salaries becoming effective inmid-April. For fiscal 2019, the Compensation Committee reviewed and approved the base salaries shown below (and with respect to Mr. Johnson, the Compensation Committee recommended, and the independent directors approved). As the named executive officers did not receive any merit, equity or bonus compensation in fiscal year 2018, Ms. Young-love Webb and Mr. Revord were granted merit increases for fiscal year 2019.

Annual Incentive Plan

The Company has established the Support Center Annual Incentive Plan to provide annual cash incentive compensation to executives in its corporate offices (the “Support Center”). The graphic below illustrates the weighting of the metrics and the calculation of the objective component of the Annual Incentive Plan.

This plan sets a threshold, target, and maximum level for each of these metrics applicable to all executive officers, and the amounts paid are based on the actual results achieved by the Company. The targets are set for the years ending December 25, 2016year by the Compensation Committee based on recommendations from the CEO and December 27, 2015 earnedthe CFO and are communicated to executives at the beginning of each year. To be eligible for an award under the plan, the named executive officer must receive an annual individual performance appraisal rating of “Contributor” or higher. The threshold, target and maximum criteria and actual fiscal year 2019 results for Same Store Sales and Adjusted EBITDA are as follows.

Equity awards represent an important component of our named executive officers.officer compensation. Beginning with grants in 2019, the equity mix for executive officers changed from 50% stock options and 50% restricted stock units to 50% performance stock units and 50% restricted stock units. The change from stock options to performance stock units served to further align the interests of our shareholders and our executive officers by increasing the proprietary interest of our executive officers in the Company’s growth and success; advance the Company’s interests by attracting and retaining qualified employees over time; and motivate our executives to act in the long-term best interests of our shareholders. To be eligible for an award, the named executive officer must receive an annual individual performance appraisal rating of “Contributor” or higher the previous year. All of our named executive officers, other than Mr. Fitzgerald, who joined the Company in December 2018, were eligible to receive an award in 2019. The graphic below illustrates the weighting of the metrics and the calculation of the long-term incentive award.