Equity Compensation |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Compensation | Equity Compensation 2021 Omnibus Incentive Plan
The Company maintains its 2021 Omnibus Incentive Plan (the “Plan”) under which it grants share-based awards to eligible directors, officers and employees in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Company’s stockholders. The Plan allows the Company to issue and grant 15,125,000 shares.
The Company measures compensation expense for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). During the nine month period ended September 28, 2024, the Company granted share-based awards including restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) under the Plan. The grant date fair value of RSUs and PSUs is equal to the closing price of the Company’s common stock on either: (i) the date of grant; or (ii) the previous trading day, depending on the level of administration required. Forfeitures are recognized as they occur, any unvested RSUs, PSUs or stock options are forfeited upon a “Termination of Service,” as defined in the Plan, or as otherwise provided in the applicable award agreement or determined by the Company’s Compensation Committee of the Board of Directors. In connection with the equity awards, the share-based compensation expense was $1.9 and $1.8 for the three month periods ended September 28, 2024 and September 30, 2023, respectively, and $7.2 and $5.4 for the nine month periods ended September 28, 2024 and September 30, 2023, respectively. The income tax benefit from share-based compensation was $0.4 and $0.3 for the three month periods ended September 28, 2024 and September 30, 2023, respectively, and $1.3 and $1.0 for the nine month periods ended September 28, 2024 and September 30, 2023, respectively.
Restricted Stock Unit Grants
RSUs are subject to a vesting period between and four years. RSU activity for the nine month period ended September 28, 2024 is as follows:
Share-based compensation expense for RSUs is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the above awards was approximately $2.9 and $1.0 for the three month periods ended September 28, 2024 and September 30, 2023, respectively, and $6.5 and $2.6 for the nine month periods ended September 28, 2024 and September 30, 2023, respectively. As of September 28, 2024, there was an aggregate of $20.4 of unrecognized expense related to the RSUs granted, which the Company expects to amortize over a weighted-average period of 2.0 years.
Performance-based Restricted Stock Unit Grants
PSU awards are based on the satisfaction of the Company’s three-year cumulative adjusted EBITDA. The number of PSUs that become earned can range between 0% and 200% of the original target number of PSUs. PSUs are subject to a three-year performance cliff-vesting period.
PSUs activity for the nine month period ended September 28, 2024 is as follows:
(1) This number excludes 242,353 performance stock units, which represents the incremental number of units that would be issued based on performance results from previously-granted PSU awards.
(2) This number includes 431,355 performance stock units, which are projecting to payout at 0% due to performance results from previously-granted PSU awards.
Share-based compensation expense for PSUs is recognized straight line over the requisite vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation (benefit) expense related to the PSUs was approximately $(1.1) and $0.6 for the three month periods ended September 28, 2024 and September 30, 2023, and $0.2 and $2.2 for the nine month periods ended September 28, 2024 and September 30, 2023, respectively. As of September 28, 2024, there was an aggregate of $0.4 of unrecognized expense related to the PSUs granted, which the Company expects to amortize over a weighted-average period of 0.3 years.
The above table represents PSUs assuming 100% of target payout at the time of the grant. The actual payout of the 2022 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 2, 2022, through December 28, 2024. As of September 28, 2024, the Company deemed the estimate of the PSUs granted in fiscal year ended December 31, 2022 to be issued at 200% of target, and have reflected such estimates within the share-based compensation expense.
The actual payout of the 2023 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 1, 2023, through December 27, 2025. As of September 28, 2024, the Company deemed the estimate of the PSUs granted in the nine month periods ended September 28, 2024 to be issued at 0% of target, and have reflected such estimates within the share-based compensation expense.
The actual payout of the 2024 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 1, 2024, through December 26, 2026. As of September 28, 2024, the Company deemed the estimate of the PSUs granted in the nine month period ended September 28, 2024 to be issued at 0% of target, and have reflected such estimates within the share-based compensation expense.
Stock Options
Stock options are granted by applying a Black-Scholes valuation model to determine the fair value on the grant date. Stock options are subject to a vesting period of either or four years. Stock option awards typically vest in 33% or 25% annual installments on each annual anniversary of the vesting commencement date for the duration of the vesting period, and expire ten years from the grant date.
The principal assumptions utilized in valuing stock options include, the expected option life, the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon with a maturity equal to the expected life of the option), the expected stock price volatility using the historical and implied price volatility, and the expected dividend yield.
Stock option activity for the nine month period ended September 28, 2024 is as follows:
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