Equity Compensation |
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| Equity Compensation |
12. Equity Compensation
2021 Omnibus Incentive Plan
We maintain our 2021 Omnibus Incentive Plan (the “Plan”) under which we grant 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 our stockholders. The Plan allows us to issue and grant 15,125,000 shares.
We measure compensation expense for share-based awards in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). During the year ended January 3, 2026, we 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 our 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. 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 Compensation Committee of the Board of Directors (the “Compensation Committee”). Share-based compensation expense is recognized straight-line over the respective vesting periods, reduced for actual forefeitures and is included in general and administrative expense in the accompanying Consolidated Statement of Operations and Comprehensive Income.
In connection with these equity awards, share-based compensation expense was $16.2, $10.7 and $7.1 and the income tax benefit from share-based compensation was $2.3, $1.9 and $1.4, for the years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively.
Restricted Stock Unit Grants
RSUs are subject to a vesting period between and four years. RSU activity for the years ended January 3, 2026 and December 28, 2024 is as follows:
Total compensation expense related to the above awards was approximately $13.0, $9.4, and $3.5 for the years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively. As of January 3, 2026, there was an aggregate of $12.0 of unrecognized expense related to the RSUs granted, which the Company expects to amortize over a weighted-average period of 1.3 years.
Performance-based Restricted Stock Unit Grants
PSU awards are based on the satisfaction of the Company’s three-year cumulative financial targets. The number of PSUs that can be earned range from 0% and 200% of the original target number of PSUs. PSUs are subject to a two-year or three-year performance cliff-vesting period.
PSUs activity for the years ended January 3, 2026 and December 28, 2024 is as follows:
The above table represents PSUs assuming 100% of target payout at the time of the grant. Included in the 2023 grants are 193,548 units granted as part of the normal annual PSU grants. 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 January 3, 2026, the Company deemed the estimate of the PSUs granted in the year ended December 30, 2023 to be issued at 0% of target, and have reflected such estimates within the share-based compensation expense.
Included in the 2024 grants are 215,845 units granted as part of the normal annual PSU grants. 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 January 3, 2026, the Company deemed the estimate of the PSUs granted in the year ended December 28, 2024 to be issued at 0% of target, and have reflected such estimates within the share-based compensation expense.
Included in the 2024 grants are 599,743 units granted as a special incentive to retain key members of the management team. The actual payout of the 2024 grants will be in a range of 0% to 200%, depending on performance results for the two-year performance period from December 29, 2024, through January 2, 2027. As of January 3, 2026, the Company deemed the estimate of the PSUs granted in the year ended December 28, 2024 to be issued at 58% of target, and have reflected such estimates within the share-based compensation expense.
Included in the 2025 grants are 381,056 units granted as part of the normal annual PSU grants. The actual payout of the 2025 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from December 29, 2024, through January 1, 2028. As of January 3, 2026, the Company deemed the estimate of the PSUs granted in the year ended January 3, 2026 to be issued at 100% 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.
A summary of the assumptions used in determining the fair value of stock options for the year ended December 30, 2023 is below. There were no stock options granted for the years ended January 3, 2026 and December 28, 2024.
(1)Expected life is the weighted average of mid-point between vesting and expiry.
(2)The risk-free rate is based on an average of U.S. Treasury yields in effect at the time of grant corresponding with the expected term.
(3)Expected volatility is based on historical volatilities from a group of comparable entities for a time period similar to that of the expected term.
Stock options activity for the years ended January 3, 2026 and December 28, 2024 is as follows:
The intrinsic value of each option is the difference between the fair market value of our common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation for fiscal 2025 and fiscal 2024 is less than the weighted average exercise price of $9.40, therefore these stock options have no intrinsic value as of the years ended January 3, 2026 and December 28, 2024, respectively.
Total compensation expense related to stock options was approximately $0.6, $0.6, and $0.8 for the years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively. Total unamortized share-based compensation expense related to the unvested stock options was approximately $0.3, which the Company expects to amortize over a weighted-average period of 0.3 years. There were no stock options exercised during the year ended January 3, 2026.
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