Equity Incentive Plan and Unit Option Plan |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Incentive Plan and Unit Option Plan | Equity Compensation 2021 Omnibus Incentive Plan
The Company maintains its 2021 Omnibus Incentive Plan (the “Plan”) under which it grants stock-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 Group’s stockholders. The Plan allows to issue and grant 15,125,000 shares.
The Company measures compensation expense for stock-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). During the six months ended July 2, 2022, the Company granted stock-based awards including restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”) and stock options under the Plan. The grant date value of RSUs and PSUs are 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.
Restricted Stock Unit Grants
RSUs are subject to or four years’ service vesting period. RSUs activity for the six months ended July 2, 2022 is as follows:
Stock-based compensation expense for RSUs is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the above awards was approximately $679 and $1,278 for the three and six months ended July 2, 2022, respectively. As of July 2, 2022, there was an aggregate of $5,101 of unrecognized expense related to the restricted stock units granted, which the Company expects to amortize over a weighted-average period of 3.1 years.
Performance-based Restricted Stock Unit Grants
The performance criteria applicable to PSUs is based on the satisfaction of performance conditions based on the achievement of the Company’s performance metrics. The number of PSUs that become earned can range between 0% and 200% of the original target number of PSUs awarded for the 2022 awards. As of July 2, 2022, the Company deemed it probable that the performance condition will be met and therefore concluded to value the PSUs based on a 100% payout. PSUs are subject to a three-year performance vesting period. As of July 2, 2022, PSUs activity for the six months ended July 2, 2022 is as follows:
Stock-based compensation expense for PSUs is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the performance-based awards was approximately $138 for the three months and six months ended July 2, 2022. As of July 2, 2022, there was an aggregate of $2,399 of unrecognized expense related to the performance-based stock units granted, which the Company expects to amortize over a weighted-average period of 2.5 years.
Stock Options
Stock options are granted by applying a valuation method to determine the grant date fair value for each stock option award. Stock options awards typically vest in 25% annual installments on each of the first anniversaries of the vesting commencement date and expire ten
years from the grant date. The fair value of each option is estimated using a Black-Scholes option valuation model using the independent valuations of the Company’s stock.
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 is as follows
Stock options activity for the six months ended July 2, 2022 is as follows:
Stock-based compensation expense for stock options is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. At July 2, 2022, total compensation expense related to stock options was approximately $94 for the three and six months ended July 2, 2022. Total unamortized stock-based compensation expense related to the unvested stock options was approximately $3,193, which the Company expects to amortize over a weighted-average period of 3.8 years.
Midco - Class B Unit Incentive Plan
Prior to the Business Combination, commencing on March 15, 2018, the Board of Directors of Midco approved the Class B Unit Incentive Plan (the “Class B Plan”), which was a form of long-term compensation that provided for the issuance of ownership units to employees for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of Midco.
As a result of the Business Combination, the Board of Directors approved an accelerated vesting for 16,079 units (equivalent to 4,012,873 shares of Group common stock) granted in connection with the Class B Plan, to allow accelerated vesting of the units upon consummation of the Business Combination. Effective June 7, 2021, as a result of the Business Combination, the Class B Plan was terminated.
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