XML 29 R25.htm IDEA: XBRL DOCUMENT v3.20.1
STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Stock and Incentive Plans
The Company has outstanding stock-based compensation awards that were granted by the compensation committee of Holdings' Board of Directors (the "Compensation Committee") under the following three stock-based employee compensation plans:
•the GNC Holdings, Inc. 2018 Stock and Incentive Plan (the "2018 Stock Plan") amended adopted in May 2018, formerly the GNC Holdings, Inc. 2015 Stock and Incentive Plan adopted in May 2015;
•the GNC Holdings, Inc. 2015 Stock and Incentive Plan (the "2015 Stock Plan") amended and adopted in May 2015, formerly the GNC Holdings, Inc. 2011 Stock and Incentive Plan adopted in March 2011; and
•the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan adopted in March 2007 (as amended, the "2007 Stock Plan").
All plans have provisions that allow for the granting of stock options, restricted stock and other stock-based awards and are available to eligible employees, directors, consultants or advisors as determined by the Compensation Committee. The Company will not grant any additional awards under either the 2007 Stock Plan or 2015 Stock Plan. Up to 20.2 million shares of common stock may be issued under the 2018 Stock Plan (subject to adjustment to reflect certain transactions and events specified in the 2018 Stock Plan for any award grant), of which 6.6 million and 11.1 million shares remain available for issuance as of December 31, 2019 and 2018, respectively, which has been reduced by 4.5 million shares and 2.2 million shares (which includes the allocation factor and performance multiplier), respectively, performance-based restricted stock units committed but not granted. See below "restricted stock awards" for more information.
Non-Plan Inducement Awards
On September 11, 2017, in connection with the appointment of the Company's new Chief Executive Officer, the Company made the following non-plan inducement awards:
•
"make-whole" restricted stock awards consisting of the following:
◦
$600,000, which are 67,000 fully vested restricted shares with transfer restrictions that lapse on the earliest to occur of a Change in Control of the Company, the third anniversary of grant or death, disability or other separation from service for any reason;
◦
$950,000, which are 106,000 restricted shares that vested on December 29, 2017; and
◦
$1,200,000, which are 134,000 unvested restricted shares scheduled to vest in three equal installments on each of the first three anniversaries of grant subject to acceleration to cover any applicable income and payroll tax withholding resulting from the recognition of ordinary income pursuant to a Section 83(b) election ("Section 83(b) Tax Liability"); and
•
time-vested awards consisting of 212,000 restricted shares and 519,000 stock options in the amount of $1,900,000 each, which are scheduled to vest in three equal installments on each of the first three anniversaries of grant.     
The Company recognized $1.5 million in stock-based compensation in both 2019 and 2018 for the non-plan inducement awards.
Stock-Based Compensation Activity
The following table sets forth a summary of all stock-based compensation awards outstanding under all plans:
 
December 31, 2019
 
December 31, 2018
Time-based stock options
1,897,109

 
2,173,488

Time-based restricted stock awards
1,040,431

 
817,696

Performance-based restricted stock units
954,937

 
277,817

Performance-based restricted stock awards with a market condition
—

 
199,028

Total share awards outstanding
3,892,477

 
3,468,029


The Company recognized $4.6 million, $6.8 million and $8.4 million of total non-cash stock-based compensation expense for the years ended December 31, 2019, 2018 and 2017, respectively, net of estimated forfeitures based on the Company's historical experience and future expectations. At December 31, 2019, there was $9.9 million of total unrecognized compensation cost related to non-vested stock-based compensation, net of expected forfeitures, for all awards previously made that are expected to be recognized over a weighted-average period of 1.4 years. In 2019, 2018 and 2017, there were no stock options exercised.
Stock Options
Time-based stock options were valued using the Black-Scholes model with exercise prices at the Company's stock price on the date of grant which typically vest at 25% per year over a four-year period except for the non-plan inducement awards as explained above. No stock options were granted during the year ended December 31, 2019 and 2018. The following table sets forth a summary of stock options under all plans.
 
Total Options
 
Weighted
Average
Exercise Price
 
Weighted Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2018
2,173,488

 
$
10.76

 
 
 
$
—

Granted
—

 
$
—

 
 
 
 
Exercised
—

 
$
—

 
 
 
$
—

Forfeited and expired
(276,379
)
 
$
13.87

 
 
 
 
Outstanding at December 31, 2019
1,897,109

 
$
10.30

 
7.1
 
$
—

 
 
 
 
 
 
 
 
Exercisable at December 31, 2019
1,107,266

 
$
10.90

 
6.9
 
$
—


The assumptions used in the Company's Black Scholes valuation during the year ended December 31, 2017 were as follows:
 
Year ended December 31, 2017
Dividend yield
0%
Expected term
 6 - 6.3 years
Volatility
38.2% - 40.8%
Risk free rate
1.8% - 2.1%

The option term has been estimated by considering both the vesting period and the contractual term. Volatility was estimated giving consideration to a peer group and the Company's own volatility. The Black Scholes valuation resulted in a weighted average grant date fair value in 2017 of $3.50.
Restricted Stock Awards
Under the 2018 Stock Plan, the Company granted time-based and performance-based restricted stock and restricted stock units as well as, performance restricted shares with a market condition. Time-based awards vest in equal annual installments over a period of three years.
Performance-based restricted stock units vest after a period of three years and the achievement of performance targets; based on the extent to which the targets are achieved, vested shares may range from 0% to 150% of the original share amount. Performance targets are not determined until the beginning of each of the three fiscal years. Therefore, although the shares related to the second and third tranches are committed, they are not granted until performance targets are communicated to the participants. At December 31, 2019 and 2018, the Company had 4.5 million shares and 2.2 million shares, respectively, (which includes the allocation factor and performance multiplier) performance-based restricted stock units committed to be granted over the next two years.
Performance restricted shares with a market condition vest after a period of three years and the achievement of total shareholder return compared with that of a selected group of peer companies. Total shareholder return is defined as share price appreciation plus the value of dividends paid during the three year vesting period. Vested shares may range from 0% to 200% of the original target. Key assumptions used in the Monte Carlo simulation for the performance restricted shares with a market condition granted during the year ended December 31, 2017 includes a volatility of 34.6% for the applicable peer group and a risk-free rate of 1.46%. At December 31, 2019, all remaining outstanding performance restricted shares with a market condition were voluntarily forfeited by optionees.
The following table sets forth a summary of restricted stock awards granted under all plans:
 
Time-Based
 
Performance-Based
 
Performance Restricted Shares with a Market Condition
 
Shares
 
Wtd Avg Grant Date Fair Value
 
Shares
 
Wtd Avg Grant Date Fair Value
 
Shares
 
Wtd Avg Grant Date Fair Value
 Outstanding at December 31, 2018
817,696

 
$
7.74

 
277,817

 
$
4.18

 
199,028

 
$
8.03

  Granted
749,462

 
$
1.62

 
1,130,055

 
$
2.76

 
—

 
$
—

  Vested
(491,530
)
 
$
7.10

 
—

 
$
—

 
—

 
$
—

  Forfeited
(35,197
)
 
$
7.99

 
(452,935
)
 
$
3.79

 
(199,028
)
 
$
8.03

 Outstanding at December 31, 2019
1,040,431

 
$
3.63

 
954,937

 
$
2.68

 
—

 
$
—


The total intrinsic value of time-based restricted stock awards vested was $1.0 million, $1.3 million and $3.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total intrinsic value of time-based restricted stock awards outstanding at December 31, 2019 was $2.8 million. The total intrinsic value of performance-based stock awards outstanding at December 31, 2019 was $2.6 million. In 2017, the weighted average grant date fair value of time-based and performance restricted shares with a market condition granted was $10.01 and $15.42, respectively.