STOCK-BASED COMPENSATION

9 Months Ended

Sep. 27, 2023

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

3. STOCK-BASED COMPENSATION

At September 27, 2023, options to purchase 1,169,959 shares of common stock were outstanding, including 480,160 vested and 689,799 unvested. Unvested options vest over time; however, upon a change in control, the Board of Directors may accelerate vesting. At September 27, 2023, there were no premium options, which are options granted above the stock price at date of grant, that were outstanding. A summary of stock option activity as of September 27, 2023 and changes during the thirty-nine weeks ended September 27, 2023 is as follows:

				Weighted-Average		Aggregate
		Weighted-Average		Contractual Life		Intrinsic Value
	Shares	Exercise Price		Life (Years)		(in thousands)
Outstanding – December 28, 2022	1,068,179	$	9.92
Grants	482,701		9.27
Exercised	(219,960)		5.32
Forfeited, cancelled or expired	(160,961)	$	11.47
Outstanding – September 27, 2023	1,169,959	$	10.30		7.17	$	—
Vested and expected to vest at September 27, 2023	1,156,593	$	10.31		7.14	$	—
Exercisable at September 27, 2023	480,160	$	11.31		4.26	$	—

The fair value of each stock option was estimated on the grant date using an exercise price of the closing stock price on the day prior to date of grant and the Black-Scholes option-pricing model with the following weighted average assumptions:

	September 27, 2023		September 28, 2022
Expected volatility	43.7	%	43.0	%
Risk-free interest rate	3.6	%	2.9	%
Expected term (years)	6.25		6.25
Expected dividends	—		—

At September 27, 2023, the Company had total unrecognized compensation expense of $3.0 million related to unvested stock options, which it expects to recognize over a weighted-average period of 3.18 years.

A summary of restricted share activity as of September 27, 2023 and changes during the thirty-nine weeks ended September 27, 2023 is as follows:

		Weighted-Average
	Shares	Fair Value
Unvested shares at December 28, 2022	545,480	$	12.02
Granted	391,432	$	9.18
Released	(181,490)	$	12.20
Forfeited, cancelled, or expired	(108,004)	$	11.93
Unvested shares at September 27, 2023	647,418	$	10.27

At September 27, 2023, the Company had unrecognized compensation expense of $5.4 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.66 years.

Total stock-based compensation expense was $0.9 million and $2.5 million for the thirteen and thirty-nine weeks ended September 27, 2023, respectively, and $1.0 million and $2.8 million for the thirteen and thirty-nine weeks ended September 28, 2022, respectively.

On October 11, 2022, the Company’s Board of Directors approved a share repurchase program (the “2022 Stock Repurchase Plan”) under which the Company was authorized to repurchase up to $20.0 million of shares of its common stock through March 28, 2024. 

Under the 2022 Stock Repurchase Plan, the Company was permitted to repurchase its common stock from time to time, in amounts and at prices that the Company deemed appropriate, subject to market conditions and other considerations. Pursuant to the 2022 Stock Repurchase Plan, the Company was authorized to effect repurchases using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.

For the thirteen and thirty-nine weeks ended September 27, 2023, the Company repurchased 206,214 and 2,030,850 shares of common stock, respectively, under the 2022 Stock Repurchase Plan, using open market purchases, for total consideration of approximately $1.9 million and $20.0 million, respectively. The common stock repurchased under 2022 Stock Repurchase Plan were retired upon repurchase. The 2022 Stock Repurchase Plan commenced on January 9, 2023, and was completed on July 12, 2023.

On August 7, 2023, the Company entered into a Stock Repurchase Agreement (the “Repurchase Agreement”) with FS Equity Partners V, L.P. and FS Affiliates V, L.P. (together, the “Sellers”), pursuant to which the Company agreed to purchase an aggregate of 2,500,000 shares of the Company’s common stock from the Sellers at a price of $10.63 per share, representing the closing price of such shares as listed on Nasdaq on August 7, 2023, for a total purchase price of $26.6 million. The repurchase was completed in August 2023.

Prior to the repurchase, Freeman Spogli & Co. (“Freeman Spogli”), collectively with the Sellers and certain other funds managed by Freeman Spogli, was the Company’s largest stockholder. In addition, John Roth, a director of the Company until his resignation on August 16, 2023, is a general partner of Freeman Spogli and its chief executive officer.