STOCK-BASED COMPENSATION

9 Months Ended

Sep. 25, 2024

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

3. STOCK-BASED COMPENSATION

Stock Options

At September 25, 2024, options to purchase 1,076,805 shares of common stock were outstanding, including 270,435 vested and 806,370 unvested options. Unvested options vest over time; however, upon a change in control, the Board of Directors (the “Board”) may accelerate vesting. A summary of stock option activity at September 25, 2024 and changes during the thirty-nine weeks ended September 25, 2024 is as follows:

				Weighted-Average		Aggregate
		Weighted-Average		Contractual Life		Intrinsic Value
	Shares	Exercise Price		Life (Years)		(in thousands)
Outstanding – December 27, 2023	843,320	$	10.13
Grants	556,958		10.48
Exercised	(163,696)		9.50
Forfeited, cancelled or expired	(159,777)		10.66
Outstanding – September 25, 2024	1,076,805	$	10.33		7.93	$	3,666
Vested and expected to vest at September 25, 2024	1,061,620	$	10.33		7.90	$	3,613
Exercisable at September 25, 2024	270,435	$	11.20		3.65	$	732

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 25, 2024		September 27, 2023
Expected volatility	44.1	%	43.7	%
Risk-free interest rate	4.6	%	3.6	%
Expected term (years)	6.25		6.25
Expected dividends	—		—

At September 25, 2024, the Company had total unrecognized compensation expense of $3.4 million related to unvested stock options, which it expects to recognize over a weighted-average period of 3.37 years.

Restricted Shares

A summary of restricted share activity as of September 25, 2024 and changes during the thirty-nine weeks ended September 25, 2024 is as follows:

		Weighted-Average
	Shares	Fair Value
Unvested shares at December 27, 2023	537,461	$	9.94
Granted	503,112	$	10.33
Released	(211,044)	$	10.17
Forfeited and cancelled	(84,301)	$	10.91
Unvested shares at September 25, 2024	745,228	$	10.03

Unvested shares at September 25, 2024, included 661,728 unvested restricted shares, 41,537 unvested performance stock units, and 41,963 unvested restricted stock units.

At September 25, 2024, the Company had unrecognized compensation expense of $5.7 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.91 years, unrecognized compensation expense of $0.3 million related to unvested performance stock units, which it expects to recognize over a weighted-average period of 2.26 years, and unrecognized compensation expense of less than $0.1 million related to unvested restricted stock units, which it expects to recognize over a weighted-average period of 0.12 years.

Total stock-based compensation expense was $1.1 million and $2.9 million for the thirteen and thirty-nine weeks ended September 25, 2024, respectively, and $0.9 million and $2.5 million for the thirteen and thirty-nine weeks ended September 27, 2023, respectively.

Share Repurchases

Share Repurchase Program

On November 2, 2023, the Company announced that the Board approved a share repurchase program (“Share Repurchase Program”) under which the Company is authorized to repurchase up to $20,000,000 of shares of the Company’s common stock. Under the Share Repurchase Program, the Company is 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 Share Repurchase Program, the Company is authorized to effect repurchases using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions. The repurchase program does not obligate the Company to acquire any particular number of shares. The repurchase program will terminate on March 31, 2025.

Further, on December 4, 2023, the Company repurchased 1.5 million shares for a total purchase price of $12.6 million under the Stock Repurchase Agreement with FS Equity Partners V, L.P. and FS Affiliates V, L.P. Following completion of this repurchase, approximately $7.4 million of the Company’s common stock remained available for repurchase under the Share Repurchase Program at December 27, 2023.

For the thirteen and thirty-nine weeks ended September 25, 2024, the Company repurchased 92,043 and 431,926 shares of common stock, respectively, under the Share Repurchase Program, using open market purchases, for total consideration of approximately $1.1 million and $4.3 million, respectively. Following completion of these repurchases, approximately $3.1 million of the Company’s common stock remained available for repurchase under the Share Repurchase Program at September 25, 2024.

Other Share Repurchases

During the thirty-nine week period ended September 25, 2024, the Company repurchased 1,534,303 shares for a total purchase price of $15.0 million under the Stock Repurchase Agreement with FS Equity Partners V, L.P. and FS Affiliates V, L.P.