Equity-based compensation

3 Months Ended

Apr. 02, 2022

Compensation And Employee Benefit Plans [Abstract]

Terminated plans

Prior to the IPO, BV LLC operated two equity-based compensation plans, the MIP and the Phantom Plan, which were terminated on February 11, 2021 in conjunction with the IPO. Prior to the Plans termination, during the three months ended April 3, 2021, (i) the Company granted 90,000 Phantom Plan units; (ii) there were no MIP awards granted; (iii) 900 Phantom Plan units were forfeited and (iv) other Phantom Units were redeemed for $479. Compensation expense related to the Phantom Plan totaled $829 for the three months ended April 3, 2021. This amount excludes the $25,185 decrease in fair market value of accrued equity-based compensation due to adjustments to reflect the difference between the expected pricing from the pending IPO and the actual offering price, of which $1,777 was recorded in research and development expense within the consolidated statement of operations and comprehensive (loss) income for the three months ended April 3, 2021.

2021 Plan

The Company operates an equity-based compensation plan (2021 Plan), which allows for the issuance of stock options (incentive and nonqualified), restricted stock, dividend equivalents, restricted stock units (RSUs), other stock-based awards, and cash awards (collectively, Awards). As of April 2, 2022, 11,873,784 shares of Class A common stock were authorized to be awarded and 2,876,822 shares were available for awards.

Equity-based compensation expense of $4,731 and $1,944 was recognized for the three months ended April 2, 2022 and April 3, 2021, respectively, for Awards granted under the 2021 Plan. The expense is primarily included in selling, general and administrative expense with a nominal amount in research and development expense on the consolidated statement of operations and comprehensive (loss) income based upon the classification of the employee. There was a $1,225 income tax benefit related to this expense for the three months ended April 2, 2022. There was no income tax benefit related to equity-based compensation expense for three months ended April 3, 2021.

Restricted Stock Units

During the three months ended April 2, 2022, the Company granted time-based RSUs which vest at various dates through March 14, 2026. RSU compensation expense is recognized over the vesting period, which is typically between 1 and 4 years. Unamortized compensation expense related to the RSUs totaled $13,321 at April 2, 2022, and is expected to be recognized over a weighted average period of approximately 3.39 years. A summary of the RSU award activity for the three months ended April 2, 2022 is as follows (number of units in thousands):


	Number of units	Weighted-average grant-date fair value per unit
Unvested at December 31, 2021	1,024	$	14.41
Granted	903	12.66
Vested	(734)	14.74
Forfeited or canceled	(33)	13.50
Unvested at April 2, 2022	1,160	12.86

Stock Options

During the three months ended April 2, 2022, the Company granted time-based stock options which vest over 2 to 4 years following the date of grant and expire within 10 years. The fair value of time-based stock options is determined using the Black-Scholes valuation model, with such value recognized as expense over the service period, which is typically 2 to 4 years, net of actual forfeitures. A summary of the Company’s assumptions used in determining the fair value of the stock options granted during the three months ended April 2, 2022 is shown in the following table.


Risk-free interest rate	1.8% - 2.1%
Expected dividend yield	—	%
Expected stock price volatility	33.2% - 33.4%
Expected life of stock options (years)	6.25

The weighted-average grant date fair value of options granted during the three months ended April 2, 2022 was $4.68. The expected term of the options granted is estimated using the simplified method. Expected volatility is based on the historical volatility of the Company’s peers common stock. The risk-free interest rate is determined based upon a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the option. Unamortized compensation expense related to the options amounted to $18,380 at April 2, 2022, and is expected to be recognized over a weighted average period of approximately 3.77 years.

A summary of stock option activity is as follows for the three months ended April 2, 2022 (number of options in thousands):


	Number of options	Weighted-average exercise price		Weighted average remaining contractual term	Aggregate intrinsic value
Outstanding at December 31, 2021	8,364	$	11.16
Granted	2,099	12.66
Exercised	(227)	8.73
Forfeited or canceled	(295)	13.09
Outstanding at April 2, 2022	9,941	11.48		8.21	$	22,184
Exercisable and vested at April 2, 2022	4,498	$	9.58	6.86	$	18,262

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices lower than $13.63, the closing price of the Company’s stock on April 1, 2022.

Employee Stock Purchase Plan

The Company operates a non-qualified Employee Stock Purchase Plan (ESPP), which provides for the issuance of shares of the Company’s Class A common stock to eligible employees of the Company that elect to participate in the plan and purchase shares of Class A common stock through payroll deductions at a discounted price. As of April 2, 2022, the aggregate number of shares reserved for issuance under the ESPP was 398,532. A total of 48,993 shares were issued and $158 of expense was recognized during the three months ended April 2, 2022. No shares were issued under the ESPP during the three months ended April 3, 2021.