Equity-based Compensation

3 Months Ended

Mar. 26, 2022

Share-based Payment Arrangement [Abstract]

Equity-based Compensation

Equity-based Compensation

The Company granted new awards during the three months ended March 26, 2022, including 239,804 restricted stock units (“RSUs”) and 446,348 performance stock units (“PSUs”). Awards are eligible to vest provided that the employee remains in continuous service on each vesting date. The RSUs vest ratably in three installments on each of the first three anniversaries of the grant date. The PSUs vest after a three-year performance period. The number of PSUs that vest is contingent on achieving certain performance goals, one being a market condition and the other being a performance condition. The number of PSU shares that vest may range from zero to 200% of the original grant, based upon the level of performance. The awards are considered probable of meeting vesting requirements, and therefore, the Company has started recognizing expense.

The fair value of the RSUs, performance based PSUs and market based PSUs granted were $7 million each. The Company based the fair value of the RSUs and performance based PSUs on the Company’s stock price on the grant date. The Company determined the fair value of the market based PSUs by using a Monte Carlo simulation, using the following assumptions: (i) an expected term of 3 years, (ii) an expected volatility of 40.90%, (iii) a correlation of the S&P Mid-cap Index peer group of 50.70%, and (iv) no expected dividend.

The Company recorded $3 million and $1 million of share-based compensation expense during the three months ended March 26, 2022 and March 27, 2021, respectively, within selling, general and administrative expenses on the consolidated statements of operations.