Equity-based Compensation

9 Months Ended

Sep. 24, 2022

Share-Based Payment Arrangement [Abstract]

The Company granted new awards during the three months ended September 24, 2022, consisting of 10,178 restricted stock units (“RSUs”) and 12,750 performance stock units (“PSUs”). The Company granted new awards during the nine months ended September 24, 2022, consisting of 264,652 RSUs and 488,488 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 the Company 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 during the three months ended September 24, 2022 were less than $1 million each. The fair value of the total RSUs, performance based PSUs and market based PSUs granted during the nine months ended September 24, 2022 were $7 million, $8 million and $8 million, respectively. 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 granted during the three months ended September 24, 2022 by using a Monte Carlo simulation, using the following assumptions: (i) an expected term of 3 years, (ii) an expected volatility of 41.00%, (iii) a correlation of the S&P Mid-cap Index peer group of 58.80%, and (iv) no expected dividend. The Company determined the fair value of the market based PSUs granted during the three months ended June 25, 2022 by using a Monte Carlo simulation, using the following assumptions: (i) an expected term of 3 years, (ii) an expected volatility of 43.90%, (iii) a correlation of the S&P Mid-cap Index peer group of 59.50%, and (iv) no expected dividend. The Company determined the fair value of the market based PSUs granted during the three months ended March 26, 2022 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 share-based compensation expense during the three and nine months ended September 24, 2022 and September 25, 2021 within selling, general and administrative expenses on the consolidated statements of operations as follows:


	Three months ended				Nine months ended
(in thousands)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021
Share-based compensation expense	$	5,000	$	1,000	$	12,000	$	3,000