On July 2, 2021, the Company's Board of Directors adopted the Company's 2021 Stock Incentive Plan (the “2021 Omnibus Incentive Plan”). The 2021 Omnibus Incentive Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock or Cash Based Awards and Dividend Equivalents to enhance the Company's ability to attract, retain, and motivate persons who make important contributions to the Company. Since fiscal year 2021, the Company has granted Restricted Stock Units under the 2021 Omnibus Incentive Plan.

On April 19, 2021, the Company’s Board of Directors adopted the Company’s Amended and Restated 2017 Stock Incentive Plan (the “Amended 2017 Plan”). The Amended 2017 Plan (i) provides for the issuance of shares of common

stock, as opposed to the Class B common stock previously issuable under the plan, to align with the Company’s Amended and Restated Certificate of Incorporation and (ii) modified the vesting terms of the existing issued performance-vesting options to vest upon the achievement of volume weighted average price (“VWAP”) per share hurdles for any ninety consecutive days commencing on or after the nine-month anniversary of the IPO. On June 17, 2021, the Company established the VWAP per share hurdles for the performance-vesting options.

Outstanding awards granted under the Amended 2017 Plan included time-vesting options, performance-vesting options, and restricted stock awards. Most awards granted to Participants consist of 50% time-vesting options and 50% performance-vesting options. Time-vesting options vest 20% per year over a period of 5 years, and the only condition to vesting is the passage of time. The related compensation expense is recognized ratably over the required service period. Time-vesting options will fully vest upon the sale of the Company. The Company has also awarded accelerator-vesting options under the Amended 2017 Plan, which are subject to the time-based vesting schedule of 20% per year over a period of 5 years and provide additional value to holders, should the Company meet specified return levels to its stockholders.

To determine the fair value of time-vesting and accelerator-vesting options under the Amended 2017 Plan, the Company utilized a Black-Scholes model. No time-vesting, accelerator-vesting, or performance-vesting options were awarded during the fiscal years ended December 30, 2023 and December 31, 2022 under the Amended 2017 Plan. The Company calculated the fair value of the outstanding performance-vesting options using the Monte Carlo option-pricing model. The Company recorded compensation expense, net of forfeitures of $0.7 million and $4.5 million during the fiscal years ended December 30, 2023, and December 31, 2022, respectively, which is included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense related to all outstanding option awards issued under the Amended 2017 Plan was $1.2 million as of December 30, 2023.

The following table summarizes the Company’s options activity for the years ended December 30, 2023 and December 31, 2022:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Total Intrinsic Value (in thousands)
Outstanding at January 1, 2022		15,270,086			6.63		6.3		28,697
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(895,569	)		4.78		-		-
Outstanding at December 31, 2022		14,374,517			4.74		5.2		-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(1,221,165	)		7.87		-		-
Outstanding at December 30, 2023		13,153,352			5.80		4.2		-
Exercisable at December 30, 2023		7,418,022			6.68		4.1		-
Vested and expected to vest at December 30, 2023		13,153,352			5.80		4.2

In accordance with the Amended 2017 Plan, an aggregate of no more than 307,500 shares of common stock are reserved for settlement of deferred restricted stock units (“Pre-IPO Deferred RSUs”). Pre-IPO Deferred RSUs fully vest on the grant date and convert to common shares upon the earlier of (1) the sale of the Company or (2) termination of service.

The value of the remaining unsettled awards was recognized in deferred restricted stock units as of December 30, 2023 and December 31, 2022 in the accompanying consolidated balance sheets. There were no awards granted during the fiscal years ended December 30, 2023 and December 31, 2022.

The Pre-IPO Deferred RSUs contain a put right, which would require the Company, at the option of the Participant, to repurchase all the Pre-IPO Deferred RSUs in event of the Participant’s termination at fair market value. The existence of this put right prevents the Participant from bearing the risks and rewards of ownership during the six month period following the vesting date as the put right requires the Company to purchase all shares the Participant received at fair market value on the repurchase date. Based on the nature of the Pre-IPO Deferred RSUs, management determined the awards, upon grant, have characteristics of a liability and accounts for them as liabilities initially.

After the Award has been outstanding for six months and a day, the Participant is subject to the risk and rewards of ownership, and the Award is reclassified to temporary equity, or when the Award has been settled, if earlier. As the put right is exercisable only when the Participant terminates his or her service, which is outside the control of the Company, the Company has classified the awards outstanding subsequent to the initial six-month period as temporary equity.

The Pre-IPO Deferred RSUs are recorded at fair value upon issuance and are remeasured at fair value at each reporting date while classified as a liability and immediately prior to being reclassified as temporary equity. As the Pre-IPO Deferred RSUs are contingently redeemable, the Company does not subsequently adjust the redemption value once classified as temporary equity as it is not deemed probable that the Participant will terminate his or her service. As of both December 30, 2023 and December 31, 2022, the Company had recorded $2.1 million in temporary equity related to all outstanding awards in the accompanying consolidated balance sheets.

As of both December 30, 2023 and December 31, 2022, there were 194,750 Pre-IPO Deferred RSUs outstanding, all of which were fully vested. No Pre-IPO Deferred RSUs vested during the fiscal years ended December 30, 2023 and December 31, 2022. There was no compensation expense related to the Pre-IPO Deferred RSUs for the fiscal years ended December 30, 2023 and December 31, 2022.

Outstanding awards under the 2021 Omnibus Incentive Plan as of December 30, 2023 include restricted stock units which were granted to certain members of the Board of Directors and certain members of management of the Company. These restricted stock units vest over time and upon vesting convert into shares of common stock on a one-for-one basis.

On June 30, 2021, the Company awarded Directors an aggregate of 52,545 restricted stock units (“Director RSUs”) under the 2021 Omnibus Incentive Plan. The Director RSUs awarded on June 30, 2021 vested over a one-year period. On August 15, 2022, the Company awarded an aggregate of 308,055 Director RSUs which vest over a one-year period. The weighted average grant date per share fair value of Director RSUs was $2.11. On February 14, 2023, the Company awarded an aggregate of 634,923 Director RSUs which vest over a one-year period. The weighted average grant date per share fair value of Director RSUs was $1.26.

The Company recorded $1.1 million and $0.6 million of compensation expense during the fiscal years ended December 30, 2023 and December 31, 2022, respectively. This expense is included in corporate expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense associated with the Director RSUs as of December 30, 2023 was $0.1 million.

On December 29, 2021, the Company awarded certain members of Management an aggregate of 2,400,000 restricted stock units (“Management RSUs”) under the 2021 Omnibus Incentive Plan. The Management RSUs awarded on December 29, 2021 vest over a four-year period. The weighted average grant date per share fair value of Management RSUs granted during the fiscal year ended January 1, 2022 was $7.00. There were no such awards granted during the fiscal years ended December 30, 2023 and December 31, 2022. The Company recorded compensation expense, net of forfeitures, of $2.2 million and $3.9 million during the fiscal years ended December 30, 2023 and December 31, 2022, respectively, which is included in corporate expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense associated with the Management RSUs as of December 30, 2023 was $6.1 million.

In the first quarter of 2022 and in the first quarter of 2023, the Compensation Committee of the Company's Board of Directors approved LTIP grants of restricted stock units ("RSUs") and performance stock units ("PSUs") under the 2021 Omnibus Incentive Plan.

The RSUs are subject to a three-year service-based cliff vesting schedule commencing on the date of grant. Compensation cost for the RSUs is measured based on the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis. In the first fiscal quarter of 2022, the Company granted 2,124,212 RSUs with a grant date per share fair value of $4.93. In the first fiscal quarter of 2023, the Company granted 4,073,186 RSUs with a grant date per share fair value of $1.26. The Company recorded compensation expense, net of forfeitures, of $2.8 million and $2.3 million during the fiscal year ended December 30, 2023 and December 31, 2022, respectively, which is included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of December 30, 2023 was $5.2 million.

The PSUs granted in 2022 contain two performance criteria: (i) 50% based on relative total shareholder return ("TSR") over a three-year performance period, which measures the Company's total shareholder return as compared to the total shareholder return of a designated peer group, and (ii) 50% based on an adjusted EBITDA target over a one-year performance period. The PSUs are also subject to a three-year service-based cliff vesting schedule commencing on the date of grant. For the PSUs that have a service and a market condition, compensation cost is measured based on the grant date estimated fair value determined using a Monte Carlo simulation model and is recognized over the applicable vesting period on a straight-line basis. The fair value inputs included in the Monte Carlo simulation model were remaining measurement period of 2.88 years, stock price on date of grant of $4.93, daily average closing stock price for the two calendar months prior to the beginning of the performance period of $7.29, risk free rate of 1.77%, and the performance payout per TSR performance percentile. The PSUs granted in 2023 contain one performance criterion based on an adjusted EBITDA target which can be met in any one-year period over the three years subsequent to the grant date. For the PSUs that have a service and a performance condition, compensation cost is initially measured based on the grant date fair value of each share. Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition. In the first fiscal quarter of 2022, the Company granted 1,389,801 PSUs with a weighted average grant date per share fair value of $5.24. In the first fiscal quarter of 2023, the Company granted 4,073,108 PSUs with a weighted average grant date per share fair value of $1.26. The Company recorded compensation expense, net of forfeitures, of $2.2 million and $1.1 million during the fiscal years ended December 30, 2023 and December 31, 2022, respectively, which is included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of December 30, 2023 associated with the remaining PSUs was $4.2 million.

The following table summarizes the Company’s restricted stock units activity for the years ended December 30, 2023 and December 31, 2022:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2022		2,452,545			7.12
Granted		3,941,930			4.73
Vested		(321,053	)		6.15
Forfeited		(598,946	)		5.57
Outstanding at December 31, 2022		5,474,476			5.63
Granted		9,186,837			1.26
Vested		(308,055	)		2.11
Forfeited		(2,908,823	)		3.55
Outstanding at December 30, 2023		11,444,435			2.79
Expected to vest at December 30, 2023		11,444,435			2.79

In the second quarter of 2023, the Compensation Committee of the Company's Board of Directors approved SMRP awards to certain members of management to be paid in the form of RSUs under the 2021 Omnibus Incentive Plan. The awards were granted based on a fixed dollar value for each member of senior management included in the plan. The number of RSUs to be paid as compensation is dependent on the share price of the Company's common stock upon completion of both of the SMRP awards' performance criteria. The SMRP awards require the Company to achieve both specified revenue and adjusted EBITDA targets during the performance period ending June 30, 2026. The Company recorded compensation expense, net of forfeitures, of $2.8 million during the fiscal year ended

December 30, 2023, which is included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of December 30, 2023 associated with the remaining SMRP awards was $12.2 million.

Total compensation expense, net of forfeitures, for all awards under the Amended 2017 Plan and 2021 Omnibus Incentive Plan was $12.0 million and $13.6 million for the fiscal years ended December 30, 2023 and December 31, 2022, respectively. Total unrecognized compensation expense for all awards under the Amended 2017 Plan and 2021 Omnibus Incentive Plan was $29.5 million and $22.6 million as of December 30, 2023 and December 31, 2022, respectively. The weighted-average period over which this expense is expected to be recognized is 2.1 years. The total fair value of all awards vested during the fiscal years ended December 30, 2023 and December 31, 2022 was $1.5 million and $4.5 million, respectively.

On April 28, 2021, the Company’s Board of Directors adopted the Aveanna Healthcare Holdings Inc. 2021 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, shares of common stock may be purchased by eligible participants during defined purchase periods at 85% of the lesser of the closing price of the Company’s common stock on the first day or last day of each purchase period. The Company used a Black-Scholes option pricing model to value the common stock purchased as part of the Company's ESPP. The fair value estimated by the option pricing model is affected by the price of the common stock as well as subjective variables that include assumed interest rates, the expected dividend yield, and the expected share volatility over the term of the award. Fair value inputs for the purchase periods in 2022 included assumed risk free interest rate of 0.19% to 2.51%, expected volatility of 48% to 49%, and expected dividend yield of 0.00%. Fair value inputs for the purchase periods in 2023 included assumed risk free interest rate of 4.77% to 5.53%, expected volatility of 52%, and expected dividend yield of 0.00%. The Company recorded compensation expense of $1.2 million and $2.3 million associated during the fiscal years ended December 30, 2023 and December 31, 2022, respectively, which is included in corporate expenses, branch and regional administrative expenses and cost of revenue, excluding depreciation and amortization in the accompanying consolidated statements of operations. Participants purchased a total of 1,565,933 shares of common stock at a weighted average price of $0.60 per share during the fiscal year ended December 30, 2023. Participants purchased a total of 3,805,844 shares of common stock at a weighted average price of $1.05 per share during the fiscal year ended December 31, 2022.

See Note 19 - Subsequent Events for disclosure of additional ESPP share purchases completed after the fiscal year ended December 30, 2023.