Share-Based Compensation

6 Months Ended

Jul. 03, 2022

Share-Based Payment Arrangement [Abstract]

13.

Share-Based Compensation

In August 2020, the Company established the 2020 Equity and Incentive Plan (the “2020 Plan”) under which SHHL Share Appreciation Rights (“SARs”) and SHHL Growth Shares were issued to certain employees. The awards are settled in ordinary D shares of SHHL and the Company can grant up to 9,978,143 SHHL ordinary D shares under the 2020 Plan. In connection with the IPO in July 2021, 25% of the outstanding awards accelerated in accordance with the original plan and all of the outstanding awards were exchanged into awards that will be settled in Class A common stock of MCG. As a result of the exchange, 7,127,246 SHHL SARs were converted into 6,023,369 MCG SARs and 2,850,897 SHHL Growth Shares were converted into 781,731 MCG restricted stock awards. The exchanged awards are subject to the same vesting conditions as the original awards.

In December 2021, the Company granted 506,990 RSUs to certain employees that were scheduled to vest over a month. On January 16, 2022, the vesting schedule of the RSUs was updated from one vesting end date of January 17, 2022 to a graded vesting schedule that vests 25% on each of January 24, January 31, February 7, and February 14, 2022, respectively. The Company accounted for the modification as a Type I modification and no incremental compensation cost was incurred related to the modification. As of July 3, 2022 and January 2, 2022, there were 5,541,919 and 5,840,483 SARs outstanding under the 2020 Plan, respectively. As of both July 3, 2022 and January 2, 2022, there were 781,731 MCG restricted stock awards outstanding under the 2020 Plan.

In July 2021, the Company established its 2021 Equity and Incentive Plan (the “2021 Plan”). The 2021 Plan allows for grants of nonqualified stock options, SARs, and restricted stock units (“RSUs”), or performance awards. There were 12,107,333 shares initially available for all awards under the 2021 Plan and the shares available will increase annually on the first day of each calendar year, beginning with the calendar year ended December 31, 2022. As of July 3, 2022, there were 9,484,453 shares available for future awards. The Company did not grant any new awards under the 2021 Plan during the 26 weeks ended July 3, 2022. As of July 3, 2022 and January 2, 2022, there were 2,115,887 and 2,622,877 RSUs outstanding under the 2021 Plan, respectively.

Share-based compensation during the 13 weeks and 26 weeks ended July 3, 2022 and July 4, 2021 was recorded in the unaudited condensed consolidated statements of operations within a separate line item as shown in the following table:


	For the 13 Weeks Ended				For the 26 Weeks Ended
(in thousands)	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
SARs	$	2,178	$	1,893	$	4,211	$	3,374
Restricted stock awards (Growth Shares)		648		655		1,303		1,303
RSUs		1,448		—		6,091		—
Employer-related payroll expense(1)		—		—		472		—
Total share-based compensation expense		4,274		2,548		12,077		4,677
Tax benefit for share-based compensation expense		—		—		—		—
Share-based compensation expense, net of tax	$	4,274	$	2,548	$	12,077	$	4,677

(1)

Relates to national insurance tax in the UK. These amounts were settled in cash and are not included in additional paid-in capital or as an adjustment to reconcile net loss to net cash used in operating activities in the unaudited condensed consolidated statements of cash flows.

As of July 3, 2022, total compensation expense not yet recognized is as follows:

•

With respect to the unvested SARs issued under the 2020 Plan, approximately $8 million, which is expected to be recognized over a weighted average period of 1.26 years;

•

With respect to the unvested restricted stock awards (Growth Shares) issued under the 2020 Plan, approximately $3 million, which is expected to be recognized over a weighted average period of 1.15 years; and

•

With respect to the unvested RSUs issued under the 2021 Plan, approximately $17 million, which is expected to be recognized over a weighted average period of 3.00 years.