Former Parent Incentive Plan — In October 2017, the Former Parent Entity approved the Class B Unit Incentive Plan (the “2017 Plan”) pursuant to the Company’s partnership agreement. Class B-1 Incentive Units (“B-1 Units”) issued under the 2017 Plan vest in installments over a five-year period, subject to the grantee’s continued employment or service. Class B-2 Incentive Units (“B-2 Units” and collectively with the B-1 Units, “Incentive Units”) issued under the 2017 Plan contain both service conditions consistent with the B-1 Units and market-based vesting conditions that require the achievement of a specified return hurdle to the controlling shareholders in order to vest. The Company recognized $1,178 and $2,238 of compensation expense within selling, general and administrative expenses related to Incentive Units for the three months and six months ended June 25, 2021.

2021 Incentive Plan — On July 16, 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) in order to provide a means through which to attract, retain, and motivate key personnel. Awards available for grant under the 2021 Plan include non-qualified and incentive stock options, restricted shares of our common stock, and other equity-based awards tied to the value of our common stock and cash-based awards.

Equity Award Conversion — During the year ended December 31, 2021, and in connection with the IPO, all outstanding unvested Incentive Units were replaced with newly issued shares of our restricted common stock. Vested Incentive Units were exchanged into shares of our common stock using the same formula as unvested Incentive Units (together, the “Equity Award Conversion”). The restricted shares of common stock that the holders received in exchange for their unvested B-1 Units are subject to the same vesting terms that applied to the B-1 Units prior to the Equity Award Conversion.

The restricted stock awards issued to replace B-2 Units vest based upon achievement of one or more hurdles, which are substantially the same as the previous market-condition vesting criteria of the B-2 Units. Although the restricted stock awards that replace the B-2 Units do not contain an explicit service condition, the vesting is subject to continued employment, resulting in a derived service period. For additional information on the Equity Award Conversion, see Note 13 of the Notes to the Consolidated Financial Statements for the year ended December 31, 2021, in the Annual Report.

In connection with the IPO, the Company issued restricted common stock to holders of unvested B-1 Units and B-2 Units. The grant date fair value of restricted stock awards was determined to be $18.00 per share, based on the initial listing price of the Company’s common stock on the grant date.


	Restricted Stock Awards
	B-1 Incentive Units			B-2 Incentive Units
	Number of Units	Weighted- Average Grant-Date Fair Value		Number of Units	Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2021	633	$	18.00	807	$	18.00
Granted	—	—		—	—
Vested	203	18.00		—	—
Forfeited	8	18.00		—	—
Outstanding at July 1, 2022	422	$	18.00	807	$	18.00

In connection with the IPO, the Company granted options to holders of B-1 Units (“Time-based Options”) and options to holders of B-2 Units (“Market-based Options” and collectively with the Time-based Options, “Leverage Replacement Options”), as further discussed in Note 13 of the Notes to the Consolidated Financial Statements for the year ended December 31, 2021, in the Annual Report.


	Time-based Options					Market-based Options
	Number of Units	Weighted- Average Grant-Date Fair Value		Aggregate Intrinsic Value (a)		Number of Units	Weighted- Average Grant-Date Fair Value		Aggregate Intrinsic Value (a)
Outstanding at December 31, 2021	4,393	$	6.49	$	13,532	1,155	$	5.66	$	3,558
Granted	—	—		—		—	—		—
Exercised	—	—		—		—	—		—
Forfeited	77	7.25		—		—	—		—
Outstanding at July 1, 2022	4,316	$	6.48	$	—	1,155	$	5.66	$	—
Options exercisable at July 1, 2022	2,726	$	6.11	$	—	—	$	—	$	—

Restricted Stock Units — The Company grants restricted stock units (“RSUs”) with time-based vesting requirements under the 2021 Plan. These RSUs typically have an initial annual cliff vest and then vest quarterly over the remaining service period, which is generally one to four years. The fair value of RSUs is based on the Company’s closing stock price on the date of grant.


	Restricted Stock Units
	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2021	390	$	18.22
Granted	930	19.13
Vested	70	18.11
Forfeited	47	19.40
Outstanding at July 1, 2022	1,203	$	18.88

Performance Stock Units — During the six months ended July 1, 2022, the Company granted performance-based restricted stock units (“PSUs”) to certain employees under the 2021 Plan. The fair value of PSUs granted is based on the Company’s closing stock price on the date of grant. Each PSU grant vests in annual tranches over a three-year service period. Total units earned for grants may vary between 0% and 200% of the units granted based on the attainment of net sales and company-specific adjusted EBITDA targets during the performance period (generally the fiscal year of the date of the grant) and upon continued service. Compensation expense for PSUs is recognized on a graded-vesting basis if it is probable that the performance conditions will be achieved. Adjustments to compensation expense are made each period


	Performance Stock Units
	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2021	—	$	—
Granted	368	20.46
Exercised	—	—
Forfeited	2	20.46
Outstanding at July 1, 2022	366	$	20.46

Other equity-based compensation — In connection with the Staub acquisition (see Note 3), the Company granted 69 shares of common stock with an aggregate fair value of $1,208 to a key executive. The shares are accounted for as equity-based compensation because the shares are subject to forfeiture based on post-acquisition time-based service vesting. The shares vest annually in equal installments over a three-year service period beginning on the acquisition date. The grant date fair value of the shares was determined to be $17.42 per share based on the Company’s closing stock price on the date of the grant.

Total equity-based compensation expense — Equity-based compensation expense is included within selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. For all equity-based compensation awards, the Company recognizes forfeitures as they occur. Compensation expense for the three months and six months ended July 1, 2022 and unrecognized stock compensation expense and weighted average remaining expense period as of July 1, 2022 consisted of:


	Compensation Expense				As of July 1, 2022
	Three months ended July 1, 2022		Six months ended July 1, 2022		Unrecognized Compensation Expense		Weighted-Average Remaining Contractual Term (Years)
2021 Plan
Restricted stock awards	1,163		$	2,308	$	6,425	1.59
Time-based options	1,676		3,405		10,702		2.21
Market-based options	645		1,290		4,135		1.59
Restricted stock units	1,970		3,406		18,885		3.05
Performance stock units	1,134		1,699		5,796		1.64
Other equity-based compensation	100		179		1,029		2.55
Total	$	6,688	$	12,287	$	46,972	2.13

Employee Stock Purchase Plan — The Company’s Board of Directors adopted, and its shareholders approved, the Snap One Holdings Corp. 2022 Employee Stock Purchase Plan (the “ESPP”). The ESPP initially reserves 750 shares for issuance, which is subject to increase on the first day of each fiscal year in an amount equal to the lesser of: (i) the positive difference, if any, between (x) 1% of the outstanding common stock of the Company on the last day of the immediately preceding fiscal year and (y) the available plan reserve on the last day of the immediately preceding fiscal year and (ii) a lower number of shares of our common stock as determined by the board. The number of shares available for issuance under the ESPP is subject to adjustment for certain changes in our capitalization. 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 implemented the ESPP with the first purchase period beginning on May 23, 2022 and ending on November 22, 2022. 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, our expected dividend yield, and our expected share volatility over the term of the award. Fair value inputs for the purchase period in 2022 included assumed risk free interest rate of 1.6%, expected volatility of 45%, and expected dividend yield of 0%. Eligible participants contributed $278 during the three months and six months ended July 1, 2022, which is included in accrued liabilities in the accompanying consolidated balance sheet as of July 1, 2022. The Company recorded compensation expense of $80 which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations for the three months and six months ended July 1, 2022. Unrecognized compensation expense as of July 1, 2022 associated with the remaining ESPP purchase period through November 22, 2022 was $295.

Control4 Equity Awards — In connection with the acquisition of Control4 Corporation (“Control4”) in 2019, the Company agreed to a settlement of Control4 equity awards that were outstanding immediately prior to the acquisition date, consisting of stock options and restricted stock units. As of the acquisition date, 2,998 shares of Control4 awards were cancelled and converted into rights to receive cash payments (“Replacement Awards”).

The Company recognized $11 and $818 of compensation expense relating to the Replacement Awards within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations during the three months ended July 1, 2022 and June 25, 2021, respectively. The Company recognized $294 and $2,544 of compensation expense relating to the Replacement Awards within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations during the six months ended July 1, 2022 and June 25, 2021, respectively.