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Equity Agreements and Incentive Equity Plans
 3 Months Ended
Mar. 29, 2024
Share-Based Payment Arrangement [Abstract]  
Equity Agreements and Incentive Equity Plans Equity Agreements and Incentive Equity Plans
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 contained both service conditions consistent with the B-1 Units and market-based vesting conditions that required the achievement of a specified return hurdle to the controlling shareholders in order to vest.

2021 Incentive Plan — On July 16, 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and initially reserved 10,500 shares for issuance. The number of shares available for issuance under the 2021 Plan is subject to adjustment for certain changes in the Company’s capitalization. In addition, the 2021 Plan contains an evergreen provision such that on the first day of each fiscal year, the number of shares available for issuance shall be increased by that number of shares, if any, equal to the lesser of (i) a number of shares such that the aggregate amount of shares available following the increase is equal to 4.0% of the fully diluted shares outstanding on the last day of the preceding fiscal year, or (ii) a lesser amount determined by the Company’s Compensation Committee. Pursuant to this provision, the Company increased the number of shares in the 2021 Plan by approximately 1,625 shares during the three months ended March 29, 2024.

Equity Award Conversion — During the year ended December 31, 2021, and in connection with the Company’s initial public offering (“IPO”), all outstanding unvested Incentive Units were replaced with newly issued shares of the Company’s restricted common stock. Vested Incentive Units were exchanged into shares of the Company’s 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. All the outstanding restricted stock awards issued to replace B-2 Units were forfeited on February 4, 2024, for failure to meet certain performance hurdles required pursuant to their terms. For additional information on the Equity Award Conversion, see Note 11 of the Notes to the Consolidated Financial Statements for the fiscal year ended December 29, 2023, in the Annual Report.

Restricted Stock Awards

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. All B-2 Units were forfeited on February 4, 2024, for failure to meet certain performance hurdles required pursuant to their terms.

The summary of the Company’s restricted stock awards activity is as follows:

Restricted Stock Awards
B-1 Incentive UnitsB-2 Incentive Units
Number of
Units
Weighted-
Average
Grant-Date
Fair Value
Number of
Units
Weighted-
Average
Grant-Date
Fair Value
Outstanding at December 29, 2023103 $18.00 662 $18.00 
Granted— — — — 
Vested40 18.00 — — 
Forfeited1 18.00 662 18.00 
Outstanding at March 29, 202462 $18.00 — $— 
Stock Options

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”), as further discussed in Note 11 of the Notes to the Consolidated Financial Statements for the year ended December 29, 2023, in the Annual Report. All market-based options were forfeited on February 4, 2024, for failure to meet certain performance hurdles required pursuant to the terms.

The summary of the Company’s option activity is as follows:

Time-based OptionsMarket-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 29, 20233,755 $6.50 $— 935 $5.66 $— 
Granted— — — — — — 
Exercised— — — — — — 
Forfeited54 6.79 — 935 5.66 — 
Outstanding at March 29, 20243,701 $6.50 $— — $— $— 
Options exercisable at March 29, 20243,306 $6.39 $— — $— $— 

(a) The intrinsic value represents the amount by which the fair value of the Company’s stock exceeds the option exercise price as of March 29, 2024 and December 29, 2023.

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 four years. The fair value of RSUs is based on the Company’s closing stock price on the date of grant.

The summary of the Company’s RSU activity is as follows:
Restricted Stock Units
Number of
Units
Weighted-Average
Grant-Date
Fair Value
Outstanding at December 29, 20232,491 $12.63 
Granted1,505 8.50
Vested468 12.28 
Forfeited62 13.19
Outstanding at March 29, 20243,466 $10.87 

As of March 29, 2024, there were 105 vested and unissued restricted stock units.

Performance Stock Units — During the three months ended March 29, 2024 and March 31, 2023, the Company granted performance-based restricted stock units (“PSUs”) to certain employees under the 2021 Plan. The awards issued during the three months ended March 29, 2024 and March 31, 2023, contain three separate tranches, each for a separate one-year performance period and each with a performance target to be established concurrently with the annual budget process. Accordingly, each tranche is accounted for as a separate grant. The targets for the PSUs issued during the three
months ended March 29, 2024 and March 31, 2023 include Company-specific annual earnings targets and internal performance measures.

The summary of the Company’s PSU activity is as follows:

Performance Stock Units
Number of
Units
Weighted-Average
Grant-Date
Fair Value
Outstanding at December 29, 2023338 $14.35 
Granted568 8.50 
Vested280 13.13 
Forfeited3 11.59 
Outstanding at March 29, 2024623 $9.55 

As of March 29, 2024, there were 71 vested and unissued performance stock units.

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 ended March 29, 2024 and March 31, 2023, and unrecognized stock compensation expense and weighted average remaining expense period as of March 29, 2024 consisted of:

Compensation ExpenseAs of March 29, 2024
Three Months Ended
March 29, 2024		Three Months Ended March 31, 2023Unrecognized Compensation ExpenseWeighted-Average Remaining Contractual Term (Years)
2021 Plan
Restricted stock awards$447 $633 $1,298 0.88
Time-based options838 1,022 2,381 1.02
Market-based options212 629 — 0.00
Restricted stock units3,047 3,543 35,338 3.02
Performance stock units1,077 1,650 4,614 0.92
Other equity-based compensation100 100 326 0.81
Total$5,721 $7,577 $43,957 1.89

Employee Stock Purchase Plan — The Company’s board of directors adopted, and its shareholders approved, the Snap One Holdings Corp. 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP initially reserved 750 shares for issuance. The number of shares available for issuance under the ESPP is subject to adjustment for certain changes in the Company’s capitalization. In addition, the ESPP contains an evergreen provision such that each January 1, starting in 2022 and ending in 2031, the number of shares available for issuance shall be increased by that number of shares equal to the lesser of (i) a number of shares such that the aggregate amount of shares available following the increase is equal to 1% of the fully diluted shares outstanding on December 31 of the preceding year, or (ii) a lesser amount determined by the Company’s Compensation Committee. Pursuant to this provision the Company increased the number of shares in the ESPP by approximately 346 shares during the three months ended March 29, 2024 and 186 shares during the three months ended March 31, 2023. 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 Company’s expected dividend yield, and the expected share volatility over the term of the award.
Offering periods are generally six months long and begin on May 23 and November 23 of each year. The Company did not have any shares purchased under the ESPP for the three months ended March 29, 2024. Stock-based compensation expense recognized related to the ESPP was $192 and $186 for the three months ended March 29, 2024 and March 31, 2023, and is included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations. Eligible participants contributed $881 and $256 as of March 29, 2024 and December 29, 2023, respectively, which is included in accrued liabilities in the accompanying condensed consolidated balance sheets. Unrecognized compensation expense as of March 29, 2024 was $117.