EQUITY COMPENSATION

9 Months Ended

Sep. 28, 2019

EQUITY COMPENSATION

EQUITY COMPENSATION

18.  The Company adopted the Continental Materials Corporation Value Creation Incentive Plan (the “VCIP”) effective July 1, 2019. The VCIP is designed to attract and retain key management personnel by providing an incentive and reward for selected executive officers and employees of the Company. The VCIP involves only the payment of cash, not the issuance of common stock, based on appreciation of Phantom Equity or Phantom Equity Appreciation Rights (PE or PEARs, respectively) of the defined business unit, over a certain period of time. Fair value of the PE or PEAR awards was measured as of the balance sheet date presented. The awards vest over a period of four or five years and are payable over a three-year period following vesting. At September 28, 2019 total future compensation expense related to unvested awards yet to be recognized by the Company was approximately $2,796,000. This expense is expected to be recognized over a weighted-average remaining vesting period of approximately 4.3 years.

The Company used the Black-Scholes option pricing model as its method for determining fair value of the awards. The compensation expense related to the awards is recognized over the vesting period for each award. For the three and nine month periods ended September 28, 2019 the Company’s net loss included $156,000 of stock-based compensation. The total liability related to the PE and PEAR awards was $456,000, which includes $300,000 from an acquisition recorded at the opening balance sheet date, and is included as Long-term compensation on the Consolidated Balance Sheet as of September 28, 2019.