Subsequent Events

3 Months Ended

Mar. 30, 2019

15. Subsequent Events

Acquisition of Sanmark B.V.

On April 1, 2019, the Company acquired 100% of the outstanding shares of Sanmark B.V. ("Sanmark") for $3.4 million, which was financed through existing credit facilities. Sanmark is a sourcing and trading business focused on organic oils for the food, pharmacy, and cosmetic industries. Sanmark sources raw materials globally and generates most of its sales into the European and Asia-Pacific markets. The results of operations of Sanmark will be included in the Company's consolidated financial statements from the date of acquisition and will be included in the international organic ingredients operations within Global Ingredients.

Stock-Based Compensation

Chief Executive Officer

On April 1, 2019, Joseph Ennen was appointed CEO of the Company. In connection with his appointment, the Company granted Mr. Ennen options to purchase 960,061 Common Shares, 297,619 restricted stock units (“RSUs”) and 1,785,714 performance stock units (“PSUs”). The stock options vest on April 1, 2022, subject to Mr. Ennen continued employment during the vesting period, and expire on April 1, 2029. Each vested stock option will entitle Mr. Ennen to purchase one Common Share at an exercise price of $3.36, which was equal to the closing price of the Common Shares on April 1, 2019. The RSUs vest in three equal annual installments beginning on April 1, 2020, and each vested RSU will entitle Mr. Ennen to receive one Common Share of the Company.

The vesting of 892,857 of the PSUs granted is subject to the Company achieving annual adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") thresholds during fiscal years 2019 through 2022, as follows: 297,619 PSUs will vest upon the Company achieving annual adjusted EBITDA of $80 million, another 297,619 will vest upon the Company achieving annual adjusted EBITDA of $110 million, and the final 297,619 will vest upon the Company achieving annual adjusted EBITDA of $140 million, and subject to Mr. Ennen continued employment with the Company through the end of the fiscal year the adjusted EBITDA performance condition is achieved. The vesting of the other 892,857 PSUs that were granted is subject to the Common Shares achieving certain volume-weighted average trading prices during a performance period commencing on April 1, 2019 and ending on December 31, 2022, as follows: 297,619 PSUs will vest upon achieving a trading price of $5.00 per share, another 297,619 will vest upon achieving a trading price of $9.00 per share, and the final 297,619 will vest upon achieving a trading price of $14.00 per share, in each case for 20 consecutive trading days, and subject to Mr. Ennen's continued employment with the Company through the date the stock price performance condition is achieved. Each vested PSU will entitle Mr. Ennen to receive one Common Share without payment of additional consideration.

The grant-date fair values of the RSUs and PSUs subject to the adjusted EBITDA performance condition were estimated to be $3.36 based on the closing price of Common Shares on the date of grant. A grant-date fair value of $1.68 was estimated for the stock options using the Black-Scholes option pricing model, and a weighted-average grant-date fair value of $1.77 was estimated for the PSUs subject to the stock price performance condition using a Monte Carlo valuation model. The following table summarizes the inputs to the Black-Scholes option-pricing and Monte Carlo valuation models:

	Stock Options		PSUs
Grant-date stock price	$	3.36	$	3.36
Exercise price	$	3.36		NA
Dividend yield		0%		0%
Expected volatility⁽¹⁾		47.87%		55.68%
Risk-free interest rate⁽²⁾		2.36%		2.30%
Expected life (in years)⁽³⁾		6.50		1.82

(1)Determined based on the historical volatility of the Common Shares over the expected life of the stock options and performance period of the PSUs.

(2) Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the stock options and performance period of the PSUs.

(3) Determined based on the mid-point of vesting (three years) and expiration (ten years) for the stock options and the derived service period for the PSUs.

The aggregate grant-date fair value of the stock options, RSUs and PSUs awarded to Mr. Ennen was determined to be $7.2 million, which will be recognized on a straight-line basis over the vesting period for the stock options and RSUs and the derived service period for the PSUs. Each reporting period, the number of PSUs subject to the adjusted EBITDA performance condition that are expected to vest will be redetermined and the grant-date fair value of the redetermined number of those PSUs will be amortized over the remaining service period less amounts previously recognized.

Short-Term Incentive Plan

On April 12, 2019, the Company granted 2,222,570 PSUs to certain employees of the Company under its Short-Term Incentive Plan. The vesting of the PSUs is subject to the Company achieving a predetermined measure of adjusted EBITDA for fiscal 2019, and subject to each employee's continued employment with the Company through the first anniversary of the grant date. The grant-date fair value of the PSUs was estimated to be $3.40 based on the closing price of the Common Shares on the date of grant. The aggregate grant-date fair value of the PSUs of $7.6 million will be initially recognized on a straight-line basis over the requisite one-year service period. Each reporting period, the number of PSUs that are expected to vest will be redetermined and the grant-date fair value of the redetermined number of PSUs will be amortized over the remaining service period less amounts previously recognized.