15. Stock-Based Compensation

On May 28, 2013, the Company's shareholders approved the 2013 Stock Incentive Plan, as amended (the "2013 Plan"), which permits the grant of a variety of stock-based awards, including stock options, restricted stock units ("RSUs") and performance share units ("PSUs") to selected employees and directors of the Company. As at December 28, 2024, 2,575,812 securities remained available for issuance under the 2013 Plan.

Additionally, on January 2, 2024, the Company granted special one-time awards of 144,404 RSUs, 288,808 PSUs and 230,804 stock options to Brian Kocher in connection with his appointment as the Company's Chief Executive Officer effective January 2, 2024. On March 13, 2024, the Company granted Mr. Kocher an additional 74,000 RSUs, equal to the number of Common Shares purchased by Mr. Kocher on the open market within the 75-day period after his employment began.

Stock options, RSUs and PSUs granted under the 2013 Plan, together with the corresponding special one-time awards granted to Mr. Kocher, are reflected in the tables below.

For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, stock-based compensation of $11.2 million, $12.4 million and $13.8 million was recorded in selling, general and administrative expenses on the consolidated statements of operations.

Stock Options

Stock options granted to employees during the three-year period ended December 28, 2024, vest ratably on each of the first through third anniversaries of the grant date and expire on the tenth anniversary of the grant date. Stock options granted by the Company contain an exercise price that is equal to the closing market price of the shares on the day prior to the grant date. Any consideration paid on the exercise of stock options is credited to capital stock.

The following table summarizes stock option activity for the year ended December 28, 2024:

					Weighted-
					average
				Weighted-	remaining
				average	contractual		Aggregate
	Stock options			exercise price	term (years)		intrinsic value
Outstanding, beginning of year	3,348,103		$	5.63
Granted	485,914			6.10
Exercised	(238,759	)		4.80
Forfeited	(137,862	)		6.53
Expired	(135,618	)		9.25
Outstanding, end of year	3,321,778		$	5.56	2.8	$	8,252
Exercisable, end of year	2,678,564		$	5.43	1.3	$	7,146

The total intrinsic value of stock options exercised during the year ended December 28, 2024 was $0.5 million.

The following table summarizes non-vested stock option activity during the year ended December 28, 2024:

				Weighted-
				average grant-
	Stock options			date fair value
Non-vested, beginning of year	1,222,991		$	3.67
Granted	485,914			3.85
Vested	(966,211	)		3.66
Forfeited	(99,480	)		3.90
Non-vested, end of year	643,214		$	3.77

The weighted-average grant-date fair values of all stock options granted in the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were $3.85, $3.87 and $3.49, respectively, using a Black-Scholes option pricing model with the following assumptions:

		December 28, 2024		December 30, 2023		December 31, 2022
Grant-date stock price	$	6.10	$	6.29	$	5.91
Dividend yield^(a)		0%		0%		0%
Expected volatility^(b)		65.7%		63.5%		61.6%
Risk-free interest rate^(c)		4.3%		4.1%		3.0%
Expected life of options (years)^(d)		6.0		6.0		6.0

(a) Determined based on expected annual dividend yield at the time of grant.

(b) Determined based on historical volatility of the Company's Common Shares over the expected life of the option.

(c) Determined based on the yield on U.S. Treasury zero-coupon issues with maturity dates equal to the expected life of the option.

(d) Determined based on the mid-point of vesting (one through three years) and expiration (10 years). The Company has used the simplified method to determine the expected life of options due to insufficient historical exercise data to provide a reasonable basis to estimate the expected life.

Total compensation costs related to non-vested stock option awards not yet recognized as an expense was $1.6 million as at December 28, 2024, which will be amortized over a weighted-average remaining vesting period of 1.9 years.

The following table summarizes stock options outstanding and exercisable as at December 28, 2024:

					Weighted-
					average
					remaining		Weighted-			Weighted-
	Exercise price range			Outstanding	contractual life		average exercise	Exercisable		average exercise
	Low		High	options	(years)		price	options		price
$	3.25	$	4.05	973,221	0.3	$	3.36	973,221	$	3.36
	4.06		5.73	340,984	7.5		5.32	110,180		4.85
	5.74		6.13	1,267,054	1.7		5.91	1,182,804		5.91
	6.14		6.60	461,170	7.2		6.44	144,460		6.35
	6.61		14.77	279,349	3.0		10.50	267,899		10.62
				3,321,778	2.8	$	5.56	2,678,564	$	5.43

Restricted Stock Units

RSUs granted to employees vest ratably on each of the first through third anniversaries of the grant date and RSUs granted to directors vest 100% on the first anniversary of the grant date. Each vested RSU entitles the employee or director to receive one Common Share without payment of additional consideration. Non-employee directors may elect to defer receipt of Common Shares until their departure from the Board of Directors. The weighted-average grant-date fair values of all RSUs granted in the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were $6.17, $5.88 and $6.40, respectively, based on the closing price of the Common Shares on the grant dates.

The following table summarizes non-vested RSU activity during the year ended December 28, 2024:

				Weighted-
				average grant-
	RSUs			date fair value
Non-vested, beginning of year	580,177		$	6.64
Granted	690,495			6.17
Vested	(367,178	)		7.14
Forfeited	(115,430	)		6.02
Non-vested, end of year	788,064			6.08
Vested and deferred	34,830			5.74
Outstanding, end of year	822,894		$	6.07

The total intrinsic value of RSUs that vested during the year ended December 28, 2024 was $2.1 million. Total compensation costs related to non-vested RSU awards not yet recognized as an expense was $3.1 million as at December 28, 2024, which will be amortized over a weighted-average remaining vesting period of 1.9 years.

Performance Share Units

Performance Conditions

The vesting of PSUs granted to selected employees under the Company's annual Short-Term Incentive Plan ("STIP") is dependent on the Company achieving a predetermined measure of adjusted earnings before interest, taxes, depreciation and amortization. For PSUs granted to selected employees under the Company 2024 Long-Term Incentive Plan ("LTIP"), the vesting of one-half of the PSUs is contingent on the achievement of compound annual growth rate ("CAGR") benchmarks for revenue during the three-year performance period commencing January 1, 2024 and continuing through December 31, 2026, and the vesting of the other one-half of the PSUs is contingent on the achievement of return on invested capital ("ROIC") benchmarks within the same performance period. The percentage of vested LTIP PSUs may range from 0% to 200% based on the Company's achievement of the predetermined CAGR and ROIC benchmarks. Each vested performance condition PSU entitles the employee to receive one Common Share without payment of additional consideration, subject to the employee's continued employment through the vesting date.

The weighted-average grant-date fair values of performance condition PSUs granted during the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were $6.49, $6.96 and $5.45, respectively, based on the closing price of the Common Shares on the grant dates. The following table summarizes non-vested performance condition PSU activity during the year ended December 28, 2024:

	Performance			Weighted-
	Condition			average grant-
	PSUs			date fair value
Non-vested, beginning of year	1,000,896		$	6.95
Granted	918,207			6.49
Vested	(818,504	)		6.94
Cancelled or forfeited	(309,558	)		6.73
Non-vested, end of year	791,041		$	6.51

The total intrinsic value of performance condition PSUs that vested during the year ended December 28, 2024 was $5.6 million.

Each reporting period, the number of unvested performance condition PSUs that are expected to vest is redetermined and the aggregate grant-date fair value of the redetermined number of PSUs is amortized on a straight-line basis over the remaining requisite service period less amounts previously recognized. As at December 28, 2024, the compensation cost not yet recognized as an expense for these PSUs that are expected to vest was $2.1 million, which will be amortized over a weighted-average remaining vesting period of 1.4 years.

Market Conditions

The vesting of PSUs granted to employees under the Company's 2023 and 2022 LTIP, and the special one-time PSUs granted to Mr. Kocher, are dependent on the Company's total shareholder return ("TSR") performance relative to food and beverage companies in a designated index during a three-year performance period commencing on January 1 of the year of grant, and the employee's continued employment with the Company through the vesting dates. The TSR for the Company and each of the companies in the designated index are calculated at the end of the applicable three-year performance period using a 20-trading day average closing price as of December 31. The percentage of vested PSUs may range from 0% to 200% based on the Company's achievement of predetermined TSR thresholds. Each vested market condition PSU entitles the employee to receive one Common Share without payment of additional consideration.

The grant-date fair values of market condition PSUs granted in the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were $7.73, $7.00 and $8.48, respectively, using a Monte Carlo valuation model with the following assumptions:

		December 28, 2024		December 30, 2023		December 31, 2022
Grant-date stock price	$	5.54	$	6.35	$	5.91
Dividend yield		0%		0%		0%
Expected volatility^(a)		58.4%		55.5%		67.8%
Risk-free interest rate^(b)		4.1%		4.7%		2.8%
Expected life (in years)^(c)		3.0		2.5		2.7

(a) Determined based on the historical volatility of the Common Shares over the performance period of the PSUs.

(b) Determined based on U.S. Treasury yields with a remaining term equal to the performance period of the PSUs.

The following table summarized non-vested market condition PSU activity during the year ended December 28, 2024:

	Market			Weighted-
	Condition			average grant-
	PSUs			date fair value
Non-vested, beginning of year	556,680		$	9.00
Granted	288,808			7.73
Vested	-			-
Forfeited	(91,649	)		14.67
Non-vested, end of year	753,839		$	7.82

Total compensation costs related to non-vested market condition PSUs not yet recognized as an expense was $2.1 million as at December 28, 2024, which will be amortized over a weighted-average remaining vesting period of 2.0 years.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan whereby employees can purchase common shares through payroll deductions. For the year ended December 28, 2024, the Company's employees purchased 84,194 Common Shares (December 30, 2023 - 120,666; December 31, 2022 - 87,850) for total proceeds of $0.4 million (December 30, 2023 - $0.6 million; December 31, 2022 - $0.6 million). As at December 28, 2024, 341,372 Common Shares remained available to be granted under this plan.