Stock-Based Compensation (Notes)

6 Months Ended

Jul. 03, 2022

Share-based Payment Arrangement [Abstract]

Stock-based compensation expense for the three months ended July 3, 2022 and July 4, 2021 was $0.9 million and $1.6 million, respectively, and for the six months ended July 3, 2022 and July 4, 2021 was $2.9 million and $3.1 million, respectively.

As of July 3, 2022, the total unrecognized stock-based compensation expense relating to time-vested restricted shares and stock options was approximately $6.0 million and the Company expects to record an additional $1.9 million in stock-based compensation expense related to the vesting of these awards in the remainder of 2022. The remaining weighted average vesting period for stock options and non-vested shares was 2.1 years.

Time-vested Restricted Shares. During the six months ended July 3, 2022, the Company granted 1,116,000 time-vested restricted shares to certain of its employees and officers and 226,584 time-vested restricted shares to its outside directors. These shares generally vest in equal installments over their three-year service period, provided the participant has continuously remained an employee, officer or director of the Company. In accordance with a transition agreement entered into in connection with the retirement of our former CEO, 165,000 issued time-vested restricted shares vested on April 1, 2022.

In addition, on April 1, 2022, the Company granted 100,000 time-vested restricted shares with a two-year vesting period to its new CEO. These shares will vest in equal installments over a two-year service period, provided the participant has continuously remained employed by the Company.

The Company's time vested shares vest, become non-forfeitable and are expensed over their respective vesting period. The following is a summary of all time-vested restricted share activity for the six months ended July 3, 2022:


	Shares	Weighted Average Grant Date Price
Non-vested at January 2, 2022	1,336,830	$	6.55
Granted	1,442,584	$	2.72
Vested	(782,053)	$	6.70
Forfeited	(99,550)	$	4.46
Non-vested at July 3, 2022	1,897,811	$	3.69

The fair value of time-vested shares is based on the closing price on the date of grant.

Performance-based Restricted Shares. On April 1, 2022, 600,000 performance-based restricted shares were granted to our new CEO. These shares fully vest on the third anniversary of the grant date based on the achievement of contractually defined EBITDA and share price growth targets. The fair value of the market-based restricted shares is determined using a Monte Carlo simulation valuation model and these shares will be expensed over a three year performance-based vesting period based on the probability of the Company's attainment of the contractually defined targets.

Stock Options. The Company has issued options to purchase shares of its common stock to certain employees and officers of the Company. These options become exercisable and are being expensed over their three-year vesting period. In accordance with a transition agreement entered into in connection with the retirement of our former CEO, his remaining 412,500 unvested options became fully vested and exercisable on April 1, 2022. The options expire seven years from the date of the grant and were issued with an exercise price equal to the fair market value of the stock price on the date of grant, or $7.12 per share.

The following is a summary of all stock option activity for the six months ended July 3, 2022:


	Options	Weighted Average Exercise Price	Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)
Options outstanding at January 2, 2022	1,025,000


Forfeited	(49,500)	$7.12
Options Outstanding at July 3, 2022	975,500	$7.12	5.1	$—
Vested or expected to vest at July 3, 2022	975,500	$7.12	5.1	$—
Options exercisable at July 3, 2022	761,000	$7.12	5.1	$—

(1)The aggregate intrinsic value is calculated using the difference between the market price of the Company's common stock at July 3, 2022 of $2.10 and the grant price for only those awards that have a grant price that is less than the market price of the Company's common stock at July 3, 2022. There were no awards having a grant price less than the market price of the Company's common stock at July 3, 2022.

Restricted Stock Units. The Company has issued restricted stock units (“RSUs”) on shares of the Company's common shares to certain officers of the Company.

The following is a summary of all RSU activity for the six months ended July 3, 2022:


			Units
Non-vested at January 2, 2022			129,620

Vested			(90,850)

Non-vested at July 3, 2022			38,770