Share-Based Compensation

6 Months Ended

Jun. 29, 2024

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

Pre-Merger Awards

In connection with the Merger in July 2022, under which Cornerstone Building Brands became a privately held company, unvested share-based compensation awards that were previously granted to key employees and executives were cancelled and converted into a contingent contractual right to receive a cash payment from the Company upon vesting. The Company had $27.6 million at December 31, 2023 and $3.7 million at June 29, 2024 classified as a current liability within employee-related liabilities on its Condensed Consolidated Balance Sheets. The Company paid out $24.7 million of cash to settle Pre-Merger Awards in March 2024.

The Company recognized an expense of $1.3 million in the three months ended June 29, 2024 and a gain of $3.4 million in the three months ended July 1, 2023. The Company recognized an expense of $3.2 million in the six months ended June 29, 2024 and a gain of $1.4 million in the six months ended July 1, 2023. These amounts are included in selling, general and administrative expense on the Condensed Consolidated Statements of Loss. The gain during the six months ended July 1, 2023 mainly related to the Company updating its vesting expectations for certain performance share unit awards which have a range of payouts based on an EBITDA-based metric.

Incentive Unit Awards

Beginning in the fourth quarter of 2022, pursuant to an incentive unit grant agreement, certain participants were granted incentive units in Camelot Return Ultimate, LP (the “Partnership”). The incentive units provide the holder with the opportunity to receive, upon certain vesting events and subject to Partnership repurchase rights and conditions, a return based upon the appreciation of the Partnership’s equity value from the date of grant. The incentive units vest over a five-year period on a straight-line basis. For the six months ended June 29, 2024, 35,760 incentive units were granted at an average grant date fair value of $46.89 per incentive unit. The Company recognized an expense from incentive units of $1.2 million in the three months ended June 29, 2024, and $2.5 million for the three months ended July 1, 2023. The Company recognized expense from incentive units of $2.8 million for the six months ended June 29, 2024, and $5.0 million for the six months ended July 1, 2023. The Company estimates that the unrecognized expense is expected to be recognized over a weighted-average period of 3.2 years totaling $26.5 million.