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Stock-Based Compensation | 3 Months Ended
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Jul. 01, 2023
Stock-Based Compensation |
Stock-Based Compensation | 5. Stock-Based Compensation ​ Equity Incentive Plans ​ On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of August 24, 2016 (as amended, the “2014 Plan”). The 2014 Plan authorizes the Company to issue awards to employees, consultants and directors for up to a total of 3,600,000 shares of common stock, par value $0.0001 per share. All awards granted by the Company under the 2014 Plan were nonqualified stock options, restricted stock awards, restricted stock units or performance share units. Options granted under the 2014 Plan have a life of eight to ten years and vest over service periods of four or five years or in connection with certain events as defined by the 2014 Plan and as determined by the Compensation Committee of our board of directors. Restricted stock awards granted under the 2014 Plan vested over one or four years, as determined by the Compensation Committee of our board of directors. Restricted stock units granted under the 2014 Plan vest over service periods of one, four or five years, as determined by the Compensation Committee of our board of directors. Performance share units granted under the 2014 Plan are subject to the vesting criteria discussed further below. ​ On August 26, 2020, the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”). Following the approval of the 2020 Plan, no further grants have been made under the 2014 Plan. The 2020 Plan authorizes the Company to issue awards to employees and directors for up to a total of 2,000,000 shares of common stock, par value $0.0001 per share. As of July 1, 2023, all awards granted by the Company under the 2020 Plan to date have been market-based stock options, restricted stock units or performance share units. Market-based stock options granted under the 2020 Plan are subject to the vesting criteria discussed further below. Restricted stock units granted under the 2020 Plan vest over service periods of one, three or four years, as determined by the Compensation Committee of our board of directors. Performance share units granted under the 2020 Plan are subject to the vesting criteria discussed further below. ​ Stock Options ​ During the thirteen weeks ended July 1, 2023, the Company did not grant options to purchase shares. ​ During the thirteen weeks ended June 25, 2022, the Company granted its Chief Executive Officer ("CEO") an option to purchase 86,189 shares of common stock under the 2020 Plan. This option contains both service and market vesting conditions. Vesting of this option is contingent upon the market price of the Company's common stock achieving three stated price targets for 30 consecutive trading days through the third anniversary of the date of grant. If the first market price target is met, 33% of the option granted will cliff vest on the third anniversary of the date of grant, with an additional 33% of the option vesting on the third anniversary of the date of grant if the second market price target is met, and the last 34% of the option vesting on the third anniversary of the date of grant if the final market price target is met. The total grant date fair value of this option was $4.0 million, with a grant date fair value of $46.41 per share. The Company is recognizing the expense relating to this stock option on a straight-line basis over the three-year service period. The exercise price of this award is $86.96 per share. The fair value of the option was estimated using a Monte Carlo simulation model. The following significant assumptions were used as of May 12, 2022, the date of grant: ​
​ | ​ | ​ | ​ | ​
Stock price |  | $ | 86.96 |
Exercise price | ​ | $ | 86.96 | ​
Expected option term (1) | ​ |  | 6.5 | years
Expected volatility (2) | ​ |  | 65.9 | %
Risk-free interest rate (3) | ​ | ​ | 2.8 | %
Expected annual dividend yield | ​ | ​ | 0 | %
(1) | The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.
(2) | Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s stock over the most recent period equal to the expected option term of the Company’s awards.
(3) | The risk-free interest rate is determined using the rate on treasury securities with the same term.
​ Intrinsic value for stock options is defined as the difference between the market price of the Company’s common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. ​ The following table summarizes the stock award activity for the thirteen weeks ended July 1, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Grant Date | ​ | Weighted | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted | ​ | Average | ​ | Aggregate
​ | ​ | Stock | ​ | Average | ​ | Remaining | ​ | Intrinsic
​ |  | Options |  | Exercise Price |  | Contractual Life |  | Value
​ | ​ | ​ | ​ | ​ | ​ | ​ | (in years) | ​ | (in thousands)
Outstanding at April 1, 2023 |  | 739,480 | ​ | $ | 31.60 | ​ | ​ | ​ | ​ | ​
Granted |  | — | ​ | $ | — | ​ | ​ | ​ | ​ | ​
Exercised | ​ | (27,219) | ​ | $ | 12.68 | ​ | ​ | ​ | $ | 1,532
Cancelled, forfeited or expired |  | — | ​ | $ | — | ​ | ​ | ​ | ​ | ​
Outstanding at July 1, 2023 |  | 712,261 | ​ | $ | 32.32 |  | 5.7 | ​ | $ | 37,498
Vested and expected to vest after July 1, 2023 |  | 712,261 | ​ | $ | 32.32 |  | 5.7 | ​ | $ | 37,498
Exercisable at July 1, 2023 |  | 549,564 | ​ | $ | 25.12 |  | 5.1 | ​ | $ | 32,740
​ A summary of the status of non-vested stock options as of July 1, 2023 including changes during the thirteen weeks ended July 1, 2023 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Weighted-
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant Date
​ |  | Shares |  | Fair Value
Nonvested at April 1, 2023 |  | 480,252 | ​ | $ | 16.26
Granted |  | — | ​ | $ | —
Vested |  | (317,555) | ​ | $ | 9.34
Nonvested shares forfeited |  | — | ​ | $ | —
Nonvested at July 1, 2023 |  | 162,697 | ​ | $ | 29.62
​ Restricted Stock Units ​ During the thirteen weeks ended July 1, 2023, the Company granted 132,713 restricted stock units to various directors and employees under the 2020 Plan. The shares granted to employees vest in three equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates (subject to certain exceptions). The shares granted to the Company’s directors vest on the first day following the first anniversary of the date of the grant. The grant date fair value of these awards for the thirteen weeks ended July 1, 2023 totaled $8.6 million. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award (subject to certain exceptions), commencing on the date of the grant. ​ During the thirteen weeks ended June 25, 2022, the Company granted 94,262 restricted stock units to various employees under the 2020 Plan. The shares granted to employees vest in three equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates (subject to certain exceptions). The shares granted to the Company’s directors vest on the first anniversary of the date of the grant. The grant date fair value of these awards for the thirteen weeks ended June 25, 2022 totaled $8.2 million. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award (subject to certain exceptions), commencing on the date of the grant. ​ Performance Share Units ​ During the thirteen weeks ended July 1, 2023 and June 25, 2022, the Company granted 112,740 and 57,843 performance share units, respectively, to various employees under the 2020 Plan with grant date fair values of $7.3 million and $5.0 million, respectively. Performance share units are stock-based awards in which the number of shares ultimately received depends on the Company’s performance against its cumulative earnings per share target over a three-year performance period. The performance period for the awards granted during the thirteen weeks ended July 1, 2023 began April 2, 2023 and ends March 28, 2026, and the performance period for the awards granted during the thirteen weeks ended June 25, 2022 began March 27, 2022 and ends March 29, 2025. ​ The performance metrics for these awards were established by the Company at the beginning of the performance periods. At the end of the performance periods, the number of performance share units to be issued is fixed based upon the degree of achievement of the performance goals. If the cumulative three-year performance goals are below the threshold level, the number of performance share units to vest will be 0%, if the performance goals are at the threshold level, the number of performance share units to vest will be 50% of the target amounts, if the performance goals are at the target level, the number of performance share units to vest will be 100% of the target amounts, and if the performance goals are at the maximum level, the number of performance share units to vest will be 200% of the target amounts, each subject to continued service by the applicable award recipients through the last day of the performance periods (subject to certain exceptions). If performance is between threshold and target goals or between target and maximum goals, the number of performance share units to vest will be determined by linear interpolation. The number of shares ultimately issued can range from 0% to 200% of the participant’s target award. ​ The grant date fair value of the performance share units granted during both the thirteen weeks ended July 1, 2023 and June 25, 2022, respectively, was initially measured using the Company's closing stock price on the dates of grant with the resulting stock compensation expense recognized on a straight-line basis over the three-year vesting periods (subject to certain exceptions). The expense recognized over the vesting periods is adjusted up or down on a quarterly basis based on the anticipated performance level during the performance periods. If the performance metrics are not probable of achievement during the performance periods, any previously recognized stock compensation expense is reversed. The awards are forfeited if the threshold performance goals are not achieved as of the end of the performance periods. ​ Stock-Based Compensation Expense ​ Stock-based compensation expense was $5.0 million and $4.7 million for the thirteen weeks ended July 1, 2023 and June 25, 2022, respectively. Stock-based compensation expense of $1.4 million and $1.0 million was recorded in cost of goods sold in the consolidated statements of operations for the thirteen weeks ended July 1, 2023 and June 25, 2022, respectively. All other stock-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of operations. ​ As of July 1, 2023, there was $2.9 million of total unrecognized stock-based compensation expense related to unvested stock options, with a weighted-average remaining recognition period of 1.72 years. As of July 1, 2023, there was $12.6 million of total unrecognized stock-based compensation expense related to restricted stock units, with a weighted-average remaining recognition period of 2.27 years. As of July 1, 2023, there was $7.1 million of total unrecognized stock-based compensation expense related to performance share units, with a weighted-average remaining recognition period of 2.62 years.

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