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Stock-Based Compensation

6 Months Ended

Jun. 29, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

12. STOCK-BASED COMPENSATION

On April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Equity Incentive Plan (the “2021 Omnibus Equity Plan”), which became effective on April 22, 2021. The 2021 Omnibus Equity Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock units and other stock-based and cash-based awards. The maximum grant date fair value of cash and equity awards that may be awarded to a

non-employee director under the 2021 Omnibus Equity Plan during any one fiscal year, together with any cash fees paid to such non-employee director during such fiscal year, is $750,000.

On May 2, 2023, at the 2023 annual meeting of stockholders of the Company, the stockholders approved the first amendment (the “First Amendment”) to the 2021 Omnibus Equity Plan, which was previously approved by the Board of Directors of the Company. The First Amendment became effective upon stockholder approval, and included an increase by 8,000,000 shares of the share pool, i.e. the maximum number of shares of the Company’s common stock that may be issued pursuant to awards granted under the 2021 Omnibus Equity Plan.

Except as amended by the First Amendment, the other terms of the 2021 Omnibus Equity Plan remain in full force and effect. Subsequent to the First Amendment, the maximum aggregate number of shares reserved for issuance under the 2021 Omnibus Equity Plan is 21,170,212 shares.

The following table summarizes the Company’s stock-based compensation expense (in thousands):



		Fiscal Quarter Ended						Two Fiscal Quarters Ended
		June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Cost of sales		$	—		$	(626)		$	—		$	(200)
Selling, general, and administrative			2,100			6,390			3,343			12,733
		$	2,100		$	5,764		$	3,343		$	12,533

As of June 29, 2024, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $12.8 million, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Awards

The following table represents the Company’s restricted stock awards activity during the two fiscal quarters ended June 29, 2024:


				Weighted-
				Average Grant-
		Shares		Date Fair Value
Outstanding at January 1, 2024		42,886		$	19.00
Granted		—			—
Vested		(21,443)			19.00
Forfeited		—			—
Outstanding at June 29, 2024		21,443		$	19.00

Restricted Stock Units

The following table represents the Company’s restricted stock units activity during the two fiscal quarters ended June 29, 2024:


				Weighted-
				Average Grant-
		Shares		Date Fair Value
Outstanding at January 1, 2024		2,235,479		$	3.60
Granted		2,616,819			2.87
Vested		(598,715)			3.60
Forfeited		(115,296)			2.95
Outstanding at June 29, 2024		4,138,287		$	3.16

Stock Options

The following table represents the Company’s stock options activity during the two fiscal quarters ended June 29, 2024:


					Weighted-		Weighted-
					Average		Average
				Exercise Price			Remaining		Aggregate
		Shares		per Share			Contract Term		Intrinsic Value
							(in years)		(in thousands)
Outstanding at January 1, 2024		1,554,294		$	15.43
Granted		—			—
Exercised		—			—
Forfeited		(50,433)			16.88
Expired		(82,007)			17.79
Outstanding at June 29, 2024		1,421,854		$	15.25		7.39		$	—
Vested and expected to vest at June 29, 2024		1,421,854		$	15.25		7.39		$	—
Options exercisable at June 29, 2024		779,935		$	16.45		7.19		$	—

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

Stock Appreciation Rights

During the fiscal quarter ended April 1, 2023, as a portion of the annual equity award grants to the Company’s executive officers, the Compensation Committee of the Board of Directors approved stock appreciation rights for an aggregate of 790,181 shares of the Company’s common stock, with a strike price of $3.24 per share. At the time of such approval, the Company did not have enough shares of the Company’s common stock in the share pool under the 2021 Omnibus Equity Plan to support such grant. As of April 1, 2023, the contingent grant of stock appreciation rights remained subject to stockholder approval of the First Amendment. On May 2, 2023, following stockholder approval of the First Amendment, the foregoing stock appreciation right awards became effective without condition.

The following table represents the Company’s stock appreciation rights activity during the two fiscal quarters ended June 29, 2024:


					Weighted-		Weighted-
					Average		Average
				Exercise Price			Remaining		Aggregate
		Shares		per Share			Contract Term		Intrinsic Value
							(in years)		(in thousands)
Outstanding at January 1, 2024		755,802		$	3.16
Granted		—			—
Exercised		—			—
Forfeited		(49,342)			3.24
Outstanding at June 29, 2024		706,460		$	3.15		8.88		$	48,280
Vested and expected to vest at June 29, 2024		706,460		$	3.15		8.88		$	48,280
Stock appreciation rights exercisable at June 29, 2024		161,893		$	3.24		8.84		$	—

The aggregate intrinsic value of stock appreciation rights is calculated as the difference between the strike price of the stock appreciation rights and the fair value of the Company’s common stock for those stock appreciation rights that had strike prices lower than the fair value of the Company’s common stock.

Performance Stock Units

During the two fiscal quarters ended June 29, 2024, the Compensation Committee of the Board of Directors approved the grant of performance stock units (“PSUs”) as a portion of the annual equity award to the Company’s executive officers.

The PSUs will be earned at 0% to 200% of the target PSUs (with 100% of PSUs being earned at target performance, and linear interpolation between threshold and target and maximum performance) based on the Company’s achievement of Adjusted EBITDA, as defined in the award agreement, over a one-fiscal year performance period ending December 31, 2024. Any earned PSUs cliff vest on the third anniversary of the grant date. Adjusted EBITDA is considered a performance condition and the grant date fair value corresponds with management’s expectation of the probable outcome of the performance condition as of the grant date. The grant date fair value is determined based on the fair market value of the Company’s stock at market close on the grant date multiplied by the target number of shares subject to the award. The probability of achieving the performance criteria is assessed quarterly during the performance period. Compensation expense related to unvested PSUs is recognized ratably over the service period.

The following table represents the Company’s PSU activity during the two fiscal quarters ended June 29, 2024:


					Weighted-
					Average
					Grant Date
		Shares			Fair Value

Outstanding at January 1, 2024		—		$	—
Granted		443,100			2.91
Adjustment for expected performance achievement ⁽¹⁾		—			—
Forfeited		—			—
Outstanding at June 29, 2024 ⁽²⁾		443,100		$	2.91

(1)Represents the adjustment to previously granted PSUs based on the Company’s performance expectations as of June 29, 2024.

(2)An additional 443,100 PSUs could potentially be included if the maximum performance level of 200% is earned for all PSUs outstanding as of June 29, 2024.