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Stock-Based Compensation | 12 Months Ended
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Dec. 28, 2019
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation [Text Block] | 17. Stock-Based Compensation Stock Incentive Plan 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, 2019, 3,876,211 securities remained available for issuance under the 2013 Plan. For the years ended December 28, 2019, December 29, 2018 and December 30, 2017, gross stock-based compensation expense amounted to $11.6 million $7.9 million and $6.4 million, respectively. For the years ended December 28, 2019 and December 30, 2017, net stock-based compensation expense was $7.5 million and $5.7 million, respectively, taking into account the reversal of $4.1 million and $0.7 million, respectively, of previously recognized stock compensation related to forfeited awards previously granted to employees who were terminated in connection with the Value Creation Plan (see note 5). Stock Options Stock options granted to selected employees during the three-year period ended December 28, 2019 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 by employees or directors on exercise of stock options or purchase of stock is credited to capital stock. The following table summarizes stock option activity for the year ended December 28, 2019:
|  |  |  |  |  |  |  | Weighted- |  |  |  |
|  |  |  |  |  |  |  | average |  |  |  |
|  |  |  |  | Weighted- |  |  | remaining |  |  |  |
|  |  |  |  | average |  |  | contractual |  |  | Aggregate |
|  | Stock options |  |  | exercise price |  |  | term (years) |  |  | intrinsic value |
Outstanding, beginning of year |  | 2,698,550 |  | $ | 7.76 |  |  |  |  |  |  |
Granted |  | 12,400 |  |  | 3.57 |  |  |  |  |  |  |
Exercised |  | (49,824 | ) |  | 3.27 |  |  |  |  |  |  |
Forfeited |  | (617,531 | ) |  | 8.35 |  |  |  |  |  |  |
Expired | (93,707 | ) | 9.51
Outstanding, end of year |  | 1,949,888 | $ | 7.57 |  |  | 5.68 |  | $ | — |
Exercisable, end of year |  | 1,370,188 |  | $ | 6.88 |  |  | 4.94 |  | $ | — |
The following table summarizes non-vested stock option activity during the year ended December 28, 2019:
|  |  |  |  | Weighted- |
|  |  |  |  | average grant- |
|  | Stock options |  |  | date fair value |
Non-vested, beginning of year |  | 1,433,648 |  | $ | 3.74 |
Granted |  | 12,400 |  |  | 1.70 |
Vested |  | (441,034 | ) |  | 3.08 |
Forfeited |  | (425,314 | ) |  | 3.84 |
Non-vested, end of year |  | 579,700 |  | $ | 4.14 |
The weighted-average grant-date fair values of all stock options granted in the years ended December 28, 2019, December 29, 2018 and December 30, 2017, were $1.70, $3.31 and $4.12, respectively. The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock options granted in those years were as follows:
|  | December 28, 2019 |  |  | December 29, 2018 |  |  | December 30, 2017 |
Grant-date stock price | $ | 3.57 |  | $ | 7.56 |  | $ | 9.29 |
Dividend yield(1) |  | 0% |  |  | 0% |  |  | 0% |
Expected volatility(2) |  | 48.6% |  |  | 41.1% |  |  | 42.1% |
Risk-free interest rate(3) |  | 2.3% |  |  | 2.9% |  |  | 2.0% |
Expected life of options (years)(4) |  | 5.8 |  |  | 6.0 |  |  | 6.4 |
(1) | Determined based on expected annual dividend yield at the time of grant.
(2) | Determined based on historical volatility of the Company’s Common Shares over the expected life of the option.
(3) | Determined based on the yield on U.S. Treasury zero-coupon issues with maturity dates equal to the expected life of the option.
(4) | Determined using simplified method, as the Company changed the vesting period of its stock option grants from five years to three years in 2016, and, as a result, historical exercise data may not provide a reasonable basis upon which to estimate expected life.
The following table summarizes stock options outstanding and exercisable as at December 28, 2019:
|  |  |  |  |  |  |  |  |  | Weighted- |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | average |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | remaining |  |  | Weighted- |  |  |  |  |  | Weighted- |
| Exercise price range |  |  |  |  |  | Outstanding |  |  | contractual life |  |  | average exercise |  |  | Exercisable |  |  | average exercise |
| Low |  |  | High |  |  | options |  |  | (years) |  |  | price |  |  | options |  |  | price |
$ | 3.27 |  | $ | 5.50 |  |  | 325,115 |  |  | 5.76 |  | $ | 3.75 |  |  | 307,715 |  | $ | 3.73 |
| 5.51 |  |  | 6.73 |  |  | 469,455 |  |  | 4.64 |  |  | 6.19 |  |  | 469,455 |  |  | 6.19 |
| 6.74 |  |  | 8.98 |  |  | 331,610 |  |  | 4.63 |  |  | 7.56 |  |  | 265,498 |  |  | 7.41 |
| 8.99 |  |  | 9.79 |  |  | 559,761 |  |  | 7.50 |  |  | 9.44 |  |  | 87,327 |  |  | 9.26 |
| 9.80 |  |  | 13.86 |  |  | 263,947 |  |  | 4.93 |  |  | 10.73 |  |  | 240,193 |  |  | 10.80 |
|  |  |  |  |  |  | 1,949,888 |  |  | 5.68 |  | $ | 7.57 |  |  | 1,370,188 |  | $ | 6.88 |
Total compensation costs related to non-vested stock option awards not yet recognized as an expense was $0.5 million as at December 28, 2019, which will be amortized over a weighted-average remaining vesting period of 0.6 years. Restricted Stock Units RSUs granted to employees vest ratably on each of the first through third anniversaries of the grant date. 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 of the Company. The weighted-average grant-date fair values of all RSUs granted in the years ended December 28, 2019, December 29, 2018 and December 30, 2017, were $3.33, $7.65 and $9.18, respectively. The following table summarizes non-vested RSU activity during the year ended December 28, 2019:
|  |  |  |  | Weighted- |
|  |  |  |  | average grant- |
|  | RSUs |  |  | date fair value |
Non-vested, beginning of year |  | 597,837 |  | $ | 8.46 |
Granted |  | 274,086 |  |  | 3.33 |
Vested |  | (331,848 | ) |  | 7.79 |
Forfeited |  | (127,062 | ) |  | 8.41 |
Non-vested, end of year |  | 413,013 |  | $ | 5.64 |
Total compensation costs related to non-vested RSU awards not yet recognized as an expense was $0.8 million as at December 28, 2019, which will be amortized over a weighted-average remaining vesting period of 0.6 years. Performance Share Units For the year ended December 28, 2019, the Company granted a total of 2,846,962 PSUs to certain employees of the Company under its Short-Term Incentive Plan. The vesting of these PSUs was subject to the Company achieving a predetermined measure of adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2019, and is subject to each employee's continued employment with the Company through April 12, 2020 (the requisite service period). The weighted-average grant-date fair value of the PSUs was estimated to be $3.42 based on the closing prices of the Common Shares on the dates of grant. Each reporting period, the number of 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. No PSUs were granted in the year ended December 29, 2018. For the year ended December 30, 2017, the Company granted 1,560,535 PSUs to selected employees. The vesting of these PSUs is subject to the satisfaction of certain stock price performance conditions during a three-year performance period ending May 24, 2020. One-third of the PSUs will vest upon achieving a stock price of $11.00, one-third will vest upon achieving a stock price of $14.00, and one-third will vest upon achieving a stock price of $18.00, in each case for 20 consecutive trading days and subject to the employee's continued employment throughout the performance period. Each vested PSU will entitle the employee to receive one common share of the Company without payment of additional consideration. The fair value of the PSUs granted was estimated using a Monte Carlo valuation model, which simulates the potential outcomes for the Company's stock price performance and determines the payouts that would occur under each scenario. Fair value is based on the average of those results. The grant-date weighted-average fair value of the PSUs was determined to be $5.64, based on the following inputs to the valuation model:
|  | December 30, 2017 |
Grant-date stock price | $ | 9.33 |
Dividend yield |  | 0% |
Expected volatility(1) |  | 42.2% |
Risk-free interest rate(2) |  | 1.5% |
Expected life (in years)(3) |  | 3.0 |
(1) | Determined based on the historical volatility of the Common Shares over 6.5 years, which is consistent with the volatility assumption for stock options granted to employees.
(2) | Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the PSUs.
(3) | Determined based on vesting for the PSUs.
The following table summarizes non-vested PSU activity during the year ended December 28, 2019:
|  |  |  |  | Weighted- |
|  |  |  |  | average grant- |
|  | PSUs |  |  | date fair value |
Non-vested, beginning of year |  | 1,361,896 |  | $ | 5.60 |
Granted | 2,846,962 | 3.42
Forfeited or cancelled |  | (1,272,743 | ) |  | 4.23 |
Non-vested, end of year |  | 2,936,115 |  | $ | 4.08 |
Total compensation costs related to non-vested PSU awards not yet recognized as an expense was $1.9 million as at December 28, 2019, which will be amortized over a weighted-average remaining vesting period of 0.3 years. Chief Executive Officer On April 1, 2019, Joseph D. Ennen was appointed CEO of the Company. In connection with his appointment, the Company granted Mr. Ennen options to purchase 960,061 Common Shares, 512,619 RSUs (of which 215,000 were issued to equal the number of Common Shares purchased by Mr. Ennen on the open market within the 60-day period after his employment began) and 1,785,714 PSUs. The stock options vest on April 1, 2022, subject to Mr. Ennen's continued employment during the vesting period, and expire on April 1, 2029. Each vested stock option will entitle Mr. Ennen to purchase one Common Share at an exercise price of $3.36, which was equal to the closing price of the Common Shares on April 1, 2019. The RSUs vest in three equal annual installments beginning on April 1, 2020, and each vested RSU will entitle Mr. Ennen to receive one Common Share of the Company. The vesting of 892,857 of the PSUs granted is subject to the Company achieving annual adjusted EBITDA thresholds during fiscal years 2019 through 2022, as follows: 297,619 PSUs will vest upon the Company achieving annual adjusted EBITDA of $80 million, another 297,619 will vest upon the Company achieving annual adjusted EBITDA of $110 million, and the final 297,619 will vest upon the Company achieving annual adjusted EBITDA of $140 million, and subject to Mr. Ennen's continued employment with the Company through the end of the fiscal year during which the adjusted EBITDA performance condition is achieved. The vesting of the other 892,857 PSUs that were granted is subject to the Common Shares achieving certain volume-weighted average trading prices during a performance period commencing on April 1, 2019 and ending on December 31, 2022, as follows: 297,619 PSUs will vest upon achieving a trading price of $5.00 per share, another 297,619 will vest upon achieving a trading price of $9.00 per share, and the final 297,619 will vest upon achieving a trading price of $14.00 per share, in each case for 20 consecutive trading days, and subject to Mr. Ennen's continued employment with the Company through the date the stock price performance condition is achieved. Each vested PSU will entitle Mr. Ennen to receive one Common Share without payment of additional consideration. The weighted-average grant-date fair values of the RSUs and PSUs subject to the adjusted EBITDA performance condition were estimated to be $3.46 and $3.36, respectively, based on the closing price of Common Shares on the dates of grant. A grant-date fair value of $1.68 was estimated for the stock options using the Black-Scholes option pricing model, and a weighted-average grant-date fair value of $1.77 was estimated for the PSUs subject to the stock price performance condition using a Monte Carlo valuation model. The following table summarizes the inputs to the Black-Scholes option-pricing and Monte Carlo valuation models:
| Stock Options |  | PSUs |
Grant-date stock price | $ | 3.36 |  | $ | 3.36 |
Exercise price | $ | 3.36 |  |  | NA |
Dividend yield |  | 0% |  |  | 0% |
Expected volatility(1) |  | 47.9% |  |  | 55.7% |
Risk-free interest rate(2) |  | 2.4% |  |  | 2.3% |
Expected life (in years)(3) |  | 6.5 |  |  | 1.8 |
(1) Determined based on the historical volatility of the Common Shares over the expected life of the stock options and performance period of the PSUs. (2) Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the stock options and performance period of the PSUs. (3) Determined based on the mid-point of vesting (three years) and expiration (ten years) for the stock options and the derived service period for the PSUs. The aggregate grant-date fair value of the stock options, RSUs and PSUs awarded to Mr. Ennen was determined to be $8.0 million, which will be recognized on a straight-line basis over the vesting period for the stock options and RSUs and the derived service period for the PSUs. Each reporting period, the number of PSUs subject to the adjusted EBITDA performance condition that are expected to vest is redetermined and the aggregate grant-date fair value of the redetermined number of those PSUs is amortized over the remaining service period less amounts previously recognized. Total compensation costs related to Mr. Ennen's non-vested equity awards not yet recognized as an expense was $5.7 million as at December 28, 2019, which will be amortized over a weighted-average remaining vesting period of 2.4 years. Chief Financial Officer On September 3, 2019, Scott Huckins was appointed CFO of the Company. In connection with his appointment, the Company granted Mr. Huckins options to purchase 262,182 Common Shares, 327,819 RSUs (of which 154,500 were issued to equal the number of Common Shares purchased by Mr. Huckins on the open market prior to December 12, 2019) and 346,638 PSUs. The stock options vest on September 3, 2022, subject to Mr. Huckins' continued employment during the vesting period, and expire on September 3, 2029. Each vested stock option will entitle Mr. Huckins to purchase one Common Share at an exercise price of $2.38, which was equal to the closing price of the Common Shares on September 3, 2019. The RSUs vest in three equal annual installments beginning on September 3, 2020, and each vested RSU will entitle Mr. Huckins to receive one Common Share of the Company. The vesting of 173,319 of the PSUs granted is subject to the Company achieving annual EBITDA thresholds during fiscal years 2019 through 2022, as follows: 57,773 PSUs will vest upon the Company achieving annual adjusted EBITDA of $80 million, another 57,773 will vest upon the Company achieving annual adjusted EBITDA of $110 million, and the final 57,773 will vest upon the Company achieving annual adjusted EBITDA of $140 million, and subject to Mr. Huckins' continued employment with the Company through the end of the fiscal year during which the adjusted EBITDA performance condition is achieved. The vesting of the other 173,319 PSUs that were granted is subject to the Common Shares achieving certain volume-weighted average trading prices during a performance period commencing on September 3, 2019 and ending on December 31, 2022, as follows: 57,773 PSUs will vest upon achieving a trading price of $5.00 per share, another 57,773 will vest upon achieving a trading price of $9.00 per share, and the final 57,773 will vest upon achieving a trading price of $14.00 per share, in each case for 20 consecutive trading days, and subject to Mr. Huckins' continued employment with the Company through the date the stock price performance condition is achieved. Each vested PSU will entitle Mr. Huckins to receive one Common Share without payment of additional consideration. The weighted-average grant-date fair values of the RSUs and PSUs subject to the adjusted EBITDA performance condition were estimated to be $2.45 and $2.38, respectively, based on the closing price of Common Shares on the dates of grant. A grant-date fair value of $1.18 was estimated for the stock options using the Black-Scholes option pricing model, and a weighted-average grant-date fair value of $0.79 was estimated for the PSUs subject to the stock price performance condition using a Monte Carlo valuation model. The following table summarizes the inputs to the Black-Scholes option-pricing and Monte Carlo valuation models:
| Stock Options |  | PSUs |
Grant-date stock price | $ | 2.38 |  | $ | 2.38 |
Exercise price | $ | 2.38 |  |  | NA |
Dividend yield |  | 0% |  |  | 0% |
Expected volatility(1) |  | 49.7% |  |  | 55.9% |
Risk-free interest rate(2) |  | 1.4% |  |  | 1.4% |
Expected life (in years)(3) |  | 6.5 |  |  | 2.1 |
(1) Determined based on the historical volatility of the Common Shares over the expected life of the stock options and performance period of the PSUs. (2) Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the stock options and performance period of the PSUs. (3) Determined based on the mid-point of vesting (three years) and expiration (ten years) for the stock options and the derived service period for the PSUs. The aggregate grant-date fair value of the stock options, RSUs and PSUs awarded to Mr. Huckins was determined to be $1.7 million, which will be recognized on a straight-line basis over the vesting period for the stock options and RSUs and the derived service period for the PSUs. Each reporting period, the number of PSUs subject to the adjusted EBITDA performance condition that are expected to vest is redetermined and the aggregate grant-date fair value of the redetermined number of those PSUs is amortized over the remaining service period less amounts previously recognized. Total compensation costs related to Mr. Huckins' non-vested equity awards not yet recognized as an expense was $1.5 million as at December 28, 2019, which will be amortized over a weighted-average remaining vesting period of 2.7 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, 2019, the Company's employees purchased 185,415 Common Shares (December 29, 2018 - 112,158; December 30, 2017 - 61,796) for total proceeds of $0.5 million (December 29, 2018 - $0.6 million; December 30, 2017 - $0.4 million). As at December 28, 2019, 814,500 Common Shares are remaining to be granted under this plan.

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