Stock-Based Compensation

9 Months Ended

Sep. 26, 2020

Share-based Payment Arrangement [Abstract]

9. Stock-Based Compensation

Short-Term Incentive Plan

On April 12, 2020, the Company issued 773,875 Common Shares, net of 368,938 Common Shares withheld for taxes, in connection with the vesting of outstanding performance share units ("PSUs") previously granted to certain employees under the Company's 2019 Short-Term Incentive Plan.

On April 22, 2020, the Company granted a total of 1,827,435 PSUs to certain employees of the Company under its 2020 Short-Term Incentive Plan. The vesting of these PSUs is subject to the Company achieving a predetermined measure of adjusted EBITDA for fiscal 2020 and subject to each employee's continued employment with the Company through April 22, 2021 (the requisite service period). The aggregate grant-date fair value of these PSUs was estimated to be $4.6 million based on a closing price of $2.52 for the Common Shares on the date 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. For the quarter and three quarters ended September 26, 2020, the Company recognized compensation expense of $1.1 million and $1.9 million, respectively, related to the number of these PSUs expected to vest, and the remaining compensation cost related to these PSUs not yet recognized as an expense was determined to be $2.5 million as at September 26, 2020.

On June 30, 2020, the Company granted an additional total of 876,181 PSUs to certain other employees of the Company under the 2020 Short-Term Incentive Plan. The vesting date and conditions of these PSUs are the same as the PSUs above granted on April 22, 2020. The aggregate grant-date fair value of these PSUs was estimated to be $4.1 million based on a closing price of $4.70 for the Common Shares on the date of grant. The compensation cost related to these PSUs will be recognized over the requisite service period through April 22, 2021, based on the number of PSUs that are expected to vest. For the quarter ended September 26, 2020, the Company recognized compensation expense of $1.2 million related to the number of these PSUs expected to vest, and the remaining compensation cost related to these PSUs not yet recognized as an expense was determined to be $2.9 million as at September 26, 2020.

Long-Term Incentive Plan

On July 10, 2020, the Company granted 486,919 stock options to selected employees. These stock options vest ratably on each of the first through third anniversaries of the grant date and expire on the tenth anniversary of the grant date. The weighted-average grant-date fair value of the stock options was estimated to be $2.56. The following table summarizes the weighted-average assumptions used in the Black-Scholes option-pricing model to determine the fair value of the stock options granted:

Grant-date stock price	$	4.73
Exercise price	$	4.73
Dividend yield		0%
Expected volatility⁽¹⁾		59.9%
Risk-free interest rate⁽²⁾		0.4%
Expected life of options (in years)⁽³⁾		6.0

(1) Determined based on the historical volatility of the Common Shares over the expected life of the stock options.

(2) Determined based on U.S. Treasury yields with a remaining term equal to the expected life of the stock options.

(3) Determined based on the mid-point of vesting (one through three years) and expiration (ten years).

The aggregate grant-date fair value of stock options awarded to these employees was $1.2 million, which will be recognized on a straight-line basis over the three-year vesting period.

On July 10, 2020, the Company also granted 254,487 PSUs and 130,080 restricted stock units ("RSUs") to these employees. The vesting of the PSUs is subject to the Company achieving predetermined measures of adjusted earnings before interest, taxes, depreciation and amortization for fiscal years ending 2020 through 2022. The RSUs vest ratably on each of the first through third anniversaries of the grant date. Each vested PSU and RSU will entitle the employee to receive one common share of the Company without payment of additional consideration.

The grant-date fair value of each of the PSUs and RSUs was estimated to be $4.91 based on the closing price of the Common Shares on the date of grant. The aggregate grant-date fair values of the PSUs and RSUs were $1.2 million and $0.6 million, respectively. The compensation cost related to the PSUs will be recognized on a straight-line basis over the performance period ending December 31, 2022, based on the number of PSUs that are expected to vest. The compensation cost related to the RSUs will be recognized on a straight-line basis over the three-year vesting period.