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Stock-Based Compensation | 6 Months Ended
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Jul. 02, 2022
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation [Text Block] | 7. Stock-Based Compensation During the two quarters ended July 2, 2022, 1,750,935 performance share units ("PSUs") were granted to certain employees under the Company's 2022 Short-Term Incentive Plan ("STIP"), which vest subject to the Company achieving a predetermined measure of adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2022 and subject to each employee's continued employment with the Company through March 31, 2023 (the requisite service period) (the "EBITDA PSUs"). The weighted-average grant-date fair value of each EBITDA PSU was estimated to be $5.27 based on the closing price of the Common Shares on the dates of grant. As at July 2, 2022, the remaining compensation cost related to these EBITDA PSUs not yet recognized as an expense was determined to be $6.7 million, which will be amortized over the remaining requisite service period. On March 30, 2022, all outstanding EBITDA PSUs previously granted to certain employees of the Company in connection with the Company's 2021 STIP were cancelled because the fiscal year 2021 performance condition was not achieved. No compensation expense was recognized related to these EBITDA PSUs. The following table summarizes all EBITDA PSU activity for the two quarters ended July 2, 2022:
|  |  |  |  | Weighted- |
|  |  |  |  | average grant- |
|  | EBITDA PSUs |  |  | date fair value |
Non-vested, beginning of period |  | 670,171 |  | $ | 11.77 |
Granted |  | 1,750,935 |  |  | 5.27 |
Vested |  | (58,235) |  |  | 4.91 |
Cancelled |  | (619,357 | ) |  | 12.93 |
Non-vested, end of period |  | 1,743,514 |  | $ | 5.06 |
During the two quarters ended July 2, 2022, 92,877 restricted stock units ("RSUs"), 522,878 PSUs and 1,761,118 stock options were granted to selected employees under the Company's 2022 Long-Term Incentive Plan ("LTIP"). The RSUs vest in three equal annual installments beginning on May 5, 2023, and each vested RSU entitles the employee to receive one Common Share without payment of additional consideration. The vesting of the PSUs is dependent on the Company's total shareholder return ("TSR") performance relative to food and beverage companies in a designated index during the three-year period commencing January 1, 2022 and continuing through December 31, 2024, and the employee's continued employment with the Company through May 5, 2025. The TSR for the Company and each of the companies in the designated index will be calculated using a 20-trading day average closing price as of December 31, 2024. The percentage of vested PSUs may range from 0% to 200% based on the Company's achievement of predetermined TSR thresholds. Each vested PSU entitles the employee to receive one Common Share without payment of additional consideration, with the Board of Directors having the option to settle vested PSUs in whole or part in cash in lieu of Common Shares. As at July 2, 2022, the Company had the intent and ability to settle the PSUs in Common Shares. The 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. Each vested stock option entitles the employee to purchase one Common Share at an exercise price of $5.91, which was the closing price of the Common Shares on May 5, 2022. The grant-date fair value of each RSU was estimated to be $5.91 based on the closing price of the Common Shares on the date of grant. A grant-date fair value of $8.48 was estimated for each PSU using a Monte Carlo valuation model, and a grant-date fair value of $3.48 was estimated for each stock option using the Black-Scholes option pricing model. The following table summarizes the assumptions used to determine the fair values of the PSUs and stock options granted under the 2022 LTIP.
|  | PSUs |  |  | Stock options
Grant-date stock price | $ | 5.91 |  | $ | 5.91
Exercise price |  | NA |  | $ | 5.91
Dividend yield |  | 0% |  |  | 0%
Expected volatility(a) |  | 67.8% |  |  | 61.6%
Risk-free interest rate(b) |  | 2.8% |  |  | 3.0%
Expected life (in years)(c) |  | 2.7 |  |  | 6.0
(a) Determined based on the historical volatility of the Common Shares over the performance period of the PSUs and expected life of the stock options. (b) Determined based on U.S. Treasury yields with a remaining term equal to the performance period of the PSUs and expected life of the stock options. (c) Determined based on the performance period of the PSUs and the mid-point of vesting (three years) and expiration (ten years) for the stock options. As at July 2, 2022, the remaining compensation cost related to RSUs, PSUs and stock options granted under the 2022 LTIP not yet recognized as an expense was determined to be $10.5 million, which will be recognized on a straight-line basis over the remaining requisite service period ending May 5, 2025.

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