Share-Based Compensation

12 Months Ended

Jan. 01, 2022

Share-based Payment Arrangement [Abstract]

We have four stock-based compensation plans covering officers, directors, certain employees, and consultants: the 2004 Equity Incentive Plan (the “2004 Plan”), the 2006 Long-Term Equity Incentive Plan (the “2006 Plan”), the 2016 Amended and Restated Long-Term Incentive Plan (the “2016 Plan”) and the 2021 Long-Term Incentive Plan (the “2021 Plan”). The plans are designed to motivate and retain individuals who are responsible for the attainment of our primary long-term performance goals. The plans provide a means whereby the participants develop a further sense of proprietorship and personal involvement in our development and financial success, thereby advancing the interests of the Company and its stockholders. Although we do not have a formal policy on the matter, we issue new shares of our common stock to participants upon the exercise of options or upon the vesting of restricted stock, restricted stock units, or performance shares, out of the total amount of common shares applicable for issuance or vesting under the aforementioned plans. Shares are available for new issuance only under the 2021 Plan. The 2004, 2006 and 2016 Plans have no shares remaining for issuance. Remaining 2006 and 2016 Plan shares are outstanding only for the vesting of outstanding equity awards.

On May 20, 2021 at the Annual Meeting of Shareholders, our stockholders approved the BlueLinx Holding, Inc. 2021 Long-Term Incentive Plan (the “2021 Plan”), which the Board of Directors had previously approved. The 2021 Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other share-based awards to participants of the 2021 Plan selected by our Board of Directors or a committee of the Board that administers the 2021 Plan. We reserved 750,000 shares of our common stock for issuance under the 2021 Plan. The terms and conditions of awards under the 2021 Plan are determined by the Compensation Committee. Some of the awards issued under both the 2006 and 2016 Plans are subject to accelerated vesting in the event of a change in control as such an event is defined in the respective Plan documents.

For all awards designated as equity awards, we recognize compensation expense equal to the grant-date fair value for all share-based payment awards that are expected to vest, as described further below, in “Compensation Expense.” This expense is recorded on a straight-line basis over the requisite service period of the entire award, unless the awards are subject to market or performance conditions, in which case we recognize compensation expense over the requisite service period of each separate vesting tranche, to the extent the occurrence of such conditions are probable.

All compensation expense related to our share-based payment awards is recorded in “Selling, general, and administrative” expense in the Consolidated Statements of Operations and Comprehensive Income.

Restricted Stock Units

During fiscal 2021 and in prior years, the Board of Directors were granted restricted stock units with a one-year vesting period, although a pro-rated portion could vest prior to the one-year period, with the remainder forfeited, if a director chose not to stand for re-election before the one-year vesting period elapsed. All vested director grants prior to May 20, 2021 settle at the earlier of ten years from the vesting date or retirement from the Board of Directors, whichever comes first. These awards are time-based and are not based upon attainment of performance goals. Grants to directors made after May 20, 2021 from the 2021 Plan share

pool will vest and settle after one year, although a pro-rated portion of the award may vest prior to the one year period, with the remainder forfeited if the director is not standing for re-election or upon retirement from the Board of Directors.

During fiscal 2020 and 2021, the Board of Directors granted restricted stock units to certain of our employees and executive officers. Certain of the restricted stock units granted in fiscal 2020 and 2021 vest in equal annual increments over the three years after the date of grant. Certain restricted stock units granted in fiscal 2019 vest on the third anniversary of the date of grant if certain performance conditions are met prior to the vesting date, and the remaining restricted stock units granted in fiscal 2019 vest at the end of the Company’s second fiscal quarter in 2022 if certain performance conditions are met as of the vesting date.

As of January 1, 2022, there was approximately $7.6 million of total unrecognized compensation expense related to restricted stock units. The unrecognized compensation expense is expected to be recognized over a weighted average term of 1.3 years. As of January 1, 2022, the weighted average remaining contractual term for our restricted stock units was 1.3 years, and the maximum contractual term was 3.0 years.

The following table summarizes activity for our restricted stock units during fiscal 2021:


	Restricted Stock Units
	Number of Awards	Weighted Average Fair Value
Outstanding as of January 2, 2021	725,483	$	15.61
Granted(1)	214,040	42.25
Vested(2)	(379,371)	16.87
Forfeited	(71,546)	16.76
Outstanding as of January 1, 2022	488,606	$	26.13

(1)Granted shares in fiscal 2021 include approximately 27,677 shares associated with grants issued in fiscal 2019 that include performance criteria granting additional shares for which we believe the performance criteria will be achieved.

(2)The total fair value of restricted stock units vested in fiscal 2021 and 2020 was $6.4 million and $1.0 million, respectively.

For fiscal 2020, the weighted average grant date fair value of restricted stock units granted was $8.52.

Compensation Expense

Total share-based compensation expense from our share-based awards was as follows:


	January 1, 2022		January 2, 2021
	(In thousands)
Restricted Stock Units	$	6,590	$	5,992

Total	$	6,590	$	5,992

We do not estimate forfeitures but adjust for them as they occur.

We recognized related income tax benefits in fiscal years 2021 and 2020 of $1.7 million and $1.5 million, respectively, which were fully realized in fiscal 2021 and 2020. We include the benefits of tax deductions in excess of recognized compensation expense as a component of our provision for income taxes in our Consolidated Statements of Operations and Comprehensive Income when present. There were $0.9 million of excess tax benefits in fiscal 2021 and no excess tax benefits in fiscal 2020.