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Stock Based Compensation | 9 Months Ended
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Sep. 27, 2024
Share-Based Payment Arrangement [Abstract] |
Stock Based Compensation | 7. Stock Based Compensation Restricted Stock Units On September 16 and 17, 2024, the Company granted its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and certain other Company leaders performance-based restricted stock units, in the amounts of 786,885, 413,115, 72,000, and 607,350, respectively. In connection with the awards, the annual equity incentive award opportunities for the recipients during the performance period of the awards will be reduced by 50% compared to the annual equity incentive award opportunities in the Company’s executive compensation program for 2024. The awards are split into three equal tranches with each tranche having its own market condition and service condition. The market condition is met when the Company’s stock price reaches a certain share price hurdle for twenty consecutive trading days during the performance period from the grant date through December 31, 2028. The share price hurdles are $30, $40, and $50 for the first, second, and third tranches, respectively. Additionally, the service condition is met if the employee is employed on the first, second, and third anniversary of the grant date for the first tranche, second tranche, and third tranche, respectively. Furthermore, if the second or third tranches are not met during the performance period, and the volume weighted average of the Company’s stock price falls between two share price hurdles for over 20 consecutive trading days immediately prior to the end of the performance period, the employee will vest in an interpolated amount of the next tranche. The Company used a lattice valuation model to determine the fair value of the three tranches as of the grant date. The lattice valuation model, using different share price paths, calculates a derived service period which is the median share price path on which the market condition is satisfied for each tranche. The requisite service period was determined to be service conditions as the service conditions are greater than the derived service period. For each of the three tranches, stock compensation expense is recognized on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as incurred. If an employee forfeits nonvested shares subsequent to meeting a service condition, the previously recognized expense is not reversed. If an employee forfeits nonvested shares prior to meeting the service condition, the previously recognized expense is reversed. As of September 27, 2024, these market conditions had not been met and as such these shares had not vested and were not included in the Company's basic or dilutive shares outstanding. The stock price appreciation equity program non-cash stock compensation expense was $0.6 million for both the quarter and nine months ended September 27, 2024. As of September 27, 2024, there was $29.1 million of total unrecognized non-cash stock based compensation expense which is expected to be recognized over a weighted-average period of 3.0 years. The following tables summarize information about the Company’s stock price appreciation equity program awards described above:
Award Summary
Tranche |  | Grant Date Fair Value |  |  | Share Price Vesting Conditions* |  | Underlying Share # |  |  | Contractual Service Period |  | Derived Service Period
|  | September 16, 2024 |  |  | September 17, 2024 |  |  | Both Grant Dates |  | September 16, 2024 |  |  | September 17, 2024 |  |  | Both Grant Dates |  | September 16, 2024 |  | September 17, 2024
1 |  | $ | 21.26 |  |  | $ | 22.85 |  |  | >$30 pershare |  |  | 424,000 |  |  |  | 202,450 |  |  | 1 year |  | 0.60 years |  | 0.46 years
2 |  | $ | 14.96 |  |  | $ | 16.31 |  |  | $30 to$40 pershare |  |  | 424,000 |  |  |  | 202,450 |  |  | 2 years |  | 2.00 years |  | 1.86 years
3 |  | $ | 9.93 |  |  | $ | 11.03 |  |  | $40 to$50 pershare |  |  | 424,000 |  |  |  | 202,450 |  |  | 3 years |  | 2.71 years |  | 2.60 years
7. Stock Based Compensation (continued) The following table summarizes the fair value assumption utilized in the lattice valuation model to calculate fair value:
Grant Date |  | Volatility |  |  | Risk Free Interest Rate |  |  | Dividend Yield |
September 16, 2024 |  |  | 29.5 | % |  |  | 3.38 | % |  |  | 1.70 | %
September 17, 2024 |  |  | 29.5 | % |  |  | 3.41 | % |  |  | 1.65 | %
In connection with the acquisition of LeewayHertz (Note 1), the Company entered into an employment agreement with the selling shareholder and certain key employees by which the Company granted 439,453 restricted stock units, with either both performance and service requirements or just service requirements at a grant-date fair value of $25.86 per share with four year vesting terms. For the quarter and nine months ended September 27, 2024, the Company recorded $0.2 million of non-cash stock compensation expense. During the quarter and nine months ended September 27, 2024, the Company issued 2,443,082 and 2,867,035 restricted stock units, respectively, at a weighted average grant date fair value of $18.11 and $18.89 per share, respectively. The grants issued during the quarter ended September 27, 2024, include the shares related to the stock price appreciation equity program and the shares issued in connection with the acquisition of LeewayHertz. As of September 27, 2024, the Company had 3,462,128 restricted stock units outstanding at a weighted average grant date fair value of $19.15 per share. As of September 27, 2024, $56.6 million of total restricted stock unit non-cash stock based compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.8 years, including the stock appreciation equity program awards discussed above. Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.

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