Stock-Based Compensation

12 Months Ended

Dec. 29, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based CompensationUnder the Equity Incentive Plan, amended and restated February 15, 2017 and approved by the stockholders of the Company on May 10, 2017 (the “EIP”), the Company may grant restricted stock and performance awards to key employees associated with the Company’s Class A stock. For shares granted prior to May 10, 2017, the EIP provides that the maximum number of shares available for grants is 15% of the outstanding Class A Stock, adjusted for EIP activity over the preceding five years. For shares granted after May 10, 2017, the amended EIP provides that the maximum number of shares available for grants is 4.7 million. The Company has no plans to issue additional shares under the provision that was in effect prior to May 10, 2017. Under the provision that was in effect for shares granted after May 10, 2017, shares available for future grants at year-end 2019 were 3.4 million. The Company issues shares out of treasury stock to satisfy stock-based awards. The Company presently has no intent to repurchase additional shares for the purpose of satisfying stock-based awards.

The Company recognized stock-based compensation cost of $5.6 million in 2019, $8.1 million in 2018 and $9.1 million in 2017, as well as related tax benefits of $1.3 million in 2019, $4.4 million in 2018 and $4.2 million in 2017.

Restricted Stock

Restricted stock, which typically vests over four years, is issued to certain key employees and is subject to forfeiture until the end of an established restriction period. The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.

A summary of the status of nonvested restricted stock under the EIP as of year-end 2019 and changes during this period is presented as follows below (in thousands of shares except per share data):


	Restricted Stock	Weighted Average Grant Date Fair Value
Nonvested at year-end 2018	356	$	23.44
Granted	185	24.76
Vested	(134)	21.23
Forfeited	(47)	23.65
Nonvested at year-end 2019	360	$	24.92

As of year-end 2019, unrecognized compensation cost related to unvested restricted stock totaled $6.5 million. The weighted average period over which this cost is expected to be recognized is approximately 1.8 years. The weighted average grant date fair value per share of restricted stock granted during 2019, 2018 and 2017 was $24.76, $28.79 and $21.97, respectively. The total fair value of restricted stock, which vested during 2019, 2018 and 2017, was $3.3 million, $4.9 million and $5.8 million, respectively.

Performance Shares

During 2019, 2018 and 2017, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers. The payment of performance awards, which will be satisfied with the issuance of shares out of treasury stock, is contingent upon the achievement of specific gross profit and operating earnings performance goals ("financial measure performance awards") over a stated period of time or may be earned based on the Company’s total shareholder return (“TSR”) relative to the S&P SmallCap 600 Index (“TSR performance awards”). Both financial measure performance awards and TSR performance awards have a performance period of three years and will cliff-vest after the approval by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares. Additionally, the Company also granted single financial measure performance shares to certain senior officers, which will be satisfied with the issuance of shares out of treasury stock, and is contingent upon the achievement of one performance measure with a one-year performance period. These single financial measure performance shares vest over four years and earn dividends, which are not paid until the awards vest.

2019 Grant

For the 2019 performance share grant (“2019 grant”), the total target number of performance shares granted is 260,000 of which 207,000 shares are eligible to earn up to the maximum number of performance shares of 413,000, which assumes 200% of the target shares originally granted, and may be earned upon achievement of two financial goals. The 2019 financial measure performance awards were granted with a market condition in the form of a relative TSR modifier, which could impact the number of shares earned as determined at the end of the performance period. The number of shares earned based on financial measures’ results will be reduced, increased or remain the same based on the Company’s TSR relative to the S&P SmallCap 600 Index. The maximum number of performance shares that may be earned is 200% of the target shares originally granted and the TSR modifier will not increase payouts above the maximum. The 2019 grant also included 53,000 single financial measure performance shares.

The 2019 financial measure performance awards have a weighted average grant date fair value of $25.54 per share, which was determined using a Monte Carlo valuation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate. The total nonvested shares at maximum level (200%) related to 2019 financial measure performance awards at year-end 2019 is 364,000.

2018 Grant

For the 2018 performance share grant (“2018 grant”), the total target number of performance shares granted was 222,000, of which 177,000 shares (118,000 of financial measure performance awards and 59,000 of TSR performance awards) are eligible to earn up to the maximum number of performance shares of 355,000, which assumes 200% of the target shares originally granted. The 2018 grant also included 45,000 single financial measure performance shares.

The financial measure performance awards have a weighted average grant date fair value of $28.40. For each of the two financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2018, 2019, and 2020 goals. Accordingly, the Company remeasures the fair value of the 2018 financial measure performance shares each reporting period until the 2020 goals are set, after which the fair value will be fixed for the remaining performance period. As of year-end 2019, the current fair value for the 2018 financial measure performance shares was $21.38. The TSR performance awards have an estimated fair value of $31.38, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free rate.

The total nonvested shares at maximum level (200%) related to 2018 financial measure performance awards and TSR performance awards at year-end 2019 are 207,000 and 104,000, respectively.

2017 Grant

For the 2017 performance share grant (“2017 grant”), the total target number of performance shares granted was 387,000, of which 304,000 shares (203,000 of financial measure performance awards and 101,000 of TSR performance awards) are eligible to earn up to the maximum number of performance shares of 609,000, which assumes 200% of the target shares originally granted. The 2017 grant also included 83,000 single financial measure performance shares.

The financial measure performance shares have a weighted average grant date fair value of $21.07. For each of the two financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2017, 2018 and 2019 goals. During the first quarter of 2019, the final year of goals was set and the grant date fair value for the 2017 financial measure performance shares was set at $23.76, and remained fixed for the remaining performance period. The TSR performance shares have an estimated fair value of $20.16, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate.

Based upon the level of achievement of specific financial performance goals and the Company's relative to the S&P SmallCap 600 Index for the 2017 grant, participants had the ability to receive up to 200% of the target number of shares originally granted. On February 11, 2020, the Compensation Committee approved the actual performance achievement of the financial measure performance awards, which resulted in achieving approximately 55% of target. These shares will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2020, if not forfeited by the recipient. The actual achievement of the TSR performance awards was below the threshold level and resulted in no payout for the 2017 grant.

The total nonvested shares related to the 2017 financial measure performance awards and TSR performance awards at year-end 2019 are 69,000 and 0, respectively.

A summary of the status of all nonvested performance shares at target for 2019 is presented as follows below (in thousands of shares except per share data). The majority of the vested shares below is related to the 2016 performance share grant, which cliff-vested after approval from the Compensation Committee during the first quarter of 2019.


	Financial Measure Performance Shares				TSR Performance Shares
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Nonvested at year-end 2018	481	$	23.58	173	$	23.56
Granted	260	25.34		—	—
Vested	(188)	28.05		(55)	19.73
Forfeited	(51)	25.14		(4)	28.99
Nonvested at year-end 2019	502	$	24.21	114	$	25.24

As of year-end 2019, unrecognized compensation cost related to all unvested financial measure performance shares and TSR performance shares totaled $1.0 million and $0.5 million, respectively. The weighted average period over which the costs are expected to be recognized is approximately 1.9 years for financial measure performance shares and 1.0 year for TSR performance shares. The total fair value of financial measure performance shares and TSR performance shares, which vested during 2019, was $3.4 million and $1.4 million, respectively.