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Share-Based Compensation | 9 Months Ended
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Sep. 28, 2024
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation In 2019, the Company’s 2011 Equity Incentive Plan (“2011 Plan”) was amended, restated and re-named the 2018 Equity Incentive Plan (“2018 Plan”), and the remaining shares available for issuance under the 2011 Plan were added to the shares reserved for issuance under the 2018 Plan. As of January 1, 2024, the maximum aggregate number of shares that may be issued under the 2018 Plan increased to 25,204,961 shares, which includes an increase of 2,144,521 shares effective January 1, 2024 under the terms of the 2018 Plan. The following table summarizes the shares available for grant under the 2018 Plan:
| Shares Available for Grant
Balance - December 31, 2023 | 8,230,500 |
Authorized | 2,144,521 |
Granted(1) | (3,258,068) |
Shares withheld to cover taxes | 71,057 |
Forfeited | 274,243 |
Balance - September 28, 2024 | 7,462,253 |
__________ (1) Includes 225,967 shares reserved for issuance pursuant to performance stock units if 200% of the applicable performance target is achieved. As of September 28, 2024 and December 31, 2023, there were 5,406,662 and 4,477,120 shares, respectively, issuable under stock options outstanding, 2,400,113 and 1,411,310 shares, respectively, issuable under unvested RSUs outstanding, 225,967 and 0 shares, respectively, issuable under unvested PSUs outstanding, 225,967 shares reserved for issuance under unvested PSUs outstanding if 200% of the applicable performance target is achieved, 9,677,136 and 9,048,906 shares, respectively, issued for stock option exercises, RSU settlement and restricted stock grants, and 7,462,253 and 8,230,500 shares, respectively, available for grant under the 2018 Plan. Stock Options Following are the assumptions used in the Black-Scholes valuation model for options granted during the periods shown below:
|  | Three Months Ended |  | Nine Months Ended
|  | September 28, 2024 |  | September 30, 2023 |  | September 28, 2024 |  | September 30, 2023
Risk-free interest rate |  | 3.9% |  | N/A |  | 4.3% |  | 4.1%
Average expected term (years) |  | 7.0 |  | N/A |  | 7.0 |  | 7.0
Expected volatility |  | 55.3% |  | N/A |  | 55.0% |  | 55.3%
Dividend yield |  | N/A |  | N/A |  | N/A |  | N/A
Option grants in the nine months ended September 28, 2024 and September 30, 2023 generally vest 25% of the total award on the first anniversary of the vesting commencement date, and thereafter ratably vesting monthly over the remaining three-year period, subject to continued employment through the vesting date. The following table summarizes the Company’s stock option activity during the nine months ended September 28, 2024:
| Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value (in thousands)(1)
Outstanding at December 31, 2023 | 4,477,120 |  |  | $ | 23.04 |  |  | 5.4 |  | $ | 12,915 |
Granted | 1,069,541 |  |  | $ | 9.33 |  |  | — |  | $ | — |
Exercised | (6,033) |  |  | $ | 3.00 |  |  | — |  | $ | 23 |
Canceled/Forfeited | (133,966) |  |  | $ | 31.89 |  |  | — |  | $ | — |
Outstanding at September 28, 2024 | 5,406,662 |  |  | $ | 20.13 |  |  | 5.6 |  | $ | 9,639 |
Vested and exercisable at September 28, 2024 | 3,482,392 |  |  | $ | 23.29 |  |  | 3.7 |  | $ | 9,544 |
Vested and expected to vest at September 28, 2024 | 4,818,333 |  |  | $ | 21.32 |  |  | 5.1 |  | $ | 9,591 |
__________ (1) Aggregate intrinsic value is calculated as the difference between the value of common stock on the transaction date and the exercise price multiplied by the number of shares issuable under the stock option. Aggregate intrinsic value of shares outstanding at the beginning and end of the reporting period is calculated as the difference between the value of common stock on the beginning and end dates, respectively, and the exercise price multiplied by the number of shares outstanding. In the three months ended September 28, 2024 and September 30, 2023, the Company recorded in aggregate $2.0 million and $2.1 million, respectively, of share-based compensation expense related to options. In the nine months ended September 28, 2024 and September 30, 2023, the Company recorded in aggregate $5.7 million and $9.0 million, respectively, of share-based compensation expense related to options. The share-based compensation expense is included in cost of goods sold, research and development expenses and SG&A expenses in the Company’s condensed consolidated statements of operations. As of September 28, 2024, there was $12.1 million in unrecognized compensation expense related to nonvested stock option awards which is expected to be recognized over a weighted average period of 1.2 years. Restricted Stock Units RSU grants to employees in the nine months ended September 28, 2024 and September 30, 2023 generally vest 25% of the total award on the first anniversary of the vesting commencement date, and thereafter vest quarterly over the remaining three years of the award, subject to continued employment through the vesting date. Some of the RSU grants to continuing employees in the nine months ended September 28, 2024 and September 30, 2023 vest 50% of the total award on the first anniversary of the vesting commencement date, and thereafter vest quarterly over the remaining four quarters of the award, subject to continued employment through the vesting date. Some of the RSU grants to continuing employees in the nine months ended September 30, 2023 vest quarterly over four quarters, subject to continued employment through the vesting date. Annual RSU grants to directors on the Company’s Board of Directors (the “Board”) in the nine months ended September 28, 2024 and September 30, 2023 vest monthly over a one-year period subject to continued service through the vesting date. RSU grants to new directors on the Board in the nine months ended September 28, 2024 and September 30, 2023 vest monthly over a three-year period subject to continued service through the vesting date. RSU grants to non-employee consultants and ambassadors in the nine months ended September 28, 2024 and September 30, 2023 vest on varying dates, subject to continued service through the vesting date. The following table summarizes the Company’s RSU activity during the nine months ended September 28, 2024:
|  | Number of Units |  | Weighted Average Grant Date Fair Value Per Unit
Unvested at December 31, 2023 |  | 1,411,310 |  |  | $ | 19.60 |
Granted |  | 1,736,593 |  |  | $ | 9.03 |
Vested(1) |  | (614,738) |  |  | $ | 18.72 |
Canceled/Forfeited |  | (133,052) |  |  | $ | 15.95 |
Unvested at September 28, 2024 |  | 2,400,113 |  |  | $ | 12.44 |
________ (1) Includes 71,057 shares of common stock that were withheld to cover taxes on the release of vested RSUs and became available for future grants pursuant to the 2018 Plan. In the three months ended September 28, 2024 and September 30, 2023, the Company recorded $3.4 million and $4.4 million, respectively, of share-based compensation expense related to RSUs. In the nine months ended September 28, 2024 and September 30, 2023, the Company recorded $10.7 million and $14.8 million, respectively, of share-based compensation expense related to RSUs. The share-based compensation expense is included in cost of goods sold, research and development expenses and SG&A expenses in the Company’s condensed consolidated statements of operations. As of September 28, 2024, there was $19.3 million in unrecognized compensation expense related to unvested RSUs which is expected to be recognized over a weighted average period of 1.3 years. Performance Stock Units In March 2024, the Company granted a target amount of $3.3 million in PSUs with market-based and service-based vesting conditions to certain executive officers. The market vesting criteria is based on the Company’s TSR results relative to a peer group. The peer group includes the constituents of the S&P Food and Beverage Select Industry Index excluding companies in the S&P 500 as of the beginning of the performance periods during a one-year, two-year and three-year performance period beginning on January 1, 2024 and ending on December 31, 2024, December 31, 2025 and December 31, 2026, respectively. The market vesting condition allows for a range of vesting from 0% to 200% of the target amount, depending on the relative TSR achieved by the Company against the peer group. In addition to the market vesting condition, these PSUs are subject to the continued service of the executive officers through the last day of the applicable performance period. The fair values of PSUs are measured on the grant date using a Monte Carlo valuation model. Each of the three performance periods is considered an individual tranche of the award referred to as “Tranche 1,” “Tranche 2” and “Tranche 3,” respectively.
|  | Number of Units |  | Grant Date Fair Value Per Unit |  | Performance Period
Tranche 1 |  | 80,307 |  |  | $ | 13.49 |  |  | January 1, 2024 - December 31, 2024
Tranche 2 |  | 74,714 |  |  | $ | 14.50 |  |  | January 1, 2024 - December 31, 2025
Tranche 3 |  | 70,946 |  |  | $ | 15.27 |  |  | January 1, 2024 - December 31, 2026
The following table summarizes the Company’s PSU activity during the nine months ended September 28, 2024:
|  | Number of Units |  | Weighted Average Grant Date Fair Value Per Unit
Unvested at January 1, 2024 |  | — |  |  | $ | — |
Granted |  | 225,967 |  |  | $ | 14.38 |
Vested |  | — |  |  | $ | — |
Canceled/Forfeited |  | — |  |  | $ | — |
Unvested at September 28, 2024 |  | 225,967 |  |  | $ | 14.38 |
The total grant date fair value of the awards was determined to be $3.3 million, with each tranche of the awards representing $1.1 million of the total expense. The requisite service period for each tranche of the award is 10 months, 22 months and 34 months, respectively. Share-based compensation expense related to PSUs is recognized on a straight-line basis over their requisite service periods, regardless of whether the market condition is ultimately satisfied. Share-based compensation expense is not reversed if the achievement of the market condition does not occur. In the three and nine months ended September 28, 2024, the Company recorded $0.6 million and $1.3 million, respectively, of share-based compensation expense related to PSUs. The share-based compensation expense is included in SG&A expenses in the Company’s condensed consolidated statements of operations. Prior to December 31, 2023, the Company had no share-based compensation expense related to PSUs. As of September 28, 2024, there was $1.9 million in unrecognized compensation expense related to unvested PSUs which is expected to be recognized over a weighted average vesting period of 1.5 years. Employee Stock Purchase Plan As of September 28, 2024, the maximum aggregate number of shares that may be issued under the 2018 Employee Stock Purchase Plan (“ESPP”) was 3,484,845 shares of common stock, including an increase of 536,130 shares effective January 1, 2024 under the terms of the ESPP. The ESPP is expected to be implemented through a series of offerings under which participants are granted purchase rights to purchase shares of the Company’s common stock on specified dates during such offerings. The administrator has not yet approved an offering under the ESPP.

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