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Share-based Compensation | 6 Months Ended
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Jul. 03, 2022
Share-based Payment Arrangement [Abstract] |
Share-based Compensation | (10) Share-based Compensation In June 2022, the Company amended and restated its 2019 Equity Incentive Plan (the “2019 Plan”), primarily authorizing an additional 3,300,000 shares available for future grant, which were not registered as of July 3, 2022. As of July 3, 2022, 1,052,734 shares remained registered and available for future grant under the 2019 Plan. At its discretion, the Company grants share option awards, nonvested share awards and nonvested share unit awards to certain employees, as defined by ASC 718, Compensation—Stock Compensation, under the Company’s 2019 Plan, and accounts for its share-based compensation in accordance with ASC 718. The Company recognized $0.6 and $1.2 million in share-based compensation expense for the 13 and 26 weeks ended July 3, 2022, respectively, compared to $0.5 million and $0.9 million in share-based compensation expense for the 13 and 26 weeks ended July 4, 2021, respectively. Share Option Awards Share option awards granted by the Company generally vest and become exercisable in four equal annual installments of 25% per year with a maximum life of ten years. The exercise price of share option awards is equal to the quoted market price of the Company’s common stock on the date of grant. The Company granted 10,000 share option awards in the first half of fiscal 2022 with a weighted-average grant-date fair value of $5.46 per share option award. No share option awards were granted in the first half of fiscal 2021. A summary of the status of the Company’s share option awards is presented below:
|  | Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life (In Years) |  |  | Aggregate Intrinsic Value |
Outstanding at January 2, 2022 |  |  | 383,035 |  |  | $ | 3.96 |  |  |  |  |  |  |
Granted |  |  | 10,000 |  |  |  | 13.35 |  |  |  |  |  |  |
Exercised |  |  | (67,750 | ) |  |  | 4.03 |  |  |  |  |  |  |
Forfeited |  |  | (9,600 | ) |  |  | 2.81 |  |  |  |  |  |  |
Outstanding at July 3, 2022 |  |  | 315,685 |  |  | $ | 4.27 |  |  |  | 7.01 |  |  | $ | 2,287,308 |
Exercisable at July 3, 2022 |  |  | 114,059 |  |  | $ | 4.11 |  |  |  | 6.01 |  |  | $ | 787,493 |
Vested and Expected to Vest at July 3, 2022 |  |  | 314,718 |  |  | $ | 4.27 |  |  |  | 7.00 |  |  | $ | 2,281,141 |
The aggregate intrinsic value represents the total pretax intrinsic value, based upon the Company’s most recent closing stock price of $11.01 as of July 3, 2022, which would have been received by the share option award holders had all share option award holders exercised their share option awards as of that date. The fair value of each share option award on the date of grant is estimated using the Black-Scholes method based on the following weighted-average assumptions:
|  | 13 Weeks Ended |  |  | 26 Weeks Ended |
|  | July 3, 2022 |  |  | July 4, 2021 |  |  | July 3, 2022 |  |  | July 4, 2021 |
Risk-free interest rate |  |  | 2.7 | % |  |  | — |  |  |  | 2.7 | % |  |  | — |
Expected term |  | 6.5 years |  |  |  | — |  |  | 6.5 years |  |  |  | — |
Expected volatility |  |  | 80.8 | % |  |  | — |  |  |  | 80.8 | % |  |  | — |
Expected dividend yield |  |  | 7.4 | % |  |  | — |  |  |  | 7.4 | % |  |  | — |
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option award; the expected term represents the weighted-average period of time that option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s dividend rate at the time fair value is measured and future expectations. As of July 3, 2022, there was $0.3 million of total unrecognized compensation expense related to share option awards granted. That expense is expected to be recognized over a weighted-average period of 1.6 years. Nonvested Share Awards and Nonvested Share Unit Awards Nonvested share awards granted by the Company vest for employees from the date of grant in four equal annual installments of 25% per year. Nonvested share awards and nonvested share unit awards granted by the Company to non-employee directors for their service as directors, as defined by ASC 718, generally vest 100% on the earlier of (a) the date of the Company’s next annual stockholders meeting following the grant date, or (b) the first anniversary of the grant date. Nonvested share awards become outstanding when granted and are delivered to the recipient upon their vesting. Vested share unit awards, including any dividend reinvestments, are delivered to the recipient on the tenth business day of January following the year in which the recipient’s service to the Company is terminated, at which time the units convert to shares and become outstanding. The total fair value of nonvested share awards which vested during the first half of fiscal 2022 and 2021 was $3.3 million and $5.3 million, respectively. No nonvested share unit awards vested during the first half of fiscal 2022. The total fair value of nonvested share unit awards which vested in the first half of fiscal 2021 was $0.1 million. On January 14, 2022, the Company delivered 124,012 shares outstanding on previously vested share unit awards, which included dividend reinvestments, to a former Board member who retired in November 2021. The Company granted 284,630 and 248,550 nonvested share awards in the first half of fiscal 2022 and 2021, respectively. The weighted-average grant-date fair value per share of the Company’s nonvested share awards granted in the first half of fiscal 2022 and 2021 was $15.03 and $15.61, respectively. A summary of the status of the Company’s nonvested share awards is presented below:
|  | Shares |  |  | Weighted- Average Grant- Date Fair Value |
Balance at January 2, 2022 |  |  | 551,700 |  |  | $ | 8.51 |
Granted |  |  | 284,630 |  |  |  | 15.03 |
Vested |  |  | (216,700 | ) |  |  | 8.19 |
Forfeited |  |  | (25,210 | ) |  |  | 11.19 |
Balance at July 3, 2022 |  |  | 594,420 |  |  | $ | 11.64 |
To satisfy employee minimum statutory tax withholding requirements for nonvested share awards that vest, the Company withholds and retires a portion of the vesting common shares, unless an employee elects to pay cash. In the first half of fiscal 2022, the Company withheld 77,340 common shares with a total value of $1.2 million. This amount is presented as a cash outflow from financing activities in the accompanying interim unaudited condensed consolidated statement of cash flows. As of July 3, 2022, there was $6.1 million of total unrecognized compensation expense related to nonvested share awards, which is expected to be recognized over a weighted-average period of 2.7 years. As of July 3, 2022, there was no remaining unrecognized compensation expense related to nonvested share unit awards.

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