Stock-Based Compensation

9 Months Ended

Oct. 05, 2024

Share-Based Payment Arrangement [Abstract]

Note 11 – Stock-Based Compensation

Stock-Based Employee Awards

The Company sponsors shareholder-approved stock incentive plans that provide for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, dividend equivalent rights, and other stock-based and stock-related awards to directors, officers and other key associates.

Stock-based compensation expense recognized and included in “Selling, general and administrative expenses” in the condensed consolidated statements of earnings, and related tax impacts were as follows:


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Restricted stock expense	$	1,082		$	1,771		$	4,343		$	8,468
Restricted stock unit expense		845			—			4,509			—
Performance share unit expense (benefit)		549			577			(800	)		1,492
Income tax benefit		(686	)		(593	)		(2,129	)		(3,502	)
Stock-based compensation expense, net of tax	$	1,790		$	1,755		$	5,923		$	6,458

The following table summarizes activity in the stock incentive plans for the 40 weeks ended October 5, 2024:


				Weighted					Weighted					Weighted
	Restricted			Average		Restricted			Average		Performance			Average
	Stock			Grant-Date		Stock			Grant-Date		Share			Grant-Date
	Awards			Fair Value		Units			Fair Value		Units			Fair Value
Outstanding at December 30, 2023		819,457		$	24.92		—		$	—		290,310		$	27.00
Granted		—			—		594,321			20.30		418,008			20.55
Vested		(466,544	)		23.14		(15,490	)		20.41		—			—
Cancelled/Forfeited		(23,104	)		27.11		(27,960	)		20.41		(28,274	)		23.30
Outstanding at October 5, 2024		329,809		$	27.29		550,871		$	20.30		680,044		$	23.19

The following table summarizes the unrecognized compensation cost and weighted average recognition period for awards granted under the Company's stock incentive plans as of October 5, 2024:


			Weighted
	Unrecognized		Average
	Compensation		Recognition
	Cost		Period
	(In thousands)		(in years)
Restricted stock awards	$	4,169		1.2
Restricted stock units		7,017		2.2
Performance share units		7,006		2.2
Total	$	18,192

Stock Warrant

On October 7, 2020, in connection with its entry into a commercial agreement with Amazon.com, Inc. (“Amazon”), the Company issued Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon, a warrant to acquire up to an aggregate of 5,437,272 shares of the Company’s common stock (the “Warrant”), subject to certain vesting conditions. Warrant shares totaling 1,087,455 shares vested upon the signing of the commercial agreement and had a grant date fair value of $5.51 per share. Warrant shares totaling up to 4,349,817 shares may vest in connection with conditions defined by the terms of the Warrant, as Amazon makes payments to the Company in connection with the commercial supply agreement, in increments of $200 million, and had a grant date fair value of $5.33 per share. Upon vesting, shares may be acquired at an exercise price of $17.7257. The Warrant contains customary anti-dilution, down-round and change-in-control provisions. The right to purchase shares in connection with the Warrant expires on October 7, 2027.

Share-based payment expense recognized as a reduction of “Net sales” in the condensed consolidated statements of earnings, and related tax benefits were as follows:


	12 Weeks Ended						40 Weeks Ended
(In thousands)	October 5, 2024			October 7, 2023			October 5, 2024			October 7, 2023
Warrant expense	$	184		$	319		$	700		$	1,279
Income tax benefit		(17	)		(43	)		(72	)		(138	)
Warrant expense, net of tax	$	167		$	276		$	628		$	1,141

The following table summarizes stock warrant activity for the 40 weeks ended October 5, 2024:


	Warrant
Outstanding and nonvested at December 30, 2023		3,262,357
Vested		(217,492	)
Outstanding and nonvested at October 5, 2024		3,044,865

As of October 5, 2024, total unrecognized cost related to nonvested warrant shares was $16.3 million, which may be expensed as vesting conditions are satisfied over the remaining term of the agreement, or 3 years. Warrants representing 2,392,407 shares are vested and exercisable. As of October 5, 2024, nonvested warrant shares had an intrinsic value of $10.9 million, and vested warrant shares had an intrinsic value of $8.5 million.