Share Based Compensation | 9 Months Ended |
Sep. 26, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Share Based Compensation | ' |
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10 | Share Based Compensation | | | | | | | | | | | | | |
The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and directors, including restricted stock units and performance share units, which are restricted stock units with vesting conditions contingent upon achieving certain performance goals. The Company estimates the fair value of share-based awards based on assumptions as of the grant date. The Company recognizes these compensation costs for only those awards expected to vest, on a straight-line basis over the requisite service period of the award, which is generally the vesting term of three years for restricted stock awards and the performance period for performance share units. The Company estimates the number of awards expected to vest based, in part, on historical forfeiture rates and also based on management’s expectations of employee turnover within the specific employee groups receiving each type of award. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. |
2014 Omnibus Incentive Plan |
In connection with the approval of the Business Combination, the 2014 Omnibus Incentive Plan (the “2014 Plan”) was approved by shareholders to provide incentives to key employees of the Company and its subsidiaries. Awards under the 2014 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock awards, performance awards, other stock-based awards, and other cash-based awards. There were 3,473,435 shares of common stock reserved and authorized for issuance under the 2014 Plan. At September 26, 2014, there were 1,026,532 shares of common stock authorized and available for grant under the 2014 Plan. |
Share Based Compensation Expense |
Upon completion of the Business Combination, the Compensation Committee of the Company’s Board of Directors approved an initial grant under the 2014 Plan to certain executive officers, senior management employees, and the Board of Directors. The total compensation expense related to the 2014 Plan was $2.1 million for the period June 30, 2014 through September 26, 2014. The income tax benefit related to share-based compensation expense was $0.8 million for the period June 30, 2014 through September 26, 2014. As of September 26, 2014, $17.3 million of total unrecognized compensation expense related to share-based compensation plans is expected to be recognized over a weighted-average period of 2.5 years. The total unrecognized share-based compensation expense to be recognized in future periods as of September 26, 2014 does not consider the effect of share-based awards that may be issued in subsequent periods. |
General Terms of Awards |
The Compensation Committee of the Board of Directors has discretion to establish the terms and conditions for grants, including the number of shares, vesting and required service or other performance criteria. Restricted stock unit and performance share unit awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting or continued eligibility for vesting upon specified events, including death or permanent disability of the grantee, termination of the grantee’s employment under certain circumstances or a change in control of the Company. Dividend equivalents on common stock are accrued for restricted stock units and performance share units granted to employees and paid in the form of cash or stock depending on the form of the dividend, at the same time that the shares of common stock underlying the restricted stock unit are delivered to the employee. All restricted stock units and performance share units granted to employees are payable in shares of common stock and are classified as equity awards. |
The rights granted to the recipient of employee restricted stock unit awards generally vest annually in equal installments on the anniversary of the grant date over the restriction or vesting period, which is generally three years. Vested restricted stock units are payable in common stock within a thirty day period following the vesting date. The Company records compensation expense of restricted stock unit awards based on the fair value of the awards at the date of grant ratably over the period during which the restrictions lapse. |
Performance share unit awards based on cumulative performance metrics are payable at the end of their respective performance period in common stock. The number of share units awarded can range from zero to 150% depending on achievement of a targeted performance metric, and are payable in common stock within a thirty day period following the end of the performance period. The Company expenses the cost of the performance-based share unit awards based on the fair value of the awards at the date of grant and the estimated achievement of the performance metric, ratably over the performance period of three years. |
Performance share unit awards based on achievement of certain established stock price targets are payable in common stock as the last sales price of the Company’s common stock equals or exceeds established stock price targets in any twenty trading days within a thirty trading day period during the performance period. The Company expenses the cost of the stock price-based performance share unit awards based on the fair value of the awards at the date of grant ratably over the derived service period of the award. |
The Company also issues restricted stock units as share-based compensation for members of the Board of Directors. Director restricted stock units vest one year from the date of grant. In the event of termination of a member’s service on the Board of Directors prior to a vesting date, all unvested restricted stock units of such holder will be forfeited. Vested restricted stock units are delivered to members of the Board of Directors six months following the termination of their directorship. All awards granted are payable in shares of common stock or cash payment equal to the fair market value of the shares at the discretion of our Compensation Committee, and are classified as equity awards due to their expected settlement in common stock. Compensation expense for these awards is measured based upon the fair value of the awards at the date of grant. Dividend equivalents on common stock are accrued for restricted stock units awarded to the Board of Directors and paid in the form of cash or stock depending on the form of the dividend, at the same time that the shares of common stock underlying the restricted stock unit are delivered to a member of the Board of Directors following the termination of their directorship. |
Restricted Stock Units |
Nonvested restricted stock unit awards as of September 26, 2014, and changes during the period June 30, 2014 through September 26, 2014 were as follows: |
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| | | Shares | | Weighted-Average Grant Date Fair Value | | | | | | |
(thousands) | | | | | | |
Nonvested at June 30, 2014 | | | — | | | — | | | | | | | |
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Granted | | | 762 | | | $ | 10.5 | | | | | | | |
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Vested | | | — | | | — | | | | | | | |
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Forfeited | | | — | | | — | | | | | | | |
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Nonvested at September 26, 2014 | | | 762 | | | $ | 10.5 | | | | | | | |
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Compensation expense related to restricted stock units was $0.8 million for the period June 30, 2014 through September 26, 2014. As of September 26, 2014, there was $7.2 million of unrecognized share-based compensation expense related to 762,075 restricted stock unit awards, with a weighted-average grant date fair value of $10.50, that are expected to vest over a weighted-average period of 2.6 years. The fair value of these awards was determined based on the Company’s stock price on the grant date. |
Performance Share Units |
Nonvested performance share unit awards as of September 26, 2014, and changes during the period June 30, 2014 through September 26, 2014, were as follows: |
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| | EBITDA Vesting Awards | | Stock Price Vesting Awards |
| | Shares | | Weighted-Average Grant Date Fair Value | | Shares | | Weighted-Average Grant Date Fair Value |
(thousands) | (thousands) |
Nonvested at June 30, 2014 | | — | | | | | | — | | | | |
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Granted | | 1,216 | | | $ | 10.49 | | | 810 | | | $ | 3.54 | |
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Vested | | — | | | — | | | — | | | — | |
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Forfeited | | — | | | — | | | — | | | — | |
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Nonvested at September 26, 2014 | | 1,216 | | | $ | 10.49 | | | 810 | | | $ | 3.54 | |
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EBITDA Vesting Awards |
During the period June 30, 2014 through September 26, 2014, 1,215,704 performance share unit awards were granted to certain executive officers and senior management employees, payable upon the achievement of certain established cumulative Adjusted EBITDA performance targets over a three year performance period. The performance period for the shares awarded during the period June 30, 2014 through September 26, 2014 is July 1, 2014 through June 30, 2017. Distributions under these awards are payable at the end of the performance period in common stock. The total potential payouts for awards granted during the period June 30, 2014 through September 26, 2014 range from 0 to 1,215,704 shares, should certain performance targets be achieved. The fair value of these awards was determined based on the Company’s stock price on the date of grant, which was $10.49 per share. These awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting or continued eligibility for vesting upon specified events, including death, permanent disability or retirement of the grantee or a change in control of the Company. |
Compensation expense for cumulative Adjusted EBITDA based performance share unit awards granted during the period June 30, 2014 through September 26, 2014 is currently being recognized based on estimated payout of 100% of target, or 810,469 shares. Compensation expense related to performance share unit awards for the period June 30, 2014 through September 26, 2014 was $0.7 million. As of September 26, 2014, there was $7.8 million of unrecognized compensation expense related to performance share unit awards, which is expected to be recognized over a weighted average period of 2.8 years. |
Stock Price Vesting Awards |
In addition, during the period June 30, 2014 through September 26, 2014, 810,469 performance share unit awards were granted to certain executive officers and senior management employees, payable upon the achievement of certain established stock price targets for the Company’s common stock during a three year performance period. The performance period for the shares awarded during the period June 30, 2014 through September 26, 2014 is July 1, 2014 through June 30, 2017. Distributions under these awards are payable in common stock as the last sales price of the Company’s common stock equals or exceeds established stock price targets in any twenty trading days within a thirty trading day period during the performance period. The weighted-average fair value of stock price based performance awards granted during the period June 30, 2014 through September 26, 2014 was $3.54 per share, and was estimated using a Monte Carlo simulation assuming an average risk-free interest rate of 0.88%, expected volatility of 17%, and zero dividends. The expected volatility was derived from the closing market price of the Company’s exchange traded warrants to purchase common stock as of the grant date using the Black-Scholes option pricing model. The weighted-average derived service period for stock price based performance awards granted during the period June 30, 2014 through September 26, 2014 was 1.7 years. |
Compensation expense related to stock price based performance share unit awards for the period June 30, 2014 through September 26, 2014 was $0.6 million. As of September 26, 2014, there was $2.3 million of unrecognized compensation expense related to performance share unit awards, which is expected to be recognized over a weighted average period of 1.4 years. |
Share Based Compensation (Predecessor) |
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Prior to the consummation of the Business Combination, Jason Partners Holdings LLC (Jason LLC), the former parent company of Jason, had granted various classes of its common units to certain executives and directors of Jason. In accordance with ASC 718, Compensation - Stock Compensation, compensation cost related to the units granted was recognized in Jason’s financial statements over the vesting period. Upon consummation of the Business Combination, all unvested units became fully vested and Jason recognized $7.6 million of compensation expense during the predecessor period from June 28, 2014 to June 29, 2014. During the predecessor period from January 1, 2014 through June 29, 2014, Jason recognized $7.7 million of stock-based compensation expense, and the related income tax benefit was $2.5 million. |