Stock-based Compensation | 14. Stock-based Compensation The Company has established two equity incentive plans as described below. The total stock-based compensation for the three months ended April 3, 2021 and the three months ended March 28, 2020 was $10.6 million and $0.7 million, respectively. 2021 Equity Incentive Plan In March 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). Under the 2021 Plan, up to 13,737,500 shares of common stock may be granted to employees, directors and consultants in the form of stock options, restricted stock units and other stock-based awards. The terms of awards granted under the 2021 Plan are determined by the Compensation Committee of the Board of Directors, subject to the provisions of the 2021 Plan. As of April 3, 2021 there were 12,361,929 shares available for future issuance under the 2021 Plan. Options granted under the 2021 Plan expire no later than 10 years from the date of grant. The vesting period of stock options and restricted stock units granted under the 2021 Plan is generally three years from the date of grant. 2021 Options Intrinsic value in millions Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding as of January 1, 2021 — $ — — $ — Granted 1,219,028 $ 17.00 — $ — Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding as of April 3, 2021 1,219,028 $ 17.00 9.95 $ — Options exercisable as of April 3, 2021 — $ — — $ — Options expected to vest as of April 3, 2021 1,219,028 $ 17.00 9.95 $ — April 3, 2021 The weighted average grant date fair value of options granted in 2021 was $ 6.30 At April 3, 2021, the total unrecognized compensation cost (in millions) related to stock options was $ 7.5 Total compensation expense (in millions) recognized for the three months ended April 3, 2021 was $ 0.15 This unrecognized compensation cost is expected to be recognized over a weighted average period of 2.94 years The closing price of our common stock on April 3, 2021 was $ 16.95 There were no exercises or vesting of these options in the three months ended April 3, 2021. The Company determined the fair value of these stock options at the date of grant using the Black-Scholes option-pricing model. The principal assumptions used in the Black-Scholes option-pricing model for these stock options granted were as follows: April 3, 2021 Risk-free interest rate 1.08 % Expected life 6 years Expected dividend yield — % Expected volatility 37.00 % 2021 Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Outstanding as of January 1, 2021 — — Granted 156,543 $ 17.00 Redeemed — — Outstanding as of April 3, 2021 156,543 $ 17.00 April 3, 2021 Total compensation expense (in millions) recognized for the three months ended April 3, 2021 was $ 0.08 Number of years that expense related to these restricted stock unit will be recognized 2.9 years As of April 3, 2021, the total unrecognized compensation cost (in millions) related to these Restricted Stock Units was $ 2.6 2017 Equity Incentive Plan In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”), which provided for the issuance of stock options, restricted stock and restricted stock awards to officers, directors and employees. The stock options granted under the 2017 Plan generally have a maximum term of up to 10 years. Restricted stock, restricted stock awards, and stock options granted under the 2017 Plan generally are eligible to vest based on continued service, generally over five years, or upon an initial public offering and post-initial public offering stock price performance. All performance-vesting conditions were satisfied on March 26, 2021 following our IPO on March 12, 2021 and subsequent stock price performance. For presentation purposes in this document we have recast the figures reported as of December 31, 2020 to recognize the 195-for-1 stock split that occurred on March 2, 2021 as if it had been effective on January 1, 2021. As of April 3, 2021 there were 7,224,906 outstanding options and 1,505,751 outstanding restricted stock awards under the 2017 Plan. No future awards will be made under the 2017 Plan following our IPO. Shares underlying awards under the 2017 Plan that expire or become unexercisable without delivery of shares, are forfeited to, or repurchased for cash by, the Company, are settled in cash, or otherwise become available again for grant will be available for future awards under the 2021 Plan (as described above). Time-Based Stock Options The following table summarizes activity for time-based stock option under the 2017 Plan: Intrinsic value in millions Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding as of January 1, 2021 6,770,400 $ 1.08 7.50 $ 16.17 Granted 524,063 $ 3.61 9.79 — Exercised (42,647) 0.50 — — Forfeited (26,910) $ 1.80 — — Outstanding as April 3, 2021 7,224,906 $ 1.26 8.00 $ 15.69 Options exercisable as of April 3, 2021 2,394,678 $ 0.88 7.41 — Options expected to vest as of April 3, 2021 4,830,228 $ 1.46 8.29 — Number of Shares Weighted-Average Grant-Date Fair Value Options granted during the three months ended April 3, 2021 524,063 $ 2.14 Options vested during the three months ended April 3, 2021 100,718 $ 1.40 Options forfeited during the three months ended April 3, 2021 26,910 $ 1.13 At April 3, 2021, the total unrecognized compensation cost related to time-based stock options was $5.6 million. This cost is expected to be recognized over a weighted average period of 3.20 years. The Company determined the fair value of these time-based stock options at the date of grant using the Black-Scholes option-pricing model. The principal assumptions used in the Black-Scholes option-pricing model for these stock options granted were as follows: April 3, 2021 March 28, 2020 Risk-free interest rate 1.08 % 0.13 % Expected life (years) 6.0 1.5 Expected dividend yield — % — % Expected volatility 37.00 % 58.00 % The risk-free interest rate was based on the U.S. Treasury yield curve at date of grant over the expected term of these stock options. The expected volatility was based upon a comparable public company’s historical volatility. Market and Performance Condition Stock Options The following table summarizes activity for stock options with market and performance conditions under our 2017 Plan: Intrinsic value in millions Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding as of January 1, 2021 6,479,655 $ 1.05 7.69 $ 16.17 Granted 524,063 $ 3.61 9.79 — Forfeited (26,910) $ 1.80 — — Outstanding as of April 3, 2021 6,976,808 $ 1.24 7.91 $ 15.71 Options exercisable as of April 3, 2021 6,976,808 — 7.91 — The performance criteria was met on March 26, 2021. Number of Shares Weighted-Average Options granted during the three months ended April 3, 2021 524,063 $ 2.07 Options forfeited during the three months ended April 3, 2021 26,910 $ 1.13 As of April 3, 2021, there was no unrecognized compensation costs related to performance-based stock options. The Company determined the fair value of these performance-based stock options at the date of grant using the Black-Scholes option pricing model. The principal assumptions used in the Black-Scholes option-pricing model for these stock options granted were as follows: April 3, 2021 March 28, 2020 Risk-free interest rate 1.08 % 0.13 % Expected life (years) 1.5 1.5 Expected dividend yield — % — % Expected volatility 37.00 % 58.00 % The risk-free interest rate was based on the U.S. Treasury yield curve at date of grant over the expected term of these stock options. The expected volatility was based upon comparable public companies historical volatility. Time-Based Restricted Stock Awards The following table summarizes activity for time-based restricted stock awards under the 2017 Plan: Restricted Class A Stock Restricted Common Grant date fair value in millions Number of Shares Weighted Number of Shares Weighted Outstanding as of January 1, 2021 — — 1,603,095 $ 1.46 Modified — — — — Forfeited — — (97,344) $ 1.46 Outstanding as of April 3, 2021 — — 1,505,751 $ 1.46 At April 3, 2021, the Company had $0.2 million of total unrecognized compensation costs relating to these restricted stock awards, which is expected to be recognized through August 4, 2022. Performance-Based Restricted Stock Awards with Market and Performance Conditions The following table summarizes activity for performance-based restricted stock awards under our the 2017 Plan: Restricted Class A Stock Restricted Common Grant date fair value in millions Number of Weighted Number of Weighted Outstanding as of January 1, 2021 225,570 $ 4.43 857,805 $ 0.43 Granted — — — — Forfeited — — — — Vested (225,570) $ 4.43 (857,805) $ 0.43 Redeemed — — Outstanding as of April 3, 2021 — — — The performance criteria was met on March 26, 2021. Accordingly, 225,570 shares of Restricted Class A stock and 857,805 shares of Restricted Common Stock vested. The fair value of the vested shares was $1.4 million. At April 3, 2021, the Company had no unrecognized compensation costs relating to these restricted stock awards. |