STOCK-BASED COMPENSATION

6 Months Ended

Jul. 04, 2021

Stock-based Compensation

Stock-Based Compensation

(9)       Stock-based Compensation

Effective May 5, 2015, the Company adopted the 2015 Equity Plan (the “2015 Plan”), pursuant to which it may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. The number of common stock reserved for issuance is 2,000,000. The Company also maintains an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). The 2005 Plan expired in 2015 and no additional options may be granted. Nonetheless, the 2005 Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. As of July 4, 2021, there were 685,324 shares available for grant pursuant to the 2015 Plan.

Stock options granted to employees and directors generally vest over two to five years, in monthly or annual installments, as outlined in each agreement. Options generally expire ten years from the date of grant. Compensation expense equal to the grant date fair value of the options is recognized in general and administrative expense over the applicable service period.

The Company utilizes the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:

● Stock price – Published trading market values of the Company’s common stock as of the date of grant.

● Exercise price – The stated exercise price of the stock option.

● Expected life – The simplified method as outlined in ASC 718.

● Expected dividend – The rate of dividends that the Company expects to pay over the term of the stock option.

● Volatility – Actual volatility over the most recent historical period equivalent to the expected life of the option.

● Risk-free interest rate – The daily United States Treasury yield curve rate.

The Company recognized stock-based compensation expense in its consolidated statements of operations for the three and six months ended July 4, 2021 and June 28, 2020, respectively, as follows:

	Three Months Ended				Six Months Ended
(in thousands)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Stock options	$	94	$	44	$	183	$	125
Restricted stock		226		67		455		123
	$	320	$	111	$	638	$	248

Information regarding the Company’s stock options is summarized below:

				Weighted
				Average
				Remaining
	Number of	Weighted Average		Contractual
(number of options in thousands)	Options	Exercise Price		Life in Years
Options outstanding at January 3, 2021	557	$	4.53
Granted	24		9.63
Exercised	(50)		6.20
Canceled, forfeited or expired	(22)		3.97
Options outstanding at July 4, 2021	509	$	4.62	6.3

	Six Months Ended
	July 4, 2021			June 28, 2020
Weighted-average fair value of options granted during the period	$	5.17		$	1.81
Expected life (in years)		4.0			5.4
Expected dividend	$	—		$	—
Expected stock volatility		71.12	%		53.64	%
Risk-free interest rate		0.6	%		1.1	%

Information regarding the Company’s restricted stock is summarized below:

				Weighted
				Average
				Remaining
	Number of	Weighted Average		Contractual
(number of awards in thousands)	Awards	Award Date Fair Value		Life in Years
Unvested at January 3, 2021	475	$	4.43
Granted	—		—
Exercised/Released	(25)		4.84
Unvested at July 4, 2021	450	$	4.41	1.5