Stock-Based Compensation

12 Months Ended

Dec. 29, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based CompensationThe Company’s Stock Incentive Plan (the “Plan”), as amended and restated in May of 2013, authorizes the grant of non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and incentive bonuses to employees, officers, non-employee directors and other service providers. The Plan is administered by the Compensation Committee of the Company’s Board of Directors (the “Board”) or another committee designated by the Board, or in the absence of any such committee, the Board itself (the “administrator”). Stock options are granted at a price determined by the administrator at an exercise price that is not less than the fair market value of the underlying stock on the date of grant. The administrator may also grant SARs and RSUs with terms determined by the administrator in accordance with the Plan. All share-based awards (except for RSUs) granted under the Plan have a life of ten years. Most awards vest ratably over four years;

however, some have been granted with different vesting schedules. Of the awards outstanding, none have been granted to non-employees (except those granted to non-employee members of the Board of Directors of the Company) under the Plan. At December 29, 2020, approximately 3.1 million share-based awards were available to be granted under the Plan.

Stock-based compensation expense is generally recognized on a straight-line basis over the service period of the awards. In 2020, 2019 and 2018, non-cash stock-based compensation expense of $2.6 million, $2.4 million and $3.0 million, respectively, was included in general and administrative expense.

The estimated fair value of each option granted is calculated using the Black-Scholes option-pricing model. Expected volatilities are based on the Company’s historical data and implied volatility. The Company uses historical data to estimate expected employee forfeitures of stock options. The expected life of options granted is management’s best estimate using recent and expected transactions. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company did not grant any options in 2020.

The weighted-average assumptions used in the model were as follows:


	2019			2018
Risk-free interest rate	1.8		%	2.7		%
Expected term (average in years)	6.2			6.2
Expected dividend yield	—			—
Expected volatility	55.7		%	51.0		%
Weighted-average Black-Scholes fair value per share at date of grant	$	4.16		$	5.11

The Company has estimated forfeiture rates that average 18% based upon the class of employees receiving stock-based compensation in its calculation of stock-based compensation expense for the year ended December 29, 2020. These estimates are based on historical forfeiture behavior exhibited by employees of the Company.

A summary of aggregate option award activity under the Plan as of December 29, 2020, and changes during the fiscal year then ended is presented below:


	Awards	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (1) (in thousands)
Outstanding—December 31, 2019	1,212,071	$	11.67
Granted	—	—
Forfeited or expired	(261,919)	8.69
Exercised	(10,799)	5.82
Outstanding—December 29, 2020	939,353	$	12.57	5.21	$	539
Vested and expected to vest	917,745	$	12.68	5.13	$	528
Exercisable as of December 29, 2020	753,883	$	13.77	4.52	$	364

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(1)Aggregate intrinsic value represents the amount by which fair value of the Company’s stock exceeds the exercise price of the option as of December 29, 2020.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2019 and January 1, 2019 was $4.16 and $5.11, respectively. There were no options granted in the year ended December 29, 2020. The intrinsic value associated with options exercised was zero, zero and $0.3 million for the fiscal years ended December 29, 2020, December 31, 2019 and January 1, 2019, respectively. The Company had 120,349, 203,254 and 204,399 options that vested during the years ended December 29, 2020, December 31, 2019 and January 1, 2019, respectively. These awards had a total estimated fair value of $0.8 million, $1.4 million, and $1.9 million at the date of vesting for the years ended December 29, 2020, December 31, 2019 and January 1, 2019, respectively.

A summary of the status of the Company’s non-vested restricted share units as of December 29, 2020 and changes during the year then ended is presented below:


	Awards	Weighted- Average Grant Date Fair Value
Outstanding—January 1, 2020	742,581	$	7.60
Granted	886,227	5.77
Vested	(268,807)	7.45
Forfeited	(204,675)	7.27
Non-vested at December 29, 2020	1,155,326	$	6.29

The Company had 268,807 restricted stock units that vested during the year ended December 29, 2020. These units had a total estimated fair value of $1.2 million at the date of vesting for the year ended December 29, 2020.

As of December 29, 2020, there was $7.3 million of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan, which is expected to be recognized over 2.5 years.