XML 42 R20.htm IDEA: XBRL DOCUMENT v3.20.4
Stock-Based Compensation
12 Months Ended
Jan. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Stock-Based Compensation
 
Prior to the IPO and related Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership units, each of which was subject to unique distribution rights. In connection with the IPO and the related Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating LP Units. Holders of the LP Units periodically exchange their LP Units for shares of Class A common Stock of Summit Inc.

In the first quarter of 2018, the Board of Directors vested the time-vesting units outstanding and we recognized the remaining $1.0 million of stock based compensation related to these LP units.
  
Omnibus Incentive Plan
 
In 2015, our Board of Directors and stockholders adopted the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the "Plan"), which allows for grants of equity-based awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units, performance units, and other stock-based awards. The Plan authorizes the issuance of up to 13,500,000 shares of Class A common stock in the form of restricted stock units and stock options, of which 4.3 million shares were available for future grants as of January 2, 2021.
 
Restricted Stock
 
Restricted Stock with Service-Based Vesting—Under the Plan, the Compensation Committee of the Board of Directors (the “Compensation Committee”) has granted restricted stock to members of the Board of Directors, executive officers and other key employees. These awards contain service conditions associated with continued employment or service. The terms of the restricted stock provide voting and regular dividend rights to holders of the awards. Upon vesting, the restrictions on the restricted stock lapse and the shares are considered issued and outstanding for accounting purposes.
 
In each of 2020, 2019 and 2018, the Compensation Committee granted restricted stock to executives and key employees under the Plan as part of our annual equity award program, which vest over a two or three year period, subject to continued employment or service.  From time to time, the Compensation Committee grants restricted stock to newly hired or promoted employees or other employees who have achieved extraordinary personal performance objectives.
 
Further, in each of 2020, 2019 and 2018, the Compensation Committee granted 42,736, 65,144 and 38,232 shares, respectively, to non-employee members of the Board of Directors for their annual service as directors. These restricted stock grants vest over a one year period.
 
In measuring compensation expense associated with the grant of restricted stock, we use the fair value of the award, determined as the closing stock price for our Class A common stock on the date of grant. Compensation expense is recorded monthly over the vesting period of the award.

Restricted stock with Service- and Market-Condition-Based Vesting—In 2020, 2019 and 2018, the Compensation Committee granted restricted stock to certain members of our executive team as part of their annual compensation package. The restricted stock vests at the end of a three year performance period, based on our total stock return (“TSR”) ranking relative to companies in the S&P Building & Construction Select Industry Index, subject to continued employment.
 
Compensation expense is recorded monthly over the vesting period of the awards. The following table summarizes information for the equity awards granted in 2020:
 
 OptionsRestricted Stock UnitsPerformance Stock UnitsWarrants
 WeightedWeightedWeightedWeighted
 average grant-Number ofaverage grant-Number ofaverage grant-average grant-
 Number ofdate fair valuerestricteddate fair valueperformancedate fair valueNumber ofdate fair value
 optionsper unitstock unitsper unitstock unitsper unitwarrantsper unit
Beginning balance—December 28, 20192,128,107 $9.08 1,556,636 $20.29 390,645 $31.08 100,037 $18.00 
Granted— — 1,379,943 18.10 199,946 23.43 — — 
Forfeited/ Canceled(35,117)12.30 (154,283)19.12 (112,416)26.54 — — 
Exercised(54,517)10.10 — — — — — — 
Vested— — (647,345)21.28 (49,300)32 — — 
Balance—January 2, 20212,038,473 $9.16 2,134,951 $18.64 428,875 $28.64 100,037 $18.00 
 
The fair value of the time-vesting options granted was estimated as of the grant date using the Black-Scholes-Merton model, which requires the input of subjective assumptions, including the expected volatility and the expected term. The fair value of the performance stock units granted was estimated as of the grant date using Monte Carlo simulations, which requires the input of subjective assumptions, including the expected volatility and the expected term. No options to purchase common stock were granted in 2020, 2019 and 2018.

The risk-free rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period approximating the expected term. As Summit Holdings has not historically and does not plan to issue regular dividends, a dividend yield of zero was used. The volatility assumption is based on reported data of a peer group of publicly traded companies for which historical information was available adjusted for the Company’s capital structure. The expected term is based on expectations about future exercises and represents the period of time that the units granted are expected to be outstanding.
 
Compensation expense for time-vesting interests granted is based on the grant date fair value. The Company recognizes compensation costs on a straight-line basis over the service period, which is generally the vesting period of the award. Forfeitures are recognized as they occur. Share-based compensation expense, which is recognized in general and administrative expenses, totaled $28.9 million, $20.4 million and $25.4 million in the years ended January 2, 2021, December 28, 2019 and December 29, 2018, respectively. As of January 2, 2021, unrecognized compensation cost totaled $22.0 million. The weighted average remaining contractual term over which the unrecognized compensation cost is to be recognized is 1.7 years as of year-end 2020.
 
As of January 2, 2021, the intrinsic value of outstanding options, restricted stock units and performance stock units was $3.8 million, $42.9 million and $8.6 million, respectively, and the remaining contractual term was 3.3 years, 1.0 year and 1.3 years, respectively. The weighted average strike price of stock options outstanding as of January 2, 2021 was $18.75 per share. The intrinsic value of 2.0 million exercisable stock options as of January 2, 2021 was $3.8 million with a weighted average strike price of $18.75 and a weighted average remaining contractual period of 3.3 years.
Summit Materials, LLC  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-Based Compensation Stock-Based Compensation
 
Prior to the IPO and related Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership units, each of which was subject to unique distribution rights. In connection with the IPO and the related Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating LP Units. Holders of the LP Units periodically exchange their LP Units for shares of Class A common Stock of Summit Inc.

In the first quarter of 2018, the Board of Directors vested the time-vesting units outstanding and we recognized the remaining $1.0 million of stock based compensation related to these LP units.

Omnibus Incentive Plan
 
In 2015, our Board of Directors and stockholders adopted the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the "Plan"), which allows for grants of equity-based awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units, performance units, and other stock-based awards. The Plan authorizes the issuance of up to 13,500,000 shares of Class A common stock in the form of restricted stock units and stock options, of which 4.3 million shares were available for future grants as of January 2, 2021.
 
Restricted Stock
 
Restricted Stock with Service-Based Vesting—Under the Plan, the Compensation Committee of the Board of Directors (the “Compensation Committee”) has granted restricted stock to members of the Board of Directors, executive officers and
other key employees. These awards contain service conditions associated with continued employment or service. The terms of the restricted stock provide voting and regular dividend rights to holders of the awards. Upon vesting, the restrictions on the restricted stock lapse and the shares are considered issued and outstanding for accounting purposes.
 
In each of 2020, 2019 and 2018, the Compensation Committee granted restricted stock to executives and key employees under the Plan as part of our annual equity award program, which vest over a two or three year period, subject to continued employment or service. From time to time, the Compensation Committee grants restricted stock to newly hired or promoted employees or other employees who have achieved extraordinary personal performance objectives.
 
Further, in each of 2020, 2019 and 2018, the Compensation Committee granted 42,736, 65,144 and 38,232 shares, respectively, to non-employee members of the Board of Directors for their annual service as directors. These restricted stock grants vest over a one year period.
 
In measuring compensation expense associated with the grant of restricted stock, we use the fair value of the award, determined as the closing stock price for our Class A common stock on the date of grant. Compensation expense is recorded monthly over the vesting period of the award.
 
Restricted stock with Service- and Market-Condition-Based Vesting—In 2020, 2019 and 2018, the Compensation Committee granted restricted stock to certain members of our executive team as part of their annual compensation package. The restricted stock vests at the end of a three year performance period, based on our total stock return (“TSR”) ranking relative to companies in the S&P Building & Construction Select Industry Index, subject to continued employment.
 
Compensation expense is recorded monthly over the vesting period of the awards. The following table summarizes information for the equity awards granted in 2020:
 OptionsRestricted Stock UnitsPerformance Stock UnitsWarrants
 WeightedWeightedWeightedWeighted
 average grant-Number ofaverage grant-Number ofaverage grant-average grant-
 Number ofdate fair valuerestricteddate fair valueperformancedate fair valueNumber ofdate fair value
 optionsper unitstock unitsper unitstock unitsper unitwarrantsper unit
Beginning balance—December 28, 20192,128,107 $9.08 1,556,636 $20.29 390,645 $31.08 100,037 $18.00 
Granted— — 1,379,943 18.10 199,946 23.43 — — 
Forfeited/ Canceled(35,117)12.30 (154,283)19.12 (112,416)26.54 — — 
Exercised(54,517)10.10 — — — — — — 
Vested— — (647,345)21.28 (49,300)32 — — 
Balance—January 2, 20212,038,473 $9.16 2,134,951 $18.64 428,875 $28.64 100,037 $18.00 
 
The fair value of the time-vesting options granted was estimated as of the grant date using the Black-Scholes-Merton model, which requires the input of subjective assumptions, including the expected volatility and the expected term. The fair value of the performance stock units granted was estimated as of the grant date using Monte Carlo simulations, which requires the input of subjective assumptions, including the expected volatility and the expected term. No options to purchase common stock were granted in 2020, 2019 and 2018.

The risk-free rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period approximating the expected term. As Summit Holdings has not historically and does not plan to issue regular dividends, a dividend yield of zero was used. The volatility assumption is based on reported data of a peer group of publicly traded companies for which historical information was available adjusted for the Company’s capital structure. The expected term is based on expectations about future exercises and represents the period of time that the units granted are expected to be outstanding.
 
Compensation expense for time-vesting interests granted is based on the grant date fair value. The Company recognizes compensation costs on a straight-line basis over the service period, which is generally the vesting period of the award. Forfeitures are recognized as they occur. Share-based compensation expense, which is recognized in general and administrative expenses, totaled $28.9 million, $20.4 million and $25.4 million in the years ended January 2, 2021, December
28, 2019 and December 29, 2018, respectively. As of January 2, 2021, unrecognized compensation cost totaled $22.0 million. The weighted average remaining contractual term over which the unrecognized compensation cost is to be recognized is 1.7 years as of year-end 2020.
 
As of January 2, 2021, the intrinsic value of outstanding options, restricted stock units and performance stock units was $3.8 million, $42.9 million and $8.6 million, respectively, and the remaining contractual term was 3.3 years, 1.0 year and 1.3 years, respectively. The weighted average strike price of stock options outstanding as of January 2, 2021 was $18.75 per share. The intrinsic value of 2.0 million exercisable stock options as of January 2, 2021 was $3.8 million with a weighted average strike price of $18.75 and a weighted average remaining contractual period of 3.3 years.