Stock Incentive Plans

12 Months Ended

Jan. 02, 2021

Share-based Payment Arrangement [Abstract]

The Company has provided equity-based compensation awards to its associates under three plans. In connection with the initial public offering of our common stock (the “IPO”), on October 23, 2017, the Company’s Board of Directors adopted, and its stockholders approved, the National Vision Holdings, Inc. 2017 Omnibus Incentive Plan (the “2017 Omnibus Incentive Plan”). The total number of shares of common stock that may be issued under the plan is 4,000,000. The plan authorizes the grant of stock options, stock appreciation rights, RSAs, RSUs, PSUs, other equity-based awards and other cash-based awards to our associates, directors, officers, consultants and advisers. The Vision Holding Corp. 2013 Amended and Restated Stock Incentive Plans provided for the issuance of stock options to directors, certain associates and consultants of Vision Holding Corp., its subsidiaries and affiliates. In 2014, our Board of Directors and stockholders of the Company approved the 2014 Stock Incentive Plan for Key Employees of National Vision Holdings, Inc. (formerly known as Nautilus Parent, Inc.) and its subsidiaries (the “2014 Stock Incentive Plan”). There were 10,988,827 stock options authorized for issuance pursuant to the 2014 Stock Incentive Plan. All awards under these plans have a contractual life of 10 years.

The Company also provides associates the opportunity to purchase Company common shares through the Associate Stock Purchase Plan (the “ASPP”), which the Company’s Board of Directors adopted and its stockholders approved on June 6, 2018. The ASPP provides that up to 850,000 shares of common stock, at par value of $0.01 per share, may be offered and issued under the ASPP.

The following table summarizes stock compensation expense under the Company’s plans, which is included in SG&A in the accompanying statements of operations:


In thousands	Fiscal Year 2020		Fiscal Year 2019		Fiscal Year 2018
Stock options	$	2,827	$	8,562	$	19,397
RSUs and PSUs	7,201		3,655		1,386
RSAs	588		334		108
Associate stock purchase plan	124		119		48
Pre-tax stock based compensation expense	$	10,740	$	12,670	$	20,939
Income tax benefit	(2,743)		(3,237)		(5,367)
After-tax share based compensation expense	$	7,997	$	9,433	$	15,572


	Stock options		RSUs and PSUs		RSAs
Unrecognized compensation cost (in thousands)	$	3,248	$	14,156	$	366
Expected remaining weighted-average period of expense recognition (in years)	1.69		2.20		0.58

Service-based options

The following table summarizes service-based stock option activity, including service-based options under the Vision Holding Corp. Amended and Restated 2013 Equity Incentive Plan, the 2014 Stock Incentive Plan, and the 2017 Omnibus Incentive Plan.


	Number of Options Outstanding	Weighted Average Exercise Price ($)	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In Thousands) ($)
Outstanding options at December 28, 2019	1,906,158	13.37
Granted	160,574	34.47
Exercised	(823,685)	8.83
Forfeited	(49,061)	23.54
Outstanding options at January 2, 2021	1,193,986	18.92	6.19	31,490
Vested and exercisable at January 2, 2021	665,781	12.94	4.94	21,540

The weighted average grant date fair value of service-based options granted during fiscal years 2020 and 2019 was $13.71 and $13.67, respectively. There were no grants of service-based options during fiscal year 2018. The fair value of service-based options vested during fiscal years 2020, 2019 and 2018 was $3.3 million, $5.7 million, and $5.9 million respectively. The aggregate intrinsic value of service-based options exercised during fiscal years 2020, 2019 and 2018 was $22.5 million, $21.4 million, and $45.7 million, respectively.

The fair value of service-based options was estimated using the Black-Scholes-Merton option pricing model. The following is a summary of the assumptions used in this model for service-based options:


	2020	2019
Expected volatility	39.54% to 55.81%	34.50% to 37.10%
Expected term range (in years)	6.00	5.75 to 6.50
Expected risk-free interest rate	0.47% to 1.13%	1.68% to 2.94%

The expected term was based on the mid-point between the weighted average time to vesting and the contractual time to maturity. Since all options granted in the 2014 Stock Incentive Plan were issued prior to the IPO, expected volatility was based on the volatility of comparable publicly traded companies. The volatility assumption subsequent to the IPO was calculated using daily closing prices of the stock. The risk free interest rate was based on the U.S. Treasury yield curve. The dividend yield was based on our expectation of not paying dividends on the common stock of NVHI for the foreseeable future.

Performance-based options

The following table summarizes performance-based stock option activity:


	Number of Options Outstanding	Weighted Average Exercise Price ($)	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In Thousands) ($)
Outstanding options at December 28, 2019	1,603,848	6.60
Exercised	(705,414)	7.37
Forfeited	(43,478)	15.74
Outstanding options at January 2, 2021	854,956	5.50	3.42	34,018
Vested and exercisable at January 2, 2021	854,956	5.50	3.42	34,018

There were no grants of performance-based options during fiscal years 2020, 2019, and 2018. The fair value of performance-based options vested during fiscal years 2020, 2019 and 2018 was $1.4 million, $4.4 million and $16.1 million, respectively. The aggregate intrinsic value of performance-based options exercised during fiscal years 2020, 2019, and 2018 was $20.0 million, $29.9 million, and $70.2 million, respectively.

The following summarizes RSU, PSU and RSA awards activity:


	RSUs	Weighted average grant date fair value ($)	PSUs	Weighted average grant date fair value ($)	RSAs	Weighted average grant date fair value ($)
Outstanding at December 28, 2019	376,145	28.45	113,014	34.49	20,628	30.71
Granted	162,468	34.73	125,387	34.34	19,583	30.65
Vested	(52,466)	25.65	—	—	(18,229)	29.27
Forfeited	(31,656)	30.62	(18,217)	34.98	—	—
Outstanding at January 2, 2021	454,491	30.85	220,184	34.36	21,982	31.85

Restricted stock units (RSUs)

During fiscal years 2020 and 2019, we granted 162,468 and 373,082 shares of RSUs, respectively. RSUs include 11,233 RSUs that vest in two equal installments on the first and second anniversaries of the grant date, 216,400 RSUs that vest in three equal installments on the first, second and third anniversaries of the grant date, and 226,858 RSUs that vest in three installments on the second, third and fourth anniversaries of the grant date. The RSUs outstanding as of January 2, 2021 have $20.6 million intrinsic value and remaining weighted average requisite service period of 2.36 years.

Performance stock units (PSUs)

During fiscal year 2020 and 2019, we granted an aggregate of 125,387 and 116,046 PSUs, respectively. The PSUs granted in fiscal 2020 and 2019 are settled after the end of the performance period (i.e., cliff vesting), which begins on the first day of the grant year and ends on the last day of our fiscal years 2022 and 2021, respectively and are based on the Company’s achievement of certain performance targets. The performance stock units outstanding as of January 2, 2021 have $10.0 million intrinsic value and remaining weighted average requisite service period of 1.75 years.

Restricted stock awards (RSAs)

During fiscal years 2020 and 2019, we granted an aggregate of 19,583 and 13,712 RSAs, respectively, to certain directors. These RSAs outstanding include 2,399 awards that vest proportionally over three years and 19,583 awards that vest one year from grant date. As of fiscal year end 2020, the intrinsic value of the awards was $1.0 million, the remaining requisite service period was 0.50 years.

Associate Stock Purchase Plan (ASPP)

Under the ASPP, eligible associates receive a 10% discount from the market trading value of common stock of the Company at the time of purchase. Participants may contribute to the ASPP, not to exceed $25,000 under the ASPP in any calendar year. As of January 2, 2021, the amount of shares held by eligible participants through the ASPP was not material.