Equity-based Compensation

6 Months Ended

Jul. 02, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-based Compensation

10. Equity-based Compensation

During the 2021 second quarter and year-to-date period, the Company granted restricted stock totaling 105,727 and 240,319 shares, respectively. During the 2020 second quarter and year-to-date period, the Company granted restricted stock totaling 219,800 and 599,928 shares, respectively. All grants in 2021 and 2020 were funded out of treasury stock.

Director Board fees are paid in part with quarterly grants of stock units. Of the total shares granted during the 2021 second quarter and year-to-date period, 13,512 and 28,230 shares represented restricted stock units that were granted to Board members, respectively. The shares vest over the quarter in which they were granted and the Company is expensing these grants as such. Grants of similar units to the Board members totaled 170,848 share units in the 2020 first quarter, and represented the annual grant for all of 2020.  

Of the shares granted in the 2021 first quarter, 119,874 shares were granted to senior management, of which 79,917 shares included a performance condition. The shares will only vest, in part, to senior management if at least 80% of a three-year cumulative target for diluted earnings per share is met for the three-year period ended December 31, 2023.  If at least 80% of the three-year EPS target is not met, the grants will expire. Of the shares granted during 2020 first quarter, 209,280 were granted to senior management, of which 115,410 shares included a performance condition. The shares will only vest in part, to senior management if at least 80% of a three-year cumulative target for

diluted earnings per share is met for the three-year period ended December 31, 2022. If at least 80% of the three-year EPS target is not met, the grants will expire.

The remaining shares granted in the 2021 and 2020 second quarter and year-to-date periods include shares that vest ratably over a period of three or four years, beginning one year from the date of grant.

The restricted shares granted are considered outstanding, can be voted, and are eligible to receive dividends in the event any are paid. However, these shares do not include a non-forfeitable right for the holder to receive dividends and none will be paid in the event the awards do not vest. Accordingly, only vested shares of outstanding restricted stock are included in the basic earnings per share calculation. The shares and share units were granted in 2021 from the 2020 Equity Award Plan, and in 2020 from the 2010 Equity Award Plan.

A total of 105,906 stock options were issued during the 2021 first quarter on March 24, 2021 from the 2020 Equity Award Plan. The options have a fair value of $3.46 per share using the Black-Scholes valuation model.  The assumptions used to calculate the fair value include the price on the date of grant of $9.17 per option, an expected life of 5.1 years, expected volatility of 41.9%, an expected dividend yield of zero, and a risk free rate of 0.8%. The options vest ratably over three years, and are being expensed over that period. The options were granted from the 2020 Equity Award Plan. A total of 173,010 options were granted during the 2020 first quarter on March 6, 2020. The options have a fair value of $1.96 per share using the Black-Scholes valuation model.  The assumptions used to calculate the fair value include the price on the date of grant of $5.88 per option, an expected life of 5.2 years, expected volatility of 36.7%, an expected dividend yield of zero, and a risk free rate of 0.6%. The options were granted from the 2010 Equity Award Plan. No other stock options were issued during the 2021 or 2020 year-to-date periods.