Share-based Arrangements

3 Months Ended

Apr. 01, 2022

Share-based Payment Arrangement, Noncash Expense [Abstract]

Share-based Payment Arrangement

17. SHARE-BASED ARRANGEMENTS

The Company accounts for stock options, restricted stock awards ("RSAs"), restricted stock units and performance stock units ("PSUs") as equity awards and measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the statement of operations. The Company also has an employee stock purchase plan, which is accounted for as a liability award. Compensation expense for stock options, RSAs, restricted stock units and PSUs is recognized on a straight-line basis over the vesting period of the awards. Throughout the course of the vesting period, the Company monitors the achievement level for the ROIC metric of the PSUs compared to the ROIC target and adjusts the number of shares expected to be earned, and the related compensation expense recorded thereafter, to reflect the most probable outcome. Share-based compensation expense recorded for the three-month fiscal periods ended April 1, 2022 and April 2, 2021 was $2.1 million and $1.7 million, respectively. These amounts were recorded to selling, general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.

17. SHARE-BASED ARRANGEMENTS (CONTINUED)

Stock option activity was as follows:

	For the Three Months Ended
	April 1, 2022
	Options	Weighted - average exercise price
Options outstanding at beginning of period	746,240	$	55.14
Granted	—	$	—
Exercised	(9,676)	$	41.63
Forfeited or expired	(3,071)	$	61.76
Options outstanding at April 1, 2022	733,493	$	55.29

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. No options were granted in the three-month fiscal period ended April 1, 2022. The following table indicates the weighted-average assumptions used in estimating fair value for the three-month fiscal period ended April 2, 2021:

	For the Three Months Ended
	April 2, 2021
Expected option term (years)	4.9
Expected volatility	35.7	%
Risk-free interest rate	0.5	%
Expected dividend yield	1.6	%
Per share fair value of options granted	$14.89

Restricted stock award and restricted stock unit activity were as follows:

	For the Three Months Ended
	April 1, 2022
	Restricted  Stock	Weighted- average grant date fair value
Restricted Stock outstanding at beginning of period	135,351	$	53.53
Granted	80,115	$	41.64
Vested	(46,598)	$	52.85
Forfeited or expired	(4,077)	$	52.90
Restricted Stock outstanding at April 1, 2022	164,791	$	47.96

Performance stock unit activity was as follows:

	For the Three Months Ended
	April 1, 2022
	Performance Stock	Weighted- average grant date fair value
Performance Stock outstanding at beginning of period	70,163	$	70.17
Granted(1)	117,885	$	54.87
Vested	—	$	—
Forfeited or expired	(3,643)	$	61.07
Performance Stock outstanding at April 1, 2022	184,405	$	60.98

(1) The PSUs granted in 2022 and 2021 assumed a 100% achievement level.

17. SHARE-BASED ARRANGEMENTS (CONTINUED)

The fair value of the PSUs based on TSR was estimated on the date of grant using a Monte-Carlo simulation model. The following table indicates the weighted-average assumptions used in estimating fair value:

	For the Three Months Ended
	April 1, 2022			April 2, 2021
Expected term (years)	2.9			2.9
Expected volatility	39.4		%	41.3		%
Risk-free interest rate	1.7		%	0.2		%
Expected dividend yield	1.9		%	1.4		%
Per share fair value of performance stock granted	$	68.10		$	84.49