Share-based Arrangements

6 Months Ended

Jul. 01, 2022

Share-based Payment Arrangement, Noncash Expense [Abstract]

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 and six-month fiscal periods ended July 1, 2022 was $2.7 million and $4.8 million, respectively. Of these amounts, $0.1 million was recorded to restructuring and severance costs in both periods, and the remaining amounts were recorded to selling, general and administrative expenses on the Company's Condensed Consolidated Statements of Operations. Share-based compensation expense recorded for the three-month and six-month fiscal periods ended July 2, 2021 was $2.5 million and $4.2 million, respectively. Of these amounts, $0.2 million was recorded to restructuring and severance costs in both periods, and the remaining amounts were recorded to selling, general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.

Stock option activity was as follows:


	For the Three Months Ended			For the Six Months Ended
	July 1, 2022			July 1, 2022
	Options	Weighted - average exercise price		Options	Weighted - average exercise price
Options outstanding at beginning of period	733,493	$	55.29	746,240	$	55.14
Granted	—	$	—	—	$	—
Exercised	—	$	42.86	(9,676)	$	41.90
Forfeited or expired	(6,802)	$	53.53	(9,873)	$	40.41
Options outstanding at July 1, 2022	726,691	$	55.32	726,691	$	55.32

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 six-month fiscal period ended July 1, 2022. The following table indicates the weighted-average assumptions used in estimating fair value for the six-month fiscal period ended July 2, 2021:


	For the Six Months Ended
	July 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

17. SHARE-BASED ARRANGEMENTS (CONTINUED)

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


	For the Three Months Ended			For the Six Months Ended
	July 1, 2022			July 1, 2022
	Restricted Stock	Weighted- average grant date fair value		Restricted Stock	Weighted- average grant date fair value
Restricted Stock outstanding at beginning of period	164,791	$	47.96	135,351	$	53.53
Granted	19,900	$	43.15	100,015	$	41.94
Vested	(28,731)	$	44.84	(75,329)	$	49.80
Forfeited or expired	(3,760)	$	50.00	(7,837)	$	51.51
Restricted Stock outstanding at July 1, 2022	152,200	$	47.87	152,200	$	47.87

Performance stock unit activity was as follows:


	For the Three Months Ended			For the Six Months Ended
	July 1, 2022			July 1, 2022
	Performance Stock	Weighted- average grant date fair value		Performance Stock	Weighted- average grant date fair value
Performance Stock outstanding at beginning of period	184,405	$	60.98	70,163	$	70.17
Granted(1)	—	$	—	117,885	$	54.87
Vested	—	$	—	—	$	—
Forfeited or expired	(4,285)	$	61.38	(7,928)	$	61.32
Performance Stock outstanding at July 1, 2022	180,120	$	60.55	180,120	$	60.55

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

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 Six Months Ended
	July 1, 2022			July 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