Share-based Arrangements

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

16. SHARE-BASED ARRANGEMENTS

The Company accounts for stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs") 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, RSUs 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 return on invested capital ("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. The PSUs granted in 2023 and 2022 assumed a 100% achievement level. Share-based compensation expense recorded for the three-month and six-month fiscal periods ended June 30, 2023 was $1.9 million and $3.9 million, respectively. For the six-month fiscal period ended June 30, 2023, $0.3 million was recorded to restructuring and severance costs and the remaining amount was recorded to selling, general and administrative expenses on the Company's Condensed Consolidated Statements of Operations. No share-based compensation expense was recorded to restructuring and severance costs in the three-month fiscal period ended June 30, 2023. 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 amount was 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
	June 30, 2023			June 30, 2023
	Options	Weighted - average exercise price		Options	Weighted - average exercise price
Options outstanding at beginning of period	686,721	$	54.51	710,782	$	54.12
Granted	—	$	—	—	$	—
Exercised	—	$	—	—	$	—
Forfeited or expired	(70,979)	$	56.22	(95,040)	$	52.89
Options outstanding at June 30, 2023	615,742	$	54.31	615,742	$	54.31

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 periods ended June 30, 2023 and July 1, 2022.

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


	For the Three Months Ended			For the Six Months Ended
	June 30, 2023			June 30, 2023
	Restricted Stock	Weighted- average grant date fair value		Restricted Stock	Weighted- average grant date fair value
Restricted Stock outstanding at beginning of period	195,267	$	34.51	159,521	$	45.78
Granted	38,232	$	22.76	140,832	$	24.57
Vested	(2,244)	$	34.98	(64,732)	$	46.71
Forfeited or expired	(4,059)	$	31.70	(8,425)	$	39.89
Restricted Stock outstanding at June 30, 2023	227,196	$	32.58	227,196	$	32.58

16. SHARE-BASED ARRANGEMENTS (CONTINUED)

Performance stock unit activity was as follows:


	For the Three Months Ended			For the Six Months Ended
	June 30, 2023			June 30, 2023
	Performance Stock	Weighted- average grant date fair value		Performance Stock	Weighted- average grant date fair value
Performance Stock outstanding at beginning of period	320,184	$	44.95	172,144	$	60.44
Granted	—	$	—	178,385	$	32.03
Vested	—	$	—	—	$	—
Forfeited or expired	(5,632)	$	42.32	(35,977)	$	54.60
Performance Stock outstanding at June 30, 2023	314,552	$	45.00	314,552	$	45.00

The fair value of the PSUs based on total shareholder return ("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
	June 30, 2023			July 1, 2022
Expected term (years)	2.9			2.9
Expected volatility	41.2		%	39.4		%
Risk-free interest rate	4.4		%	1.7		%
Expected dividend yield	3.3		%	1.9		%
Per share fair value of performance stock granted	$	38.83		$	68.10