Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

v3.23.2
Stock-based Compensation
 6 Months Ended
Jun. 29, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based Compensation
In accordance with ASC 718, Compensation-Stock Compensation, the Company measures compensation cost for all stock-based awards at fair value on the date of grant and recognizes compensation expense, net of forfeitures, using the straight-line method over the requisite service period of awards expected to vest, which for each of the awards is the service vesting period.
The table below presents components of stock-based compensation expense within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income:
Twenty-six Weeks Ended
in thousands June 29, 2023 June 30, 2022
General and administrative $ 14,212  $ 10,869 
Selling and store operating 835  — 
Total stock-based compensation expense $ 15,047  $ 10,869 
Stock Options
The table below summarizes stock option activity for the twenty-six weeks ended June 29, 2023.
Options Weighted Average Exercise Price
Outstanding at December 30, 2022 2,101,559  $ 27.10 
Exercised (201,891) 24.06 
Forfeited or expired (2,091) 56.56 
Outstanding at June 29, 2023
 1,897,577  $ 27.39 
Vested and exercisable at June 29, 2023
 1,795,662  $ 25.10 
Restricted Stock Units
The Company periodically grants restricted stock units (“RSUs”) that represent an unfunded, unsecured right to receive a share of the Company’s Class A common stock upon vesting. During the twenty-six weeks ended June 29, 2023, the Company granted RSUs to certain employees, officers, and non-employee directors comprised of service-based RSUs, performance-based RSUs, and total shareholder return (“TSR”) awards. Service-based RSUs vest based on the grantee’s continued service through the vesting date. The performance-based RSUs cliff vest based on (i) the Company's achievement of predetermined financial metrics at the end of a three-year performance period and (ii) the grantee’s continued service through the vesting date. Depending on the performance-based RSU grant and the extent to which the relevant performance goals are achieved, the number of common shares earned upon vesting may range from either 0% to 150% or 0% to 200% of the award granted. The TSR awards cliff vest based on (i) the Company's relative TSR compared to a specified peer group and (ii) the grantee's continued service through the vesting date. The number of common shares earned upon vesting of the TSR awards may range from 0% to 150% of the TSR awards granted with no vesting above the target awards amount if the Company’s three-year absolute TSR is negative. The Company assesses the probability of achieving all performance goals on a quarterly basis. The service periods for RSUs granted during the period varies by grantee and ranges between approximately two to four years from the grant date.
The following table summarizes restricted stock unit activity during the twenty-six weeks ended June 29, 2023:
Restricted Stock Units
Service-based Performance-based Total shareholder return Total Restricted Stock Units
Unvested at December 30, 2022 408,829  36,117  —  444,946 
Granted 367,111  188,543  58,854  614,508 
Vested (125,141) —  —  (125,141)
Forfeited (12,612) (36,117) —  (48,729)
Unvested at June 29, 2023 638,187  188,543  58,854  885,584 
The aggregate fair value for all restricted stock units granted during the twenty-six weeks ended June 29, 2023 was $56.0 million. The grant-date fair value of service-based RSUs and performance-based RSUs is based on the closing market price of the Company’s Class A common stock on the date of grant. The grant-date fair value of TSR awards is estimated using a Monte Carlo valuation method, which included the following assumptions for TSR awards granted during the period:
Twenty-six Weeks Ended
June 29, 2023
Expected term (in years) 2.8
Risk-free interest rate 4.5  %
Expected volatility 49.5  %
Dividend yield —  %
Restricted Stock Awards
The following table summarizes restricted stock award activity during the twenty-six weeks ended June 29, 2023:
Restricted Stock Awards
Service-based Performance-based (1) Total shareholder return (1) Total Restricted Stock Awards
Unvested at December 30, 2022 103,326  134,318  87,517  325,161 
Vested (68,334) (86,656) (56,461) (211,451)
Unvested at June 29, 2023 34,992  47,662  31,056  113,710 
(1) The performance-based and total shareholder return restricted stock awards that vested during the period were issued at 100% of target based on achievement of the predetermined performance and total shareholder return criteria as specified in the underlying grant agreements.