Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.25.0.1
Stockholders' Equity
 12 Months Ended
Dec. 26, 2024
Equity [Abstract]  
Stockholders' Equity Stockholders’ Equity
Common Stock
The Company has one class of common stock known as Class A. The holders of Class A common stock are entitled to share equally, on a per share basis, in dividends or other distributions. Class A common stockholders are entitled to one vote per share held. In the event of the voluntary liquidation or dissolution of the Company, Class A common stockholders will share equally, on a per share basis, in all the assets of the Company that are available for distribution to stockholders. In fiscal 2021, the Company’s Certificate of Incorporation was amended to eliminate Class B and Class C common stock.
Stock Incentive Plans
On January 13, 2011, the Company adopted the 2011 Stock Option Plan (as amended, restated, supplemented or otherwise modified from time to time, the “2011 Plan”) to provide for the grant of stock options to employees (including officers), consultants and non-employee directors of the Company and its subsidiaries. The Company ceased granting awards under the 2011 Plan upon the implementation of the 2017 Plan (as defined below).
On April 13, 2017, the board of directors approved the Floor & Decor Holdings, Inc. 2017 Stock Incentive Plan (as amended, restated, supplemented or otherwise modified from time to time, the “2017 Plan”), which was subsequently approved by the Company’s stockholders. The 2017 Plan authorizes the Company to grant equity awards, including options, restricted stock units, restricted stock awards, and other stock-based awards to eligible employees (including officers), consultants, and non-employee directors up to an aggregate of 9,000,000 shares of Class A common stock. As of December 26, 2024 and December 28, 2023, there were 4,952,065 and 5,187,323 shares available for grant pursuant to awards under the 2017 Plan, respectively.
Stock-based Compensation
In accordance with ASC 718, 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. Stock-based compensation expense within the Company’s Consolidated Statements of Operations and Comprehensive Income for the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 was $33.7 million, $27.2 million, and $22.2 million, respectively.
Stock Options
Stock options are granted with an exercise price equal to the closing price of the Company’s Class A common stock on the date of grant, as authorized by the Company’s board of directors or compensation committee. Options granted have contractual terms of ten years and vesting provisions ranging from one year to five years. Stock option grants are generally subject to forfeiture if employment terminates prior to vesting. Stock option award grant date fair values were estimated using the Black-Scholes-Merton option pricing model. No stock options were granted during fiscal years 2024, 2023, and 2022.
The table below summarizes stock option activity for the fiscal year ended December 26, 2024:
Options Weighted
Average
Exercise
Price		 Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 29, 2023 1,607,341  $ 28.51 
Exercised (457,074) $ 22.13 
Forfeited or expired (2,867) $ 72.09 
Outstanding at December 26, 2024 1,147,400  $ 30.93  3.1 $ 80,544 
Vested and exercisable at December 26, 2024 1,135,906  $ 30.22  3.1 $ 80,477 
The fair value of stock options vested during the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 was $1.9 million, $3.0 million, and $7.9 million, respectively. The aggregate intrinsic value of stock options exercised was $42.2 million, $37.9 million, and $20.4 million for the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022, respectively.
The Company’s total unrecognized compensation cost related to stock options as of December 26, 2024 and December 28, 2023 was $0.1 million and $1.0 million, respectively. The unrecognized compensation cost remaining as of December 26, 2024 is expected to be recognized over a weighted average period of 0.2 years.
Restricted Stock Units
The Company periodically grants restricted stock units (“RSUs”), each of which represents an unfunded, unsecured right to receive a share of the Company’s Class A common stock upon vesting. During the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022, the Company granted RSUs to certain employees, executive 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 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 period for RSUs granted during the period varies by grantee and is one year from the grant date for non-employee directors and ranges between two to four years from the grant date for employees and executive officers.
The following table summarizes restricted stock unit activity during the fiscal year ended December 26, 2024:
Restricted Stock Units
Service-based Performance-based Total shareholder return
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
Unvested at December 29, 2023 608,140  $ 90.40  188,543  $ 90.38  58,854  $ 104.67 
Granted 257,113  $ 114.91  50,855  $ 115.97  —  $ — 
Vested (226,178) $ 88.78  —  $ —  —  $ — 
Forfeited (50,014) $ 98.35  (15,230) $ 91.75  (4,204) $ 104.67 
Unvested at December 26, 2024 589,061  $ 101.03  224,168  $ 96.09  54,650  $ 104.67 
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 fiscal 2023:
Fiscal Year Ended December 28,
2023
Expected term (in years) 2.8
Risk-free interest rate 4.5  %
Expected volatility 49.5  %
Dividend yield —  %
The total unrecognized compensation cost related to restricted stock units as of December 26, 2024 and December 28, 2023 was $41.9 million and $42.8 million, respectively. The unrecognized compensation cost remaining as of December 26, 2024 is expected to be recognized over a weighted average period of 1.8 years.
The weighted average grant date fair value per share of restricted stock units granted during the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 was $115.08, $91.86, and $92.31, respectively. The total fair value of restricted stock units that vested during the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 was $26.7 million, $13.7 million, and $5.3 million, respectively.
Restricted Stock Awards
Restricted stock awards are issued to certain executive officers and non-employee directors. The fair value of performance-based and service-based restricted stock awards is based on the closing market price of the Company’s Class A common stock on the date of grant. The fair value of the TSR restricted stock awards is estimated on the grant date using the Monte Carlo valuation method. Compensation cost for restricted stock awards is recognized using the straight-line method over the requisite service period, which for each of the awards is the service vesting period, typically three to four years. No restricted stock awards were granted during fiscal years 2024, 2023, and 2022. The following table summarizes restricted stock award activity during the fiscal year ended December 26, 2024:
Restricted Stock Awards
Service-based
Performance-based (1)
Total shareholder return (1)
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
Unvested at December 29, 2023
 34,783  $ 66.30  47,662  $ 57.70  31,056  $ 44.28 
Vested (30,889) $ 62.60  (47,662) $ 57.70  (31,056) $ 44.28 
Forfeited (395) $ 95.68  —  $ —  —  $ — 
Unvested at December 26, 2024 3,499  $ 95.68  —  $ —  —  $ — 
(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.
As of December 26, 2024 and December 28, 2023, total unrecognized compensation cost related to unvested restricted stock awards was $0.1 million and $0.7 million, respectively. The unrecognized compensation cost remaining as of December 26, 2024 is expected to be recognized over a weighted average period of 0.2 years.
The total fair value of restricted stock awards that vested during the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 was $12.8 million, $19.2 million, and $2.2 million, respectively.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (the “ESPP”) is a tax-qualified plan under Section 423 of the Internal Revenue Code and permits eligible employees to purchase shares of the Company’s common stock through payroll deductions, subject to certain limitations. The Company has designated a purchase price per share of common stock acquired under the ESPP at the lesser of 90% of the lower of the fair market value of its common stock on either the first or last trading day of each six-month offering period. There are 1,500,000 shares of the Company’s Class A common stock, par value $0.001 per share, approved for issuance under the ESPP, 58,665, 83,686, and 62,274 of which were issued during fiscal years 2024, 2023, and 2022, respectively. During fiscal years 2024, 2023, and 2022, the Company recognized stock-based compensation expense related to the ESPP totaling $1.4 million, $1.3 million, and $1.2 million, respectively.