Simply Good Foods Co - 10-Q filing on 2021-07-08

Omnibus Incentive Plan

9 Months Ended

May 29, 2021

Share-based Payment Arrangement [Abstract]

Stock-based compensation includes stock options, restricted stock units, performance stock unit awards and stock appreciation rights, which are awarded to employees, directors, and consultants of the Company. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award based on their grant date fair value. Stock-based compensation expense is included within General and administrative expense, which is the same financial statement caption where the recipient’s other compensation is reported.

The Company recorded stock-based compensation expense of $2.2 million and $2.2 million in the thirteen weeks ended May 29, 2021 and May 30, 2020, respectively, and $5.8 million and $5.9 million in the thirty-nine weeks ended May 29, 2021 and May 30, 2020, respectively.

Stock Options

The following table summarizes stock option activity for the thirty-nine weeks ended May 29, 2021:


	Shares underlying options	Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding as of August 29, 2020	2,615,899	$	14.33
Granted	289,555	20.47
Exercised	(58,308)	12.00
Forfeited	(53,983)	22.33
Outstanding as of May 29, 2021	2,793,163	$	14.86	6.85

Vested and expected to vest as of May 29, 2021	2,793,163	$	14.86	6.85

Exercisable as of May 29, 2021	2,215,040	$	13.25	6.37

As of May 29, 2021, the Company had $2.9 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.7 years. During the thirty-nine weeks ended May 29, 2021 and May 30, 2020, the Company received $0.7 million and $0.9 million in cash from stock option exercises, respectively.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the thirty-nine weeks ended May 29, 2021:


	Restricted Stock Units	Weighted average grant-date fair value
Non-vested as of August 29, 2020	208,023	$	22.82
Granted	423,387	24.84
Vested	(79,381)	25.08
Forfeited	(48,735)	21.33
Non-vested as of May 29, 2021	503,294	$	24.31

As of May 29, 2021, the Company had $9.8 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.1 years.

Performance Stock Units

During the thirty-nine weeks ended May 29, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan. Performance stock units vest in a range between 0% and 200% based upon certain performance criteria in a three-year period. Performance stock units were valued using a Monte Carlo simulation.

The following table summarizes performance stock unit activity for the thirty-nine weeks ended May 29, 2021:


	Performance stock units	Weighted average grant-date fair value
Non-vested as of August 29, 2020	295,256	$	17.93
Granted	116,309	23.59
Vested	—	—
Forfeited	(30,688)	22.28
Non-vested as of May 29, 2021	380,877	$	19.31

As of May 29, 2021, the Company had $3.7 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.3 years.

Stock Appreciation Rights

Stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the Company’s common stock price. The Company’s SARs settle in shares of its common stock once the applicable vesting criteria has been met. SARs cliff vest three years from the date of grant and must be exercised within ten years.

The following table summarizes SARs activity for the thirty-nine weeks ended May 29, 2021:


	Shares underlying SARs	Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding as of August 29, 2020	150,000	$	24.20
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of May 29, 2021	150,000	$	24.20	8.43

Vested and expected to vest as of May 29, 2021	150,000	$	24.20	8.43

Exercisable as of May 29, 2021	—	$	—	0.00

As of May 29, 2021, the Company had $0.2 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 1.4 years.