Quarterly report pursuant to Section 13 or 15(d)

Equity-Based Compensation

v3.24.0.1
Equity-Based Compensation
3 Months Ended
Dec. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Equity-Based Compensation

Note 13—Equity-Based Compensation

Equity-Based Compensation

2020 Omnibus Incentive Plan

In October 2020, we adopted the Leslie’s, Inc. 2020 Omnibus Incentive Plan (the “Plan”). The Plan provides for the grant of awards such as non-qualified stock options to purchase Leslie’s common stock (each, a “Stock Option”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) which may settle in Leslie’s, Inc. common stock to our directors, executives, and eligible employees of the Company. The vesting of the Company’s outstanding and unvested Stock Options, RSUs, and PSUs is contingent upon each holder’s continued service through the date of each applicable vesting event. As of December 30, 2023, we had approximately 6.4 million shares of common stock available for future grants under the Plan.

As of December 30, 2023, the aggregate unamortized value of all outstanding equity-based compensation awards was approximately $24.6 million, which is expected to be recognized over a weighted average period of approximately 2.7 years.

Stock Options

Stock Options granted under the Plan generally expire ten years from the date of grant and consist of Stock Options that vest upon the satisfaction of time-based requirements. The following tables summarizes our Stock Option activity under the Plan during the three months ended December 30, 2023 (in thousands, except per share amounts):

 

 

Number of Options

 

 

Weighted Average
Exercise Price

 

Outstanding, Beginning

 

 

3,308

 

 

$

18.10

 

Granted

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

Forfeited/Expired

 

 

(230

)

 

 

19.23

 

Balance, Ending

 

 

3,078

 

 

$

18.02

 

 

 

 

 

 

 

 

Vested and exercisable as of December 30, 2023

 

 

2,352

 

 

$

17.78

 

 

 

 

As of December 30, 2023

 

Aggregate intrinsic value of options outstanding

 

$

 

Unamortized value of unvested stock options

 

$

3,115

 

Weighted average years that expense is expected to be recognized

 

 

0.9

 

Weighted average remaining contractual years outstanding

 

 

7.2

 

Restricted Stock Units and Performance Units

RSUs represent grants that vest ratably upon the satisfaction of time-based requirements. PSUs represent grants potentially issuable in the future based upon the Company’s achievement of certain performance conditions. The fair value of our RSUs and PSUs are calculated based on the Company’s stock price on the date of the grant.

The following table summarizes our RSU and PSU activity under the Plan during the three months ended December 30, 2023 (in thousands, except per share amounts):

 

 

Number of RSUs/PSUs

 

 

Weighted Average
Grant Date Fair Value

 

Outstanding, Beginning

 

 

2,084

 

 

$

11.92

 

Granted

 

 

1,638

 

 

 

5.43

 

Vested

 

 

(221

)

 

 

8.49

 

Forfeited

 

 

(133

)

 

 

15.22

 

Balance, Ending

 

 

3,368

 

 

$

8.86

 

 

During the three months ended December 30, 2023, 0.4 million PSUs were granted subject to the Company achieving certain adjusted net income and sales performance targets on a cumulative basis during fiscal years 2024 and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 200% of the base number of awards granted. The weighted average grant date fair value of the PSUs was $5.43. The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting.

 

In December 2022, the Company granted 0.3 million PSUs subject to the Company achieving certain adjusted net income and sales performance targets on a cumulative basis during each of the fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 200% of the base number of awards granted. As of December 30, 2023, the performance targets had not been met for the PSUs to vest, and no PSUs had vested as of such date.

 

 

 

As of December 30, 2023

 

Unamortized value of unvested RSUs/PSUs

 

$

21,505

 

Weighted average period (years) expense is expected to be recognized

 

 

2.9

 

During the three months ended December 30, 2023 and December 31, 2022, equity-based compensation expense was $2.7 million and $3.0 million, respectively. Equity-based compensation expense is reported in selling, general, & administrative expenses (“SG&A”) in our condensed consolidated statements of operations.