Stock-Based Compensation

12 Months Ended

Jul. 02, 2021

Share-based Payment Arrangement [Abstract]

STOCK INCENTIVE PLANS

The Board of Directors approved the Company’s 2018 Stock Incentive Plan (the “2018 Plan”) on July 23, 2018. The 2018 Plan became effective upon the approval of shareholders at the Company’s annual meeting held on October 24, 2018. The aggregate number of shares authorized for issuance under the 2018 Plan is 6,782 shares, with an additional 710 shares rolled into the 2018 Plan that were available for future grant under the Company’s 2005 Stock Incentive Plan, as amended and restated (the “2005 Plan”) and 3,000 shares approved by the Company's shareholders on October 28, 2020. The 2018 Plan replaced the 2005 Plan. The shares authorized for issuance under the 2018 Plan will continue to be increased by any future cancellations, forfeitures or terminations (other than by exercise) of awards under the 2005 Plan. The foregoing does not affect any outstanding awards under the 2005 Plan, which remain in full force and effect in accordance with their terms. The 2018 Plan provides for the grant of non-qualified and incentive stock options, restricted stock, stock appreciation rights and deferred stock awards to employees and non-employees. There were 4,604 shares available for future grant under the 2018 Plan at July 2, 2021.

As part of the Company's ongoing annual equity grant program for employees, the Company grants performance-based restricted stock awards to certain executives and employees pursuant to the 2018 Plan. Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. Based on the performance targets, some of these awards require graded vesting which results in more rapid expense recognition compared to traditional time-based vesting over the same vesting period. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly based on its determination of the likelihood for reaching targets. The performance targets generally include the achievement of internal performance targets in relation to a peer group of companies.

EMPLOYEE STOCK PURCHASE PLAN

The number of shares authorized for issuance under the Company’s 1997 Employee Stock Purchase Plan, as amended and restated (“ESPP”), is 2,300 shares, including 500 shares approved by the Company's shareholders on October 28, 2020. Under the ESPP, rights are granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation as defined in the ESPP. The number of shares issued under the ESPP during fiscal years 2021, 2020 and 2019 was 101, 89 and 102, respectively. Shares available for future purchase under the ESPP totaled 428 at July 2, 2021.

STOCK OPTION AND AWARD ACTIVITY

The following table summarizes activity of the Company’s stock option plans since June 30, 2019:


	Options Outstanding
	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value as of 7/2/2021








Outstanding at June 30, 2019	4	$	5.52	2.13
Granted	—	—
Exercised	(1)	5.52
Cancelled	—	—
Outstanding at July 3, 2020	3	$	5.52	1.12
Granted	—	—
Exercised	(3)	5.52
Cancelled	—	—
Outstanding at July 2, 2021	—	$	—	—	$	—
Vested and expected to vest at July 2, 2021	—	$	—	—	$	—
Exercisable at July 2, 2021	—	$	—	—	$	—

The intrinsic value of the options exercised during fiscal years 2021 and 2020 was $183 and $67, respectively. There were no options exercised during fiscal 2019. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of July 2, 2021, July 3, 2020 and June 30, 2019, there was no unrecognized compensation cost related to non-vested options granted under the Company’s stock plans. There were no stock options granted during fiscal years 2021, 2020 or 2019.

The following table summarizes the status of the Company’s non-vested restricted stock awards since June 30, 2019:


	Non-Vested Restricted Stock Awards
	Number of Shares	Weighted Average Grant Date Fair Value








Outstanding at June 30, 2019	1,046	$	39.62
Granted	522	80.87
Vested	(562)	31.40
Forfeited	(49)	54.96
Outstanding at July 3, 2020	957	$	61.59
Granted	570	76.03
Vested	(436)	53.08
Forfeited	(78)	69.54
Outstanding at July 2, 2021	1,013	$	70.77

The total fair value of restricted stock awards vested during fiscal years 2021, 2020 and 2019 was $34,342, $46,089 and $24,596, respectively.

Non-vested restricted stock awards are subject to the risk of forfeiture until the fulfillment of specified conditions. As of July 2, 2021, there was $48,629 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 2.4 years from July 2, 2021. As of July 3, 2020, there was $44,690 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 2.4 years from July 3, 2020.

STOCK-BASED COMPENSATION EXPENSE

The Company recognizes expense for its share-based payment plans in the Consolidated Statements of Operations and Comprehensive Income in accordance with ASC 718. The Company had $796 and $562 of capitalized stock-based compensation expense on the Consolidated Balance Sheets as of July 2, 2021 and July 3, 2020, respectively. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the service period. The following table presents share-based compensation expenses from continuing operations included in the Company’s Consolidated Statements of Operations and Comprehensive Income:


	Fiscal Years Ended
	July 2, 2021		July 3, 2020		June 30, 2019
Cost of revenues	$	2,037	$	989	$	820
Selling, general and administrative	21,866		21,688		16,188
Research and development	4,387		3,861		2,414
Stock-based compensation expense before tax	28,290		26,538		19,422
Income taxes	(7,355)		(6,900)		(5,263)
Stock-based compensation expense, net of income taxes	$	20,935	$	19,638	$	14,159