Stockholders’ Equity

3 Months Ended

Apr. 04, 2021


5. STOCKHOLDERS’ EQUITY

As of April 4, 2021, approximately 3.5 million shares remained available for future grants under the 2015 Stock Plan.

Restricted Stock

Restricted stock activity was as follows:


	Restricted Stock Units (RSU)	Performance Stock Units (PSU)(1)	Weighted-Average Grant Date Fair Value per Share
Units in thousands			RSU		PSU
Outstanding at January 3, 2021	1,721	—	$	313.35	—
Awarded	70	390	$	445.13	$	477.78
Vested	(17)	—	$	230.58	—
Cancelled	(88)	(6)	$	311.10	$	486.28
Outstanding at April 4, 2021	1,686	384	$	319.77	$	477.65

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(1)The number of units reflect the estimated number of shares to be issued at the end of the performance period. Awarded units are presented net of performance adjustments.

Stock Options

Stock option activity was as follows:


	Options (in thousands)	Weighted-Average Exercise Price
Outstanding at January 3, 2021	10	$	59.11

Exercised	(1)	$	48.36

Outstanding and exercisable at April 4, 2021	9	$	60.21

Employee Stock Purchase Plan

The price at which common stock is purchased under the Employee Stock Purchase Plan (ESPP) is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During Q1 2021, approximately 0.1 million shares were issued under the ESPP. As of April 4, 2021, there were approximately 13.1 million shares available for issuance under the ESPP.

Share Repurchases

On February 5, 2020, our Board of Directors authorized a new share repurchase program, which supersedes all prior and available repurchase authorizations, to repurchase $750 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. We did not repurchase any shares during Q1 2021. Authorizations to repurchase approximately $15 million of our common stock remained available as of April 4, 2021.

Share-based Compensation

Share-based compensation expense reported in our condensed consolidated statements of income was as follows:



In millions	Q1 2021		Q1 2020
Cost of product revenue	$	7	$	5
Cost of service and other revenue	1		1
Research and development	24		15
Selling, general and administrative	35		18
Share-based compensation expense before taxes	67		39
Related income tax benefits	(13)		(9)
Share-based compensation expense, net of taxes	$	54	$	30

In February 2021, we modified the metrics and reduced the maximum potential payouts for our performance stock units granted in 2019 and 2020, which vest at the end of the three-year periods ended January 2, 2022 and January 1, 2023, respectively. The modifications affected 52 employees with units granted in 2019, which resulted in total incremental share-based compensation cost of approximately $41 million, and 72 employees with units granted in 2020, which resulted in total incremental share-based compensation cost of approximately $65 million.

The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the ESPP during Q1 2021 were as follows:


	Employee Stock Purchase Rights
Risk-free interest rate	0.08% - 1.56%
Expected volatility	30% - 48%
Expected term	0.5 - 1.0 year
Expected dividends	0		%
Weighted-average grant-date fair value per share	$	99.67

As of April 4, 2021, approximately $636 million of total unrecognized compensation cost related to restricted stock and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 2.4 years.