The Company grants stock awards in the form of restricted stock units ("RSUs") and performance stock units ("PSUs") to its employees as part of the Company’s long-term equity compensation plan. These stock awards are granted to employees with a unit purchase price of zero dollars and typically vest over three years, subject to the employee’s continued service with the Company and, in the case of PSUs, subject to achieving certain performance goals and market conditions. The Company also grants common stock to its board members in the form of restricted stock awards ("RSAs"), which vest on the earlier of 1) the next Annual Shareholder Meeting, or 2) 365 days from date of grant.

Stock-based compensation expense includes compensation costs related to estimated fair values of awards granted. The estimated fair value of the Company’s equity-based awards, net of expected forfeitures, is amortized on a straight-line basis over the awards’ vesting period and is adjusted for performance as it relates to PSUs. Under the current PSU program, which was effective beginning fiscal 2021, performance goals are set at the time of grant and performance is reviewed at the end of a three-year period. The percentage to be applied to each participant’s target award ranges from zero to 200% based upon the extent to which the financial performance goals are achieved. If specific performance threshold levels for the financial goals are met on an annual basis, the amount earned for that element will be applied to one-third of the participants’ PSU award granted to determine the number of total units earned.

At the end of the three-year performance period, the total units earned, if any, are adjusted by applying two modifiers, each ranging from 25% to (25)% based on (i) the Company’s relative total shareholder return (“TSR”) compounded annual growth rate (“CAGR”) which is based on the Company’s stock price changes relative to a group of peer companies and (ii) the “average annual difference in operating margin” is defined as non-GAAP operating margin divided by total revenue comparing the annual operating plan to actual results.

The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations:


	Three Months Ended				Nine Months Ended
	September 30,		September 24,		September 30,		September 24,
(In millions)	2022		2021		2022		2021
Cost of revenues (1)	$	0.1	$	0.5	$	1.1	$	1.4
Research and development		0.1		0.1		0.3		0.2
Sales and marketing		0.4		0.3		1.0		1.0
General and administrative		4.1		3.4		12.4		8.9
Stock-based compensation expense		4.7		4.3		14.8		11.5

(1)

Stock-based compensation expense capitalized in inventory for the three and nine months ended September 30, 2022 and September 24, 2021 and September 24, 2021 was not significant.

For the three and nine months ended September 30, 2022, 0.1 million and 0.5 million RSUs were granted with a weighted average fair value of $30.46 and $33.09 per share, respectively, and for the three and nine months ended September 24, 2021, 32,000 and 0.4 million RSUs were granted with a weighted average fair value of $44.54 and $48.64 per share.

For the three and nine months ended September 30, 2022, zero and 98,000, respectively PSUs were granted.

As of September 30, 2022, approximately $31.1 million of unrecognized stock-based compensation cost related to employee and director awards remains to be amortized on a straight-line basis over a weighted average period of 1.3 years, and will be adjusted for subsequent changes in future grants.

As of September 30, 2022, a total of 25,900 RSAs were outstanding. The total unamortized expense of the Company’s unvested RSAs as of September 30, 2022 was $0.5 million.

The following table summarizes the Company’s combined RSU, PSU and RSA activity for the nine months ended September 30, 2022:


(In millions)	Shares			Aggregate Fair Value
Unvested RSUs, PSUs and RSAs at December 31, 2021		1.2		$	69.3
Granted		0.7			-
Vested		(0.6	)		-
Forfeited		(0.1	)		-
Unvested RSUs, PSUs and RSAs as of September 30, 2022		1.2		$	30.0
Vested and expected to vest RSUs, PSUs and RSAs as of September 30, 2022		1.2		$	30.0

The ESPP permits employees to purchase common stock at a discount through payroll withholdings at certain specified dates (purchase period) within a defined offering period. The purchase price is 85% of the fair market value of the common stock at the end of the purchase period and is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. During the three and nine months ended September 30, 2022, zero and 24,400 shares, respectively were issued under the ESPP, and the Company recorded zero and $0.1 million of expense related to the ESPP for the three and nine months ended September 30, 2022, respectively.