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 the next Annual Shareholder Meeting, or 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 is amortized on a straight-line basis over the awards’ vesting period and is adjusted for performance as it relates to PSU’s.

Total stock-based compensation during the fiscal years 2022, 2021 and 2020, respectively, in various expense categories was as follows:


	Year Ended
	December 30,		December 31,		December 25,
(In millions)	2022		2021		2020
Cost of revenues (1)	$	1.5	$	2.0	$	1.8
Research and development		0.3		0.2		0.1
Sales and marketing		1.3		1.3		1.3
General and administrative		16.0		12.3		9.5
Total stock-based compensation	$	19.1	$	15.8	$	12.7

(1)

Stock-based compensation expenses capitalized in inventory for fiscal years 2022, 2021 and 2020 were immaterial.

As of December 30, 2022, there was $26.9 million of unrecognized compensation cost related to employee and director awards which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.7 years, and will be adjusted for subsequent changes in future grants.

For each of the fiscal years ended 2022, 2021 and 2020, vested shares of 0.1 million were withheld to satisfy withholding tax obligations, resulting in the net issuance of 0.6 million, 0.6 million and 0.7 million shares, respectively.

The following table summarizes the Company’s PSUs, RSUs and RSAs activities through the year ended December 30, 2022:


				Aggregate
				Intrinsic
	Number of			Value
	Shares			(In millions)
Unvested restricted stock units and restricted stock awards at December 25, 2020		1.7		$	54.1
Granted		0.4
Vested		(0.8	)
Forfeited		(0.1	)
Unvested restricted stock units and restricted stock awards at December 31, 2021		1.2		$	69.3
Granted		0.7
Vested		(0.7	)
Forfeited		(0.1	)
Unvested restricted stock units and restricted stock awards at December 30, 2022		1.1		$	37.6
Vested and expected to vest restricted stock units and restricted stock awards		1.1		$	37.6

The RSU 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. During the year ended December 30, 2022, the Company approved and granted 557,176 RSUs to employees with a weighted average grant date fair value of $33.12 per share.

During the year ended December 30, 2022, the Company also approved and granted 98,048 PSUs with a grant date fair value of $32.17 per share. These PSUs also contained a market condition component, total shareholder return (“TSR”) that added a weighted average grant date fair value of $nil per share.

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 200.0% 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 25.0% to (25.0)% based on (i) the Company’s relative 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 TSR modifier is intended to ensure that there are limited or no payouts under the PSU program if the Company’s stock performance is significantly below the median TSR. Where the financial goals have been met and where there has been strong relative TSR performance over the three-year performance period, the PSU program may provide substantial rewards to participants with a maximum payout of two times the initial PSU award.

For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation model and recognized over the requisite service period based on the expected market performance as of the grant date. For the PSU awards, the Company used the following inputs for the Monte Carlo simulation:


	Year Ended
	December 30,			December 31,			December 25,
	2022			2021			2020
Stock price	$	32.17		$	52.73		n/a
Term	2.68 years			2.67 years			n/a
Expected volatilities		65.9	%		64.7	%	n/a
Risk-free rate		2.7	%		0.3	%	n/a

Recipients of PSU awards generally must remain employed by the Company on a continuous basis through the end of the three-year performance period in order to receive any amount of the PSUs covered by that award. In events such as death, disability or retirement, the recipient may be entitled to pro-rata amounts of PSUs as defined in the Plan. Target shares subject to PSU awards do not have voting rights of common stock until earned and issued following the end of the three-year performance period.

In fiscal years 2022, 2021 and 2020, the Company granted 25,907, 18,893 and 46,363 shares, respectively, of common stock to its board members under the 2003 Incentive Plan. The total unamortized expense of the Company’s unvested RSAs as of December 30, 2022, is approximately $0.3 million.

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 85.0% 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. There were 24,394 shares issued under the ESPP during the year ended December 30, 2022.

The Company recorded $0.1 million, $0.3 million and $0.1 million of stock-based compensation expense related to ESPP for fiscal years 2022, 2021 and 2020, respectively.