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 PSUs.

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


	Three Months Ended
	March 31,		April 1,
(In millions)	2023		2022
Cost of revenues (1)	$	0.3	$	0.5
Research and development		0.1		0.1
Sales and marketing		0.3		0.3
General and administrative		3.0		4.7
Total stock-based compensation	$	3.7	$	5.6

(1)

Stock-based compensation expense capitalized in inventory for the three months ended March 31, 2023 and April 1, 2022 were immaterial.

As of March 31, 2023, approximately $21.5 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 1.45 years, and will be adjusted for subsequent changes in future grants. As of March 31, 2023, a total of 25,900 RSAs were outstanding. The total unamortized expense of the Company’s unvested RSAs as of March 31, 2023 was $0.1 million.

The following table summarizes the Company’s combined RSU, PSU and RSA activity for the three months ended March 31, 2023 (in millions):


				Aggregate
	Number of			Intrinsic
	Shares			Value
Unvested restricted stock units and restricted stock awards at December 30, 2022		1.1		$	37.6
Granted		0.1
Vested		(0.1	)
Forfeited		—
Unvested restricted stock units and restricted stock awards at March 31, 2023		1.1		$	35.6
Vested and expected to vest restricted stock units and restricted stock awards		1.1		$	35.6

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 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.

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.

For the three months ended March 31, 2023 and April 1, 2022, 1.8 thousand and 55.8 thousand RSUs were granted with a weighted average fair value of $34.08 and $44.91 per share, respectively.

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. No shares were issued under the ESPP during the three months period ended March 31, 2023 and April 1, 2022.