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Employee Stock Plans
12 Months Ended
Dec. 27, 2019
Postemployment Benefits [Abstract]  
Employee Stock Plans

11. EMPLOYEE STOCK PLANS

Employee Stock Plans

The Company maintains plans which allow for the issuance of equity-based awards to executives and certain employees. These equity-based awards include stock options, restricted stock awards and restricted stock units. The Company also maintains an employee stock purchase plan (“ESPP”) that provides for the issuance of shares to all eligible employees of the Company at a discounted price.

The estimated fair value of the Company’s equity-based awards, net of expected forfeitures, is amortized over the awards’ vesting period on a straight-line basis over a weighted average period of four years for stock options, three years for restricted stock units and one year for restricted stock awards and will be adjusted for subsequent changes in estimated forfeitures and future option grants.

The Company uses historical data to estimate pre-existing forfeitures, and records stock-based compensation for those awards that are expected to vest at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.

On February 20, 2003, the Company adopted the 2003 Stock Incentive Plan (the “2003 Incentive Plan”) which was subsequently amended and restated. The Company has reserved 4,515,239 shares of its common stock for issuance under the 2003 Incentive Plan. The stockholders of the Company approved an increase in the number of shares available for issuance under our amended and restated stock incentive plan by 2.3 million and 2.7 million in 2019 and 2017, respectively. At December 27, 2019, 1,299,197 shares were available for future grants under the 2003 Incentive Plan.

There were no employee stock option grants by the Company for years 2019, 2018 and 2017. During fiscal years 2019, 2018 and 2017, the Company recorded $12.1 million, $10.3 million and $7.8 million, respectively, of stock-based compensation expense, associated with the 2003 Incentive Plan. As of December 27, 2019, there was $15.5 million, net of forfeitures of $2.4 million, of unrecognized compensation cost related to employee and director stock which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.8 years, and will be adjusted for subsequent changes in estimated forfeitures and future grants.

Total stock-based compensation during the fiscal years 2019, 2018 and 2017, respectively, in various expense categories was as follows:

 

 

Year Ended

 

 

December 27,

 

 

December 28,

 

 

December 29,

 

(In millions)

2019

 

 

2018

 

 

2017

 

Cost of revenues (1)

$

2.4

 

 

$

2.1

 

 

$

1.5

 

Research and development

 

0.3

 

 

 

0.1

 

 

 

0.2

 

Sales and marketing

 

1.3

 

 

 

1.0

 

 

 

0.6

 

General and administrative

 

8.1

 

 

 

7.1

 

 

 

5.5

 

 

 

12.1

 

 

 

10.3

 

 

 

7.8

 

Income tax benefit

 

 

 

(3.0

)

 

 

(0.9

)

Net stock-based compensation expense

$

12.1

 

 

$

7.3

 

 

$

6.9

 

 

 

(1)

Stock-based compensation expenses capitalized in inventory for fiscal years 2019, 2018 and 2017 were considered immaterial.

2003 Amended and Restated Stock Incentive Plan

Options

The 2003 Incentive Plan provides for the issuance of options and other stock-based awards. Options are generally granted at fair value at the date of grant as determined by the Board of Directors and have terms up to ten years and generally vest over four years.

Option activity under the 2003 Incentive Plan is as follows:

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

Aggregate

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Intrinsic

 

 

 

Shares

 

 

Exercise

 

 

Contractual

 

 

Value

 

 

 

(in thousands)

 

 

Price

 

 

Life

 

 

(in thousands)

 

Outstanding, December 30, 2016

 

 

136.4

 

 

$

13.15

 

 

0.57

 

 

$

135.0

 

Exercised

 

 

(113.4

)

 

13.96

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(13.8

)

 

 

14.56

 

 

 

 

 

 

 

 

 

Outstanding, December 29, 2017

 

 

9.2

 

 

$

1.17

 

 

1.24

 

 

$

203.0

 

Exercised

 

 

(5.0

)

 

1.17

 

 

 

 

 

 

 

 

 

Outstanding, December 28, 2018

 

 

4.2

 

 

$

1.17

 

 

0.24

 

 

$

30.0

 

Exercised

 

 

(4.2

)

 

$

1.17

 

 

 

 

 

 

 

 

 

Outstanding, December 27, 2019

 

 

-

 

 

$

 

 

 

-

 

 

$

 

Options exercisable and expected to vest,

   December 27, 2019

 

 

-

 

 

$

 

 

 

-

 

 

$

 

 

There was no stock-based compensation expense for fiscal year 2019, 2018 and 2017 attributable to stock options as all outstanding options were fully vested at the beginning of the 2014 fiscal year.

 

Restricted Stock Units and Restricted Stock Awards

In fiscal years 2019, 2018 and 2017, the Company granted 69,783, 38,010 and 45,000 shares, respectively, of common stock to its board members under the 2003 Incentive Plan. These Restricted Share Awards (RSAs) vest on the earlier of 1) the next Annual Shareholder Meeting, or 2) 365 days from date of grant. The total unamortized expense of the Company’s unvested RSAs as of December 27, 2019, is approximately $0.4 million. During the first quarter of fiscal year 2008, the Company began granting stock awards in the forms 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. The expected cost of the grant is recognized over the service period, and is reduced for estimated forfeitures and, in the case of PSUs, is reduced based on estimated achievement of performance goals. During the year ended December 27, 2019, the Company approved and granted 883,837 RSU’s to employees with a weighted average grant date fair value of $12.58 per share and 144,183 PSUs with a weighted average grant date fair value of $12.03 per share. As of December 27, 2019, $15.1 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to RSUs remains to be amortized and is expected to be recognized over an estimated period of 1.8 years. The unvested amount is subject to forfeiture, until fully vested. At December 27, 2019, 1,790,786 shares were subject to forfeiture.

The following table summarizes the Company’s restricted stock unit and restricted stock award activity through the year ended December 27, 2019:

 

 

 

 

 

 

 

Aggregate

 

 

 

 

 

 

 

Intrinsic

 

 

 

Number of

 

 

Value

 

 

 

Shares

 

 

(in millions)

 

Unvested restricted stock units and restricted stock awards at

   December 29, 2017

 

 

1.7

 

 

$

38.7

 

Granted

 

 

1.1

 

 

 

 

 

Vested

 

 

(0.8

)

 

 

 

 

Forfeited

 

 

(0.2

)

 

 

 

 

Unvested restricted stock units and restricted stock awards at

   December 28, 2018

 

 

1.8

 

 

$

14.6

 

Granted

 

 

1.1

 

 

 

 

 

Vested

 

 

(0.9

)

 

 

 

 

Forfeited

 

 

(0.2

)

 

 

 

 

Unvested restricted stock units and restricted stock awards at

   December 27, 2019

 

 

1.8

 

 

$

41.9

 

Vested and expected to vest restricted stock units and restricted stock

   awards

 

 

1.6

 

 

$

37.3

 

 

Employee Stock Purchase Plan

In 2004 the Company adopted an Employee Stock Purchase Plan (“ESPP”) and is authorized to issue 555,343 shares of common stock under the ESPP. 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 95% 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 21,161 shares issued under the ESPP during the year ended December 27, 2019.