Employee Stock Plans

3 Months Ended

Mar. 29, 2024

EMPLOYEE STOCK PLANS

Employee Stock Plans

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
(In millions)	March 29, 2024		March 31, 2023
Cost of revenues (1)	$	0.4	$	0.3
Research and development	0.1		0.1
Sales and marketing	0.4		0.3
General and administrative	2.6		3.0
Total stock-based compensation	$	3.5	$	3.7

(1)Stock-based compensation expense capitalized in inventory for the three months ended March 29, 2024 and March 31, 2023 were immaterial.

For the three months ended March 29, 2024, 24,000 RSUs were granted with a weighted average fair value of $44.21 per share. No RSU's were granted for the three months ended March 31, 2023.

No PSUs and RSA's were granted for the three months ended March 29, 2024 and March 31, 2023.

The following table summarizes the Company’s combined RSU, PSU and RSA activity for the three months ended March 29, 2024:


(In millions)	Number of Shares	Aggregate Intrinsic Value
Unvested restricted stock units and restricted stock awards at December 29, 2023	1.4	$	46.1
Granted	0.0
Vested	(0.1)
Forfeited	(0.1)
Unvested restricted stock units and restricted stock awards at March 29, 2024	1.2	57.0
Vested and expected to vest restricted stock units and restricted stock awards	1.2	$	56.0

As of March 29, 2024, approximately $19.1 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 1.7 years, and will be adjusted for subsequent changes in future grants. The total unamortized expense of the Company’s unvested RSAs as of March 29, 2024 was $0.1 million.

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 participant’s PSU award granted to determine the number of total units earned.

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.

Employee Stock Purchase Plan

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 ended March 29, 2024 and March 31, 2023. The Company recorded $0.2 million of expense related to ESPP for the three months ended March 29, 2024. No ESPP related expense was recorded for the three months ended March 31, 2023