The Company’s share-based compensation plans are intended to attract and retain employees and to provide an incentive for them to assist the Company to achieve long-range performance goals and to enable them to participate in long-term growth of the Company. The Company settles restricted stock unit awards, employee stock purchase option exercises and stock option exercises with newly issued common shares.

Onto Innovation Inc. 2020 Stock Plan, as amended and restated (the “2020 Plan”). The 2020 Plan provides for the grant of 3.7 million stock options and other stock awards to employees, directors and consultants at an exercise price equal to the fair market value of the common stock on the date of grant. Options granted under the 2020 Plan typically grade vest over a three-year period and expire ten years from the date of grant. Restricted stock units granted under the 2020 Plan typically vest over a three-year period for employees and one year for directors; however, other vesting periods are allowable under the 2020 Plan. Restricted stock units (“RSUs”) granted to employees have time based or performance-based vesting. As of December 28, 2024, there were 2.7 million shares of common stock available for issuance pursuant to future grants under the 2020 Plan.

Onto Innovation Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). Under the terms of the 2020 ESPP, eligible employees may have up to 10% of eligible compensation deducted from their pay and applied to the purchase of shares of Company common stock. The price the employee pays for each share of stock is 85% of the lesser of the fair market value of Company common stock at the beginning or the end of the applicable six-month purchase period. The 2020 ESPP is intended to qualify under Section 423 of the Internal Revenue Code and is a compensatory plan as defined by FASB ASC Topic 718, “Stock Compensation.” Through the Company’s employee stock purchase plans, employees purchased 83 thousand, 91 thousand and 142 thousand shares during the twelve months ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. As of December 28, 2024 and December 30, 2023, there were 0.9 million and 1.0 million, shares available for issuance under the Company’s employee stock purchase plan, respectively.

Share-based compensation was allocated in the Company’s Consolidated Statement of Operations as follows:


	Year Ended
	December 28, 2024		December 30, 2023		December 31, 2022
	(in thousands)
Cost of revenue	$	4,771	$	4,405	$	4,271
Research and development		5,499		6,072		6,068
Sales and marketing		5,606		4,859		4,233
General and administrative		12,702		10,176		9,854
Total share-based compensation expense before income taxes		28,577		25,513		24,426
Income tax benefit		6,209		5,497		5,237
Total share-based compensation expense, net of income taxes	$	22,368	$	20,016	$	19,189

During fiscal years 2024, 2023 and 2022, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). Service-based RSUs typically vest over a period of 3 years or less. Market-based PRSUs generally vest three years from the grant date if certain performance criteria are achieved and require continued employment. Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s common stock price performance compared to the market price performance of a designated benchmark index, ranging from 0% to 200% of target. The designated benchmark index was the Philadelphia Semiconductor Sector Index for market-based PRSUs issued in 2024, 2023 and 2022. The stock price performance or market price performance is measured using the closing price for the 20-trading days prior to the dates the performance period begins and ends.

The following table summarizes the Company’s combined service-based RSUs and market-based PRSUs:


	Number of Shares (in thousands)			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2022		765		$	48.25
Granted		410		$	82.48
Vested		(373	)	$	42.87
Forfeited		(59	)	$	58.98
Nonvested at December 31, 2022		743		$	69.01
Granted		319		$	89.23
Vested		(415	)	$	59.20
Forfeited		(63	)	$	84.11
Nonvested at December 30, 2023		584		$	85.41
Granted		171		$	191.25
Vested		(329	)	$	81.10
Forfeited		(17	)	$	105.31
Nonvested at December 28, 2024		409		$	132.39

Of the 409 thousand shares outstanding at December 28, 2024, 327 thousand are service-based RSUs and 82 thousand are market-based PRSUs. The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the date of grant. The fair value of the Company’s market-based PRSUs granted during fiscal years 2024, 2023, and 2022 was calculated using a Monte Carlo simulation model at the date of the grant, resulting in a weighted average grant-date fair value per share of $251.51, $100.79, and $85.49, respectively.

As of December 28, 2024, there was $29.2 million of total unrecognized compensation cost related to RSUs granted under the plans. That cost is expected to be recognized over a weighted average period of 1.3 years.

The Company has a 401(k) savings plan that allows employees to contribute up to 100% of their annual compensation to the Plan on a pre-tax or after-tax basis, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The plan provides a 50% match of all employee contributions up to 6 percent of the employee’s salary. Matching contributions to the plan totaled $3.2 million, $3.1 million and $3.0 million for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.