Stockholders' Equity

6 Months Ended

Jun. 28, 2024

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Note 10 — Stockholders’ Equity

Incentive Plan

The Company maintains an Amended and Restated Omnibus Equity Incentive Plan (the “Equity Plan”). The Equity Plan allows for awards of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of June 28, 2024, the Company had outstanding grants of stock options, restricted stock awards, RSUs and PSUs.

Stock option awards granted under the Equity Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain stock options and stock-based awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Equity Plan). Grants of restricted stock outstanding under the Equity Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Equity Plan generally vest based on service, performance, or a combination of both. On June 20, 2024, stockholders approved a proposal to increase the number of shares under the Equity Plan by 2,600,000 shares, for a total of 22,805,000 shares. As of June 28, 2024, there were 3,487,255 shares available for grant under the Equity Plan.

Stock-Based Compensation

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):

	Three Months Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Employee stock options	$	3,518	$	3,479	$	6,691	$	6,456
Restricted stock		170		79		198		146
RSUs		3,084		2,148		5,396		3,749
PSUs		2,119		2,403		2,804		3,509
Nonemployee stock options		151		314		292		628
Total stock-based compensation expense	$	9,042	$	8,423	$	15,381	$	14,488

The Company recorded stock-based compensation costs in the following categories (in thousands):

	Three Months Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Cost of sales	$	363	$	223	$	661	$	372
General and administrative		4,981		3,695		8,056		7,058
Selling and marketing		1,319		2,492		2,529		3,349
Research and development		2,379		2,013		4,135		3,709
Total stock-based compensation expense, net		9,042		8,423		15,381		14,488
Amounts capitalized as part of inventory		440		528		777		897
Total stock-based compensation expense, gross	$	9,482	$	8,951	$	16,158	$	15,385

As of June 28, 2024, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands):

	June 28, 2024
Stock options	$	25,633
Restricted stock, RSUs and PSUs		38,796
Total unrecognized stock-based compensation cost	$	64,429

The cost is expected to be recognized over a weighted-average period of approximately two years.

Note 10 — Stockholders’ Equity (Continued)

Assumptions

The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of stock options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that stock options granted are expected to be outstanding. The Company has calculated a 8% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.

	Three Months Ended						Six Months Ended
	June 28, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Expected dividend yield		0	%		0	%		0	%		0	%
Expected volatility		59	%		58	%		59	%		59	%
Risk-free interest rate		4.45	%		3.41	%		4.19	%		3.87	%
Expected term (in years)		5.29			4.87			5.29			5.02

Stock Options

A summary of stock option activity under the Equity Plan for six months ended June 28, 2024 is presented below:

	Stock Options (in 000’s)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in 000’s)
Outstanding at December 29, 2023		2,630		$	46.38
Granted		597			38.14
Exercised		(205	)		27.83
Forfeited or expired		(114	)		69.44
Outstanding at June 28, 2024		2,908		$	45.08		6.81	$	31,731
Exercisable at June 28, 2024		1,760		$	44.45		5.29	$	24,251

Restricted Stock, Restricted Stock Units and Performance Stock Units

A summary of restricted stock, RSU and PSU activity under the Equity Plan for the six months ended June 28, 2024 is presented below (shares in thousands):

	Restricted Stock			RSUs			PSUs
Unvested at December 29, 2023		14			401			56
Granted		17			443			390
Vested		(10	)		(122	)		(24	)
Forfeited or expired		(5	)		(18	)		(16	)
Unvested at June 28, 2024		16			704			406