Stockholders' Equity

9 Months Ended

Sep. 27, 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 September 27, 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 September 27, 2024, there were 3,464,552 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				Nine Months Ended
	September 27, 2024		September 29, 2023		September 27, 2024		September 29, 2023
Employee stock options	$	3,592	$	3,517	$	10,283	$	9,973
Restricted stock		156		201		354		347
RSUs		3,160		2,214		8,556		5,963
PSUs		115		2,449		2,919		5,958
Nonemployee stock options		137		465		429		1,093
Total stock-based compensation expense	$	7,160	$	8,846	$	22,541	$	23,334

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

	Three Months Ended				Nine Months Ended
	September 27, 2024		September 29, 2023		September 27, 2024		September 29, 2023
Cost of sales	$	303	$	223	$	964	$	595
General and administrative		3,621		4,049		11,677		11,107
Selling and marketing		1,213		2,561		3,742		5,910
Research and development		2,023		2,013		6,158		5,722
Total stock-based compensation expense, net		7,160		8,846		22,541		23,334
Amounts capitalized as part of inventory		361		534		1,138		1,431
Total stock-based compensation expense, gross	$	7,521	$	9,380	$	23,679	$	24,765

As of September 27, 2024, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands):

	September 27, 2024
Stock options	$	22,076
Restricted stock, RSUs and PSUs		28,545
Total unrecognized stock-based compensation cost	$	50,621

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						Nine Months Ended
	September 27, 2024			September 29, 2023			September 27, 2024			September 29, 2023
Expected dividend yield		0	%		0	%		0	%		0	%
Expected volatility		59	%		60	%		59	%		60	%
Risk-free interest rate		3.70	%		4.18	%		4.17	%		3.91	%
Expected term (in years)		5.29			5.05			5.29			5.05

Stock Options

A summary of stock option activity under the Equity Plan for the nine months ended September 27, 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		622			38.03
Exercised		(310	)		23.76
Forfeited or expired		(144	)		70.90
Outstanding at September 27, 2024		2,798		$	45.76		6.81	$	12,305
Exercisable at September 27, 2024		1,709		$	46.54		5.43	$	11,458

Restricted Stock, Restricted Stock Units and Performance Stock Units

A summary of restricted stock, RSU and PSU activity under the Equity Plan for the nine months ended September 27, 2024 is presented below (shares in thousands):

	Restricted Stock			RSUs			PSUs
Unvested at December 29, 2023		14			401			56
Granted		17			457			390
Vested		(10	)		(127	)		(24	)
Forfeited or expired		(5	)		(18	)		(16	)
Unvested at September 27, 2024		16			713			406