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Stock-Based Compensation
 12 Months Ended
Jun. 26, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation [Text Block] STOCK-BASED COMPENSATION
At June 26, 2021, the Company had one stock incentive plan, the Company's 1996 Stock Incentive Plan (the “1996 Plan”) and one employee stock purchase plan, the 2008 Employee Stock Purchase Plan (the “2008 ESPP”). The 1996 Plan was adopted by the Board of Directors to provide the grant of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), restricted stock awards ("RSAs") and market stock units (“MSUs”) to employees, directors, and consultants.

Pursuant to the 1996 Plan, the exercise price for incentive stock options and non-statutory stock options is determined to be the fair market value of the underlying shares on the date of grant. Options typically vest ratably over a four-year period measured from the date of grant. Options generally expire no later than seven years after the date of grant, subject to earlier termination upon an optionee's cessation of employment or service.

RSUs granted to employees typically vest ratably over a four-year period and are converted into shares of the Company's common stock upon vesting, subject to the employee's continued service to the Company over that period. RSUs granted from September 2017 to July 2020 will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements.

RSAs granted to employees typically vest over a four-year cliff period and are converted into shares of the Company's common stock upon vesting, subject to the employee's continued service to the Company over that period. RSAs have certain shareholder rights, such as voting rights, but are not eligible for dividends or dividend equivalents.

MSUs granted to employees typically vest over a four-year cliff period and are converted into shares of the Company's common stock upon vesting, subject to the employee's continued service to the Company over that period. The number of shares that are released at the end of the performance period can range from zero to a maximum cap depending on the Company's performance. MSUs granted in September 2017, September 2018, and September 2019 will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements.
The following tables show total stock-based compensation expense by type of award, and the resulting tax effect, included in the Consolidated Statements of Income for fiscal years 2021, 2020 and 2019:

For the year ended June 26, 2021
Stock OptionsMarket Stock UnitsRestricted Stock Units and AwardsEmployee Stock Purchase PlanTotal
(in thousands)
Cost of goods sold$39 $1,673 $10,481 $1,562 $13,755 
Research and development12 3,116 39,464 3,155 45,747 
Selling, general and administrative253 6,778 39,787 1,673 48,491 
Pre-tax stock-based compensation expense$304 $11,567 $89,732 $6,390 $107,993 
Less: income tax effect9,709 
Net stock-based compensation expense$98,284 

For the year ended June 27, 2020
Stock OptionsMarket Stock UnitsRestricted Stock Units and AwardsEmployee Stock Purchase PlanTotal
(in thousands)
Cost of goods sold$31 $1,840 $7,455 $2,851 $12,177 
Research and development14 3,307 35,145 6,236 44,702 
Selling, general and administrative254 7,521 27,356 3,421 38,552 
Pre-tax stock-based compensation expense$299 $12,668 $69,956 $12,508 $95,431 
Less: income tax effect9,415 
Net stock-based compensation expense$86,016 

For the year ended June 29, 2019
Stock OptionsMarket Stock UnitsRestricted Stock Units and AwardsEmployee Stock Purchase PlanTotal
(in thousands)
Cost of goods sold$35 $1,527 $6,201 $2,324 $10,087 
Research and development9 2,835 33,347 5,433 41,624 
Selling, general and administrative232 6,747 25,331 2,956 35,266 
Pre-tax stock-based compensation expense$276 $11,109 $64,879 $10,713 $86,977 
Less: income tax effect8,443 
Net stock-based compensation expense$78,534 

In connection with the proposed ADI Merger, on September 1, 2020, the Company’s Board of Directors granted RSAs to certain employees. For employees who made Internal Revenue Code Section 83(b) elections, Maxim Integrated accelerated a portion of the RSAs to satisfy tax withholding requirements. The Company recorded $8.7 million of stock-based compensation expense related to the accelerated RSAs during fiscal year 2021. Additionally, in connection with the proposed ADI Merger, the Company modified equity awards held by certain executives by accelerating the vesting of 0.2 million outstanding RSU awards that otherwise would have vested at various dates through calendar year 2023. The Company recognized an additional $5.1 million of stock-based compensation expense related to these RSU modifications during fiscal year 2021.
Stock Options

The fair value of options granted to employees under the 1996 Plan is estimated on the date of grant using the Black-Scholes option valuation model.

The Company did not grant any stock options in fiscal years 2021, 2020 or 2019.

The following table summarizes outstanding, exercisable and vested and expected to vest stock options as of June 26, 2021 and their activity during fiscal years 2021, 2020 and 2019:
 OptionsWeighted Average Remaining Contractual Term (in years)Aggregate Intrinsic Value
 Number of SharesWeighted Average Exercise Price
Balance, June 30, 20181,688,253 $27.72   
Options Granted— —   
Options Exercised(907,401)27.22  
Options Cancelled(3,439)28.08  
Balance, June 29, 2019777,413 28.30  
Options Granted— —   
Options Exercised(656,391)28.26  
Options Cancelled(16,575)27.30  
Balance, June 27, 2020104,447 28.76
Options Granted— — 
Options Exercised(104,447)28.75
Options Cancelled— $— 
Balance, June 26, 2021— $— 0.0$— 
Exercisable as of June 26, 2021— $— 0.0$— 
Vested and expected to vest, June 26, 2021— $— 0.0$— 

The total intrinsic value of options exercised during fiscal years 2021, 2020 and 2019 were $2.2 million, $20.1 million and $27.5 million, respectively.

Restricted Stock Units and Restricted Stock Awards

The fair value of RSUs and RSAs under the Company’s 1996 Plan is estimated using the value of the Company’s common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on an annual basis.

The weighted average fair value of RSUs and RSAs was $71.83, $49.57 and $53.97 per share for fiscal years 2021, 2020 and 2019, respectively.
The following table summarizes outstanding and expected to vest RSUs and RSAs as of June 26, 2021 and their activity during fiscal years 2021, 2020 and 2019:
 
Number of
Shares
Weighted Average Remaining Contractual Term
(in years)
Aggregate
Intrinsic
Value (1)
Balance, June 30, 20185,524,432   
Restricted stock units and restricted stock awards granted1,694,294   
Restricted stock units and restricted stock awards released(1,779,317)  
Restricted stock units and restricted stock awards cancelled(521,103)  
Balance, June 29, 20194,918,306 
Restricted stock units and restricted stock awards granted1,834,828 
Restricted stock units and restricted stock awards released(1,700,518)
Restricted stock units and restricted stock awards cancelled(446,024)
Balance, June 27, 20204,606,592 
Restricted stock units and restricted stock awards granted1,553,239 
Restricted stock units and restricted stock awards released(1,759,355)
Restricted stock units and restricted stock awards cancelled(396,786)
Balance, June 26, 20214,003,690 1.7$411,018,815 
Expected to vest as of June 26, 20213,419,394 1.4$351,034,954 

(1)     Aggregate intrinsic value for RSUs and RSAs represents the closing price per share of the Company's common stock on June 25, 2021, the last business day preceding the fiscal year end, multiplied by the number of RSUs and RSAs outstanding, or expected to vest as of June 26, 2021.

The Company withheld shares totaling $61.9 million in value as a result of employee withholding taxes based on the value of the RSUs and RSAs on their vesting date for the fiscal year ended June 26, 2021. The total payments for the employees' tax obligations to the taxing authorities are reflected as financing activities within the Consolidated Statements of Cash Flows.

As of June 26, 2021, there was $154.9 million of unrecognized compensation cost related to 4.0 million unvested RSUs and RSAs, which is expected to be recognized over a weighted average period of approximately 1.7 years.

Market Stock Units

The Company grants MSUs to senior members of management in lieu of granting stock options. For MSUs granted in September 2017, September 2018, and September 2019, the performance metrics for this program are based on the total shareholder return ("TSR") of the Company relative to the TSR of the other companies included in the Semiconductor Exchange Traded Fund index SPDR S&P ("XSD"). The fair value of MSUs is estimated using a Monte Carlo simulation model on the date of grant. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on an annual basis. Compensation expense is recognized based on the initial valuation and is not subsequently adjusted as a result of the Company’s performance relative to that of the TSR of the companies included in the XSD. Vesting for MSUs is contingent upon both service and market conditions and has a four-year vesting cliff period. MSUs granted in September 2017, September 2018 and September 2019 vest based upon annual performance and are subject to continued service through the end of the four-year period but will continue to vest post-employment at the Company for certain individuals satisfying specific eligibility requirements. As a result of the ADI Merger Agreement, in September 2020, the Company granted RSUs in lieu of MSUs (or RSAs in lieu of RSUs and MSUs for any potential “disqualified individuals” within the meaning of Section 280G of the Internal Revenue Code, which RSAs will not be eligible for dividends or dividend equivalent rights).

No MSUs were granted during the fiscal year ended June 26, 2021. The weighted-average fair value of MSUs granted was $54.70 and $75.48 per share for fiscal years 2020 and 2019, respectively.
The following table summarizes the number of MSUs outstanding and expected to vest as of June 26, 2021 and their activity during fiscal years 2021, 2020 and 2019:
 
Number of
Shares
Weighted Average Remaining Contractual Term
(in years)
Aggregate
Intrinsic
Value (1)
Balance, June 30, 20181,079,064   
Market stock units granted247,804   
Market stock units released(13,594)  
Market stock units cancelled(264,742)  
Balance, June 29, 20191,048,532 
Market stock units granted259,984 
Market stock units released(183,974)
Market stock units cancelled(153,322)
Balance, June 27, 2020971,220 
Market stock units granted— 
Market stock units released— 
Market stock units cancelled(237,576)
Balance, June 26, 2021733,644 1.1$75,315,893 
Expected to vest as of June 26, 2021918,617 0.9$94,305,236 

(1)     Aggregate intrinsic value for MSUs represents the closing price per share of the Company’s common stock on June 25, 2021, the last business day preceding the fiscal quarter-end, multiplied by the number of MSUs outstanding or expected to vest as of June 26, 2021.

As of June 26, 2021, there was $13.6 million of unrecognized compensation cost related to 0.7 million unvested MSUs, which is expected to be recognized over a weighted average period of approximately 1.1 years.

At June 26, 2021, the Company had 14.6 million shares of its common stock available for issuance to employees and other recipients under the 1996 Plan.

Employee Stock Purchase Plan

Employees are granted rights to acquire common stock under the 2008 ESPP.

The Company issued 0.4 million shares of its common stock for total consideration of $18.5 million related to the 2008 ESPP during the fiscal year ended June 26, 2021. As of June 26, 2021, the Company had 5.0 million shares of its common stock reserved and available for future issuance under the 2008 ESPP.

The fair value of shares granted to employees under the 2008 ESPP in fiscal years 2021, 2020 and 2019 has been estimated at the date of grant using the Black-Scholes option valuation model using the following assumptions for the offering periods outstanding:
 For the Year Ended
 June 26,
2021		June 27,
2020		June 29,
2019
Expected holding period (in years) 0.50.50.5
Risk-free interest rate0.2% - 1.6%0.2% - 2.7%1.6% - 2.6%
Expected stock price volatility 29.2% - 55.2%28.4% - 55.2%19.6% - 32.7%
Dividend yield 3.3% - 3.3%3.1% - 3.4%2.8% - 3.4%

As of June 26, 2021, there was $0 of unrecognized compensation expense related to the 2008 ESPP. At the end of the offering period in November 2020, the Company suspended the 2008 ESPP program pursuant to the terms of the ADI Merger Agreement.