Stock-Based Compensation

6 Months Ended

Jul. 02, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Total stock-based compensation expense included in our Consolidated Statements of Operations was as follows:



	Three Months Ended				Six Months Ended
(In thousands)	July 2, 2016		July 4, 2015		July 2, 2016		July 4, 2015
Cost of products sold	$	166	$	398	$	425	$	638
Research and development	1,468		2,346		3,927		3,855
Selling, general and administrative	1,608		2,235		3,446		3,870
Acquisition related charges	—		—		—		3,891
Total stock-based compensation	$	3,242	$	4,979	$	7,798	$	12,254

Of the $12.3 million total stock-based compensation for the six months ended July 4, 2015, $3.9 million was paid in cash during the period as a result of the acquisition of Silicon Image on March 10, 2015. There have been no cash payments related to stock compensation in fiscal 2016.

We have granted stock options and RSUs with a market condition to certain executives, amounting to approximately 327,200 stock options and 70,000 RSUs during the first and second quarters of fiscal 2015 and approximately 321,900 stock options in the second quarter of fiscal 2016. The options and RSUs have a two year vesting and vest between 0% and 200% of the target amount, based on the Company's relative Total Shareholder Return (TSR) when compared to the TSR of a component of companies of the PHLX Semiconductor Sector Index over a two year period. TSR is a measure of stock price appreciation plus dividends paid, if any, in the performance period. The fair values of the options were determined and fixed on the date of grant using a lattice-based option-pricing valuation model, which incorporates a Monte-Carlo simulation, and considered the likelihood that we would achieve the market condition. Of these grants with a market condition, approximately 596,600 stock options were outstanding as of July 2, 2016. We incurred stock compensation expense related to these market condition awards of less than $0.1 million and approximately $0.2 million in the second quarter and first six months, respectively, of fiscal 2016 and approximately $0.1 million and approximately $0.3 million in the second quarter and first six months, respectively, of fiscal 2015.