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Stockholders' Equity
12 Months Ended
Dec. 28, 2019
Share-based Payment Arrangement [Abstract]  
Shareholders' Equity Stockholders’ Equity
2007 Equity Incentive Plan, 2016 Equity Incentive Plan, 2019 Inducement Equity Incentive Plan and Employee Stock Purchase Plan
In February 2007, the Company’s board of directors adopted the 2007 Equity Incentive Plan (the “2007 Plan”) and the Company’s stockholders approved the 2007 Plan in May 2007. The Company reserved a total of 46.8 million shares of common stock for issuance under the 2007 Plan. Upon stockholder approval of the 2016 Equity Incentive Plan (the “2016 Plan”), the Company has ceased granting equity awards under the 2007 Plan, however the 2007 Plan will continue to govern the terms and conditions of the outstanding options and awards previously granted under the 2007 Plan. As of December 28, 2019, options to purchase 0.7 million shares of the Company's common stock were outstanding and 0.3 million RSUs were outstanding under the 2007 Plan.
In February 2016, the Company's board of directors adopted the 2016 Plan and the Company's stockholders approved the 2016 Plan in May 2016. In May 2018 and May 2019 respectively, the Company's stockholders approved an amendment to the 2016 Plan to increase the number of shares authorized for issuance under the 2016 Plan by 1.5 million shares and 7.3 million shares. As of December 28, 2019, the Company reserved a total of 22.7 million shares of common stock for the award of stock options, RSUs and PSUs to employees, non-employees, consultants and members of the Company's board of directors, pursuant to the 2016 Plan, plus any shares subject to awards granted under the 2007 Plan that, after the effective date of the 2016 Plan, expire, are forfeited or otherwise terminate without having been exercised in full to the extent such awards were exercisable, and shares issued pursuant to awards granted under the 2007 Plan that, after the effective date of the 2016 Plan, are forfeited to or repurchased by the Company due to failure to vest. The 2016 Plan has a maximum term of 10 years from the date of adoption, or it can be earlier terminated by the Company's board of directors.
The ESPP was adopted by the board of directors in February 2007 and approved by the stockholders in May 2007. The ESPP was last amended by the stockholders in May 2019 to increase the shares authorized under the ESPP to a total of approximately 31.6 million shares of common stock. The ESPP has a 20-year term. Eligible employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 15% of the employee’s compensation and employees may not purchase more than 3,000 shares per purchase period and $25,000 of stock during any calendar year.
Shares Reserved for Future Issuances
Common stock reserved for future issuance was as follows (in thousands):
 
December 28, 2019
Outstanding stock options and awards
14,835

Reserved for future option and award grants
8,149

Reserved for future ESPP
12,438

Total common stock reserved for stock options and awards
35,422

Stock-based Compensation Plans
The Company has stock-based compensation plans pursuant to which the Company has granted stock options, RSUs and PSUs. The Company also has an ESPP for all eligible employees. The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data):  
 
Number of
Options
 
Weighted-Average
Exercise Price
Per Share
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2016
1,655

 
$
8.30

 
$
965

Options granted

 
$

 

Options exercised
(196
)
 
$
7.78

 
$
373

Options canceled
(62
)
 
$
14.11

 

Outstanding at December 30, 2017
1,397

 
$
8.11

 
$
1

Options granted

 
$

 


Options exercised
(229
)
 
$
7.43

 
$
496

Options canceled
(53
)
 
$
11.57

 


Outstanding at December 29, 2018
1,115

 
$
8.09

 
$

Options granted

 
$

 
 
Options exercised

 
$

 
$

Options canceled
(385
)
 
$
7.47

 
 
Outstanding at December 28, 2019
730

 
$
8.41

 
$

Exercisable at December 28, 2019
730

 
$
8.41

 
$


 
 
Number of
Restricted
Stock Units
 
Weighted-Average
Grant Date
Fair Value
Per Share
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2016
5,293

 
$
14.10

 
$
44,939

RSUs granted
4,281

 
$
9.66

 

RSUs released
(2,198
)
 
$
13.56

 
$
20,791

RSUs canceled
(585
)
 
$
13.24

 

Outstanding at December 30, 2017
6,791

 
$
11.55

 
$
42,988

RSUs granted
3,756

 
$
10.52

 


RSUs released
(2,642
)
 
$
12.12

 
$
26,457

RSUs canceled
(1,159
)
 
$
11.12

 


Outstanding at December 29, 2018
6,746

 
$
10.83

 
$
26,446

RSUs granted
8,950

 
$
4.36

 


RSUs released
(2,784
)
 
$
10.48

 
$
12,901

RSUs canceled
(1,312
)
 
$
8.37

 
 
Outstanding at December 28, 2019
11,600

 
$
6.20

 
$
90,254


 
 
Number of
Performance
Stock Units
 
Weighted-Average
Grant Date
Fair Value Per Share
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2016
904

 
$
14.13

 
$
7,672

PSUs granted
916

 
$
10.88

 

PSUs released
(26
)
 
$
11.83

 
$
225

PSUs canceled
(427
)
 
$
12.20

 

Outstanding at December 30, 2017
1,367

 
$
16.28

 
$
8,651

PSUs granted
521

 
$
9.79

 


PSUs released
(55
)
 
$
15.93

 
$
411

PSUs canceled
(704
)
 
$
16.01

 


Outstanding at December 29, 2018
1,129

 
$
16.10

 
$
4,425

PSUs granted
2,202

 
$
4.63

 


PSUs released
(99
)
 
$
11.11

 
$
472

PSUs canceled
(727
)
 
$
14.42

 
 
Outstanding at December 28, 2019
2,505

 
$
6.48

 
$
19,485

Expected to vest as of December 28, 2019
2,392

 
 
 
$
18,613


The aggregate intrinsic value of unexercised options is calculated as the difference between the closing price of the Company’s common stock of $7.78 at December 27, 2019 and the exercise prices of the underlying stock options. The aggregate intrinsic value of the options which have been exercised is calculated as the difference between the fair market value of the common stock at the date of exercise and the exercise price of the underlying stock options. The aggregate intrinsic value of unreleased RSUs and unreleased PSUs is calculated using the closing price of the Company's common stock of $7.78 at December 27, 2019. The aggregate intrinsic value of RSUs and PSUs released is calculated using the fair market value of the common stock at the date of release.
 
The following table presents total stock-based compensation cost for instruments granted but not yet amortized, net of estimated forfeitures, of the Company’s equity compensation plans as of December 28, 2019. These costs are expected to be amortized on a straight-line basis over the following weighted-average periods (in thousands, except for weighted-average period): 
 
Unrecognized
Compensation
Expense, Net
 
Weighted-
Average Period
(in years)
RSUs
$
50,418

 
2.10
PSUs
$
7,458

 
1.99

The following table summarizes information about options outstanding at December 28, 2019. 
 
 
Options Outstanding
 
Vested and Exercisable
Options
Exercise Price
 
Number of
Shares
 
Weighted-
Average
Remaining
Contractual Life
 
Weighted-
Average
Exercise
Price
 
Number of
Shares
 
Weighted-
Average
Exercise
Price
 
 
(In thousands)
 
(In years)
 
 
 
(In thousands)
 
 
$6.99 - $ 7.25
 
48

 
1.40
 
$
7.03

 
48

 
$
7.03

$ 7.53
 
35

 
1.34
 
$
7.53

 
35

 
$
7.53

$ 8.01
 
93

 
0.87
 
$
8.01

 
93

 
$
8.01

$ 8.58
 
485

 
1.05
 
$
8.58

 
485

 
$
8.58

$9.02 - $9.28
 
69

 
0.01
 
$
9.19

 
69

 
$
9.19

 
 
730

 

 


 
730

 



Employee Stock Options
The Company did not grant any stock options during 2019, 2018 or 2017. Stock option exercises are settled with newly issued shares of common stock approved by stockholders for inclusion under the 2007 Plan. 
Amortization of stock-based compensation expense related to stock options in 2019, 2018 and 2017 was insignificant.
 
Employee Stock Purchase Plan
The fair value of the ESPP shares was estimated at the date of grant using the following assumptions:
 
Years Ended
 
December 28,
2019
 
December 29,
2018
 
December 30,
2017
Volatility
70% - 72%
 
48% - 62%
 
47% - 51%
Risk-free interest rate
1.76% - 2.48%
 
1.90% - 2.31%
 
0.81% - 1.16%
Expected life
0.5 years
 
0.5 years
 
0.5 years
Estimated fair value
$1.64 - $1.77
 
$2.47 - $3.13
 
$2.44 - $3.46

The Company’s ESPP activity for the following periods was as follows (in thousands):
 
Years Ended
 
December 28,
2019
 
December 29,
2018
 
December 30,
2017
Stock-based compensation expense
$
4,873

 
$
5,478

 
$
6,049

Employee contributions
$
12,052

 
$
15,992

 
$
16,410

Shares purchased
2,897

 
2,189

 
2,140


Restricted Stock Units
The Company granted RSUs to employees and members of the Company’s board of directors to receive shares of the Company’s common stock. All RSUs awarded are subject to each individual's continued service to the Company through each applicable vesting date. The Company accounted for the fair value of the RSUs using the closing market price of the Company’s common stock on the date of grant. Amortization of stock-based compensation expense related to RSUs in 2019, 2018 and 2017 was approximately $32.3 million, $29.2 million and $30.5 million, respectively.
Performance Stock Units
Pursuant to the 2016 Plan, the Company has granted PSUs to certain of the Company’s executive officers, senior management and certain employees. All PSUs awarded are subject to each individual's continued service to the Company through each applicable vesting date and if the performance metrics are not met within the time limits specified in the award agreements, the PSUs will be canceled.

PSUs granted to the Company’s executive officers and senior management under the 2016 Plan during 2017 and the first half of 2018 are based on the TSR of the Company's common stock price relative to the TSR of the individual companies listed in the SPGIIPTR over the span of one year, two years and three years. The number of shares to be issued upon vesting of these PSUs range from zero to two times the target number of PSUs granted depending on the Company’s performance against the individual companies listed in the SPGIIPTR.
The ranges of estimated values of the PSUs granted that are compared to the SPGIIPTR, as well as the assumptions used in calculating these values were based on estimates as follows:
 
2018
 
2017
Index volatility
33%
 
33% - 34%
Infinera volatility
58% - 59%
 
55% - 56%
Risk-free interest rate
2.37% - 2.40%
 
1.41% - 1.63%
Correlation with index
0.04 - 0.48
 
0.10 - 0.49
Estimated fair value
$14.99 - $19.46
 
$15.23 - $17.35


PSUs granted to the Company's executive officers and senior management under the 2016 Plan during the first, second and third quarter of 2019 are based on performance criteria related to a specific financial target over the span of a three-year performance period. These PSUs may become eligible for vesting to begin before the end of the three year performance period, if the applicable financial target is met. The number of shares to be issued upon vesting of these PSUs is capped at the target number of PSUs granted. Certain other employees were awarded PSUs that will only vest upon the achievement of specific financial and operational performance criteria.
            
In addition, one of the Company's executive officers was awarded a PSU that will be eligible to vest if the market price condition is met. The assumptions used in calculating the estimated values of this award granted in fiscal 2019 were based upon Monte Carlo Model Assumptions and estimates as follows:

 
2019
Index volatility
N/A
Infinera volatility
64% - 68%
Risk-free interest rate
2.17% - 2.48%
Correlation with index/index component
N/A
Estimated fair value
$2.08 - $2.89


The following table summarizes by grant year, the Company’s PSU activity for the year ended December 28, 2019 (in thousands):
 
 
 
 
Grant Year
 
 
Total Number of Performance Stock Units
 
2016
 
2017
 
2018
 
2019
Outstanding at December 29, 2018
 
1,129

 
156

 
481

 
492

 

PSUs granted
 
2,202

 

 

 

 
2,202

PSUs released
 
(99
)
 

 
(26
)
 
(25
)
 
(48
)
PSUs canceled
 
(727
)
 
(156
)
 
(256
)
 
(197
)
 
(118
)
Outstanding at December 28, 2019
 
2,505

 

 
199

 
270

 
2,036


Amortization of stock-based compensation expense related to PSUs in 2019, 2018 and 2017 was approximately $6.1 million, $8.2 million and $9.5 million, respectively.
 
Stock-based Compensation Expense
The following tables summarize the effects of stock-based compensation on the Company’s consolidated balance sheets and statements of operations for the periods presented (in thousands):
 
 
Years Ended
 
December 28,
2019
 
December 29,
2018
 
December 30,
2017
Stock-based compensation effects in inventory
$
4,798

 
$
4,750

 
$
5,255

Stock-based compensation effects in net loss before income taxes
 
 
 
 
 
Cost of revenue
$
1,743

 
$
1,635

 
$
3,065

Research and development
17,457

 
16,270

 
15,845

Sales and marketing
8,413

 
10,869

 
11,288

General and administrative
10,460

 
9,649

 
10,776

 
$
38,073

 
$
38,423

 
$
40,974

Cost of revenue—amortization from balance sheet (1)
4,706

 
4,986

 
4,746

Total stock-based compensation expense
$
42,779

 
$
43,409

 
$
45,720

(1) 
Represents stock-based compensation expense deferred to inventory in prior periods and recognized in the current period.