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Stockholders' Equity
 6 Months Ended
Jun. 27, 2020
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Stockholders’ Equity
2019 Equity Incentive Award Plan
At the Company’s 2019 annual meeting of stockholders, the stockholders approved the 2019 Equity Incentive Award Plan (the “2019 Plan”). The 2019 Plan supersedes and replaces the 2010 Equity Incentive Award Plan (the “2010 Plan”) and preceding plans. No further awards will be granted under the 2010 Plan; however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards granted under the 2010 Plan.
Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Company's Board of Directors, are eligible to receive awards under the 2019 Plan. The 2019 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), other stock or cash-based awards and dividend equivalents to eligible individuals.
The number of shares available for issuance under the 2019 Plan includes an initial reserve of 1.7 million shares of common stock, any shares of common stock that are available for issuance under the 2010 Plan as of the effective date of the 2019 Plan and any shares of common stock subject to issued and outstanding awards under the 2010 Plan that expire, are cancelled or otherwise terminate following the effective date of the 2019 Plan. At the Company’s 2020 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable by 3.5 million shares. As of June 27, 2020, there were 5.0 million shares available for issuance under the 2019 Plan.
Stock Options
During the three months ended June 27, 2020, stock option awards exercisable for up to an aggregate of 0.9 million shares of common stock were granted with a grant date fair value of $12.63 per share. During the six months ended June 27, 2020, stock option awards exercisable for up to an aggregate of 0.9 million shares of common stock were granted with a grant date fair value of $12.44 per share.
During the three months ended March 28, 2020, performance-based stock option awards exercisable for up to an aggregate of 0.8 million shares of common stock were granted to certain Company executives with a grant date fair value of $9.16 per share. The actual number of shares earned is contingent upon achievement of annual corporate financial targets for bookings and non-GAAP net income for 2020 (collectively, the “2020 Performance Targets”) during the one-year performance period. These performance-based stock option awards will vest, subject to certification by the Compensation Committee of the Company’s Board of Directors upon the achievement of the 2020 Performance Targets, as to 25% of the shares of common stock earned on the date of such certification, and as to the remaining 75% of the shares of common stock earned, in substantially equal quarterly installments over the subsequent 36 months, subject to the executive’s continuous service with the Company through the respective vesting dates. Under the 2020 Performance Targets, if non-GAAP net income is below 80% of target and bookings are below 90% of target, no shares are awarded. From this base, shares are awarded on a 50% weighting for both non-GAAP net income and bookings up to 100% for each 2020 Performance Target using a sliding scale. The probability of
meeting the performance conditions related to these performance-based stock option awards was assessed to be probable as of June 27, 2020, and stock-based compensation expense of $0.5 million was recognized for the three months ended June 27, 2020. For the six months ended June 27, 2020 stock-based compensation expense of $0.7 million was recognized.
During the three months ended March 30, 2019, performance-based stock option awards exercisable for up to an aggregate of 2.0 million shares of common stock were granted to Company executives with a grant date fair value of $8.03 per share. These performance-based stock option awards contained a one-year performance period and a subsequent three-year service period. The actual number of shares earned was contingent upon achievement of both annual and quarterly corporate financial targets for revenue, non-GAAP gross margin and non-GAAP net income per share for 2019 (collectively, the “2019 Performance Targets”) during the one-year performance period. In February 2020, following the review of the Company’s financial performance for 2019, the Compensation Committee of the Company’s Board of Directors certified that the 2019 Performance Targets (as modified) for the 2019 performance-based stock options were partially met, resulting in an award to each Company executive of 30% of their target shares. One quarter of these performance-based stock option awards vested on this date, and the remaining 75% of the shares of common stock earned will vest in substantially equal quarterly installments over the subsequent 36 months, subject to the executive’s continuous service with the Company through the respective vesting dates.
During the three months ended June 27, 2020, 0.6 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $7.63 per share. During the six months ended June 27, 2020, 0.7 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $7.50 per share. As of June 27, 2020, unrecognized stock-based compensation expense of $11.4 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 3.0 years.
Restricted Stock Units
During the three and six months ended June 27, 2020, RSUs of 0.1 million were granted with a grant date fair value of $11.22 per share. During the three months ended June 27, 2020, RSUs for 0.2 million shares of common stock vested. During the six months ended June 27, 2020, RSUs for 0.3 million shares of common stock vested. As of June 27, 2020, unrecognized stock-based compensation expense of $1.4 million related to RSUs, net of estimated forfeitures, was expected to be recognized over a weighted-average period of 0.8 years.
Employee Stock Purchase Plans
The Company maintains two employee stock purchase plans - the Amended and Restated Employee Stock Purchase Plan (the “ESPP”) and the Amended and Restated 2017 Nonqualified Employee Stock Purchase Plan (the “NQ ESPP”).
The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their annual compensation subject to certain Internal Revenue Code limitations. In addition, no participant may purchase more than 2,000 shares of common stock in each offering period.
Beginning in the third quarter of 2020, the ESPP will provide two six-month offering periods from August 15th through February 14th and February 15th through August 14th of each year. A transition period began on May 15th and will end on August 14, 2020. The price of common stock purchased under the ESPP is 85% of the lower of the fair market value of the common stock on the commencement date and the end date of each six-month offering period. In May 2019, the stockholders approved an increase in the number of shares of common stock issuable under the ESPP by 2.5 million shares. The total shares authorized for issuance under the ESPP increased from 7.3 million shares to 9.8 million shares. As of June 27, 2020, there were 2.8 million shares available for issuance under the ESPP. During the three and six months ended June 27, 2020, 0.4 million shares were purchased under the ESPP. As of June 27, 2020, unrecognized stock-based compensation expense of $0.3 million related to the ESPP is expected to be recognized over a remaining service period of 0.1 years.
The NQ ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 25% of their annual compensation. Eligible employees have the right to (a) purchase the maximum number of whole shares of common stock that can be purchased with the elected payroll deductions during each offering period for which the employee is enrolled at a purchase price equal to the closing price of the Company’s common stock on the last day of such offering period and (b) receive an equal number of shares of the Company’s common stock that are subject to a risk of forfeiture in the event the employee terminates employment within the one year period immediately following the purchase date. Beginning in the fourth quarter of 2020, the NQ ESPP will provide two six-month offering periods, from November 15th through May 14th and May 15th through November 14th of each year. A transition period began on June 21st and will end on November 14, 2020. In May 2020, the stockholders approved an amendment of certain terms and an increase in the number of shares of common stock issuable under the NQ ESPP by 1.2 million shares. The maximum number of shares of common stock currently authorized for issuance under the NQ ESPP is 4.7 million shares, with a maximum of 0.5 million shares allocated per purchase period. As of June 27, 2020, there were 2.5 million shares available for issuance under the NQ ESPP, including the stockholder-approved 1.2 million share increase. During the three and six months ended June 27, 2020, 0.3 million shares were purchased and issued.
As of June 27, 2020, unrecognized stock-based compensation expense of $3.8 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 1.1 years.
Stock-Based Compensation
The following table summarizes stock-based compensation expense (in thousands):
 Three Months EndedSix Months Ended
June 27,
2020		June 29,
2019		June 27,
2020		June 29,
2019
Cost of revenue:
Products$126  $123  $233  $278  
Services90  93  205  192  
Research and development1,098  873  2,107  1,889  
Sales and marketing1,002  814  1,958  1,888  
General and administrative926  666  1,722  1,467  
$3,242  $2,569  $6,225  $5,714