Employee Stock Benefit Plans

3 Months Ended

Mar. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Employee Stock Benefit Plans

4. Employee Stock Benefit Plans

Employee Stock Purchase Plan

The Cohu, Inc. 1997 Employee Stock Purchase Plan (“the Plan”) provides for the issuance of shares of our common stock. Under the Plan, eligible employees may purchase shares of Cohu common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Cohu common stock at the beginning or end of each 6-month purchase period, subject to certain limits. No shares were issued under the Plan during the three-month period ended March 30, 2013 and there were 485,542 shares available for future issuance.

Stock Options

Under our equity incentive plans, stock options may be granted to employees, consultants and directors to purchase a fixed number of shares of our common stock. The exercise prices of options granted are at least equal to the fair market value of our common stock on the dates of grant. Options generally vest and become exercisable after one year or in four annual increments beginning one year after the grant date and expire ten years from the grant date. At March 30, 2013, there were 1,000,825 shares available for future equity grants under the 2005 Equity Plan. We have historically issued new shares of our common stock upon share option exercise.

Subsequent to December 29, 2012, we awarded stock options covering 445,346 shares of our common stock to employees and at March 30, 2013, we had 3,435,701 stock options outstanding. These options had a weighted-average exercise price of $12.21 per share, an aggregate intrinsic value of approximately $1.8 million and the weighted average remaining contractual term was approximately 5.8 years.

At March 30, 2013, we had 2,454,448 stock options outstanding that were exercisable. These options had a weighted-average exercise price of $12.76 per share, an aggregate intrinsic value of $1.8 million and the weighted average remaining contractual term was approximately 4.4 years.

Restricted Stock Units

We issue restricted stock units to certain employees, consultants and directors. Restricted stock units vest over either a one-year or a four-year period from the date of grant. Prior to vesting, restricted stock units do not have dividend equivalent rights, do not have voting rights and the shares underlying the restricted stock units are not considered issued and outstanding. Shares of our common stock will be issued on the date the restricted stock units vest.

Subsequent to December 29, 2012, we awarded restricted stock units covering 474,313 shares of our common stock to employees and at March 30, 2013, we had 991,267 restricted stock units outstanding with an aggregate intrinsic value of approximately $9.3 million and the weighted average remaining vesting period was approximately 2.0 years.

Equity-Based Performance Stock Units

We issue equity-based performance stock units to certain employees to reward achievement of financial performance goals set by the Board of Directors. Equity -based performance stock units vest over a three-year period from the date of grant. Prior to vesting, equity-based performance stock units do not have dividend equivalent rights, do not have voting rights and the shares underlying the restricted stock units are not considered issued and outstanding. The number of shares of stock ultimately issued to participants will depend upon the extent to which goals are met. The award measurement period is one fiscal year. Based upon the level of goal achievement, the number of shares we will issue can range from 0% up to 150% of the granted units. These outstanding units will vest over three years from the date of initial grant and upon final Board of Directors approval, shares of our common stock will be considered issued as of that date.

In March 2013, we granted equity-based performance units covering 140,865 shares of our common stock to certain employees. In March 2012, we granted equity-based performance units covering 128,916 shares of our common stock to certain employees and upon completion of the award measurement period 77,455 units were issued shares based on the financial goals achieved during fiscal 2012.