Employee Stock Benefit Plans

9 Months Ended

Sep. 28, 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. A total of 81,230 shares were issued under the Plan during the nine-month period ended September 28, 2013 and there were 404,312 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 September 28, 2013, there were 1,010,720 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 470,346 shares of our common stock to employees and at September 28, 2013, we had 3,283,105 stock options outstanding. These options had a weighted-average exercise price of $12.26 per share, an aggregate intrinsic value of approximately $3.5 million and the weighted average remaining contractual term was approximately 5.2 years.

At September 28, 2013, we had 2,308,726 stock options outstanding that were exercisable. These options had a weighted-average exercise price of $12.86 per share, an aggregate intrinsic value of $2.8 million and the weighted average remaining contractual term was approximately 3.9 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 523,813 shares of our common stock to employees and at September 28, 2013, we had 960,035 restricted stock units outstanding with an aggregate intrinsic value of approximately $10.5 million and the weighted average remaining vesting period was approximately 2.7 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 awarded equity-based performance units covering 158,365 shares of our common stock to certain employees.