5.	Employee Stock Benefit Plans

Our 2005 Equity Incentive Plan (the “2005 Plan”) is a broad-based, long-term retention program intended to attract, motivate, and retain talented employees as well as align stockholder and employee interests. Awards that may be granted under the program include, but are not limited to, non-qualified and incentive stock options, restricted stock units, and performance-based stock units. We settle employee stock option exercises, employee stock purchase plan purchases, and the vesting of restricted stock units, and performance-based stock units with newly issued common shares. On May 12, 2015, our stockholders approved an amendment to the 2005 Plan which increased the number of shares that may be issued under the 2005 Plan by 1,500,000 shares. Subsequent to this amendment, at September 26, 2015, there were 2,257,363 shares available for future equity grants under the 2005 Equity Incentive Plan.

Stock Options

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 and options generally vest and become exercisable after one year or in four annual increments beginning one year after the date of grant. Stock options granted under the program have a maximum contractual term of ten years.

At September 26, 2015, we had 2,031,539 stock options outstanding. These options had a weighted-average exercise price of $11.20 per share, an aggregate intrinsic value of approximately $1.3 million and the weighted average remaining contractual term was approximately 4.7 years.

At September 26, 2015, we had 1,720,111 stock options outstanding that were exercisable. These options had a weighted-average exercise price of $11.43 per share, an aggregate intrinsic value of $1.2 million and the weighted average remaining contractual term was approximately 4.2 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.

In the nine months ended

September 26, 2015

we awarded restricted stock units covering 482,101 shares of our common stock to employees and at September 26, 2015, we had 1,097,429 restricted stock units outstanding with an aggregate intrinsic value of approximately $10.6 million and the weighted average remaining vesting period was approximately 1.4 years.

Equity-Based Performance Stock Units

In March 2012, we began granting equity-based performance units covering shares of our common stock to certain employees. The number of shares of stock ultimately issued will depend upon the extent to which certain financial performance goals set by our Board of Directors are met during the one-year award measurement period. Based upon the level of achievement of performance goals the number of shares we ultimately issue can range from 0% up to 150% of the number of shares under each grant which vest over 3 years from the date of initial grant. In 2014, we began awarding equity-based performance stock units to senior executives with vesting that is contingent on the level of achievement of certain performance goals, market return and continued service (“market-based PSUs”) and in 2015, the market-based PSUs granted are only subject to certain adjustments resulting from performance of Cohu’s Relative Total Shareholder Return (“TSR”) to a selected peer group over a two-year measurement period following the date of grant based on the percentage by which our TSR exceeds or falls below the selected peer group. Market-based PSUs earned will vest at the rate of 50% on the second and third anniversary of their grant. We estimated the fair value of market-based PSUs using a Monte Carlo simulation model on the date of grant. Compensation expense is recognized ratably over the measurement period of each vesting tranche based on our current assessment of achievement of the performance goals. New shares of our common stock will be issued on the date the equity-based performance units vest.

In the nine months ended

September 26, 2015

, we awarded

156,370 market-based performance stock units

to senior executives, and at

September 26, 2015, we had 376,374 PSUs and market based PSUs outstanding with an aggregate intrinsic value of approximately $3.6 million and the weighted average remaining vesting period was approximately 1.3 years.

Employee Stock Purchase Plan (ESPP)

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. On May 12, 2015 our stockholders approved an amendment to the Plan which increased the number of shares that may be issued under the Plan by 750,000 shares.

During

the three-month period ended September 26, 2015, no shares of our common stock were sold to our employees under the Plan leaving 864,321 shares available for future issuance.