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 stock units. We settle employee stock option exercises, employee stock purchase plan purchases, and the vesting of restricted stock units, and performance stock units with newly issued common shares. At September 24, 2016, there were 1,815,471 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 vest and become exercisable in annual increments that range from one to four years from the date of grant. Stock options granted under the 2015 Plan have a maximum contractual term of ten years.

the first nine months of fiscal 2016

we did not grant any stock options and

we issued 32,555 shares of our common stock on the exercise of options that were granted previously.

At September 24, 2016, we had 1,730,496 stock options outstanding. These options had a weighted-average exercise price of $10.71 per share, an aggregate intrinsic value of approximately $3.1 million and the weighted average remaining contractual term was approximately 4.1 years.

At September 24, 2016, we had 1,617,819 stock options outstanding that were exercisable. These options had a weighted-average exercise price of $10.78 per share, an aggregate intrinsic value of $2.9 million and the weighted average remaining contractual term was approximately 3.9 years.

Restricted Stock Units

We grant restricted stock units (“RSUs”) to certain employees, consultants and outside directors. RSUs vest in annual increments that range from one to four years from the date of grant. Prior to vesting, RSUs 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. New shares of our common stock will be issued on the date the RSUs vest net of the minimum statutory tax withholding requirements to be paid by us on behalf of our employees. As a result, the actual number of shares issued will be fewer than the actual number of RSUs outstanding at September 24, 2016.

the first nine months of fiscal 2016 we awarded 471,225 RSUs and we issued 396,225 shares of our common stock on vesting of previously granted awards. At September 24, 2016, we had 1,115,355 restricted stock units outstanding with an aggregate intrinsic value of approximately $12.9 million and the weighted average remaining vesting period was approximately 2.3 years.

Performance Stock Units

We also grant performance stock units (“PSUs”) to senior executives as a part of our long-term equity compensation program. The number of shares of common stock that will ultimately be issued to settle PSUs granted in 2016 ranges from 25% to 200% and is determined based on certain performance criteria over a three-year measurement period. For PSUs granted in 2015, the number of shares of common stock issued to settle PSUs granted is determined based on a two-year measurement period. The performance criteria for the PSUs are based on a combination of the Company’s annualized Total Shareholder Return (“TSR”) for the performance period and the relative performance of the Company’s TSR compared with the annualized TSR of certain peer companies for the performance period. PSUs granted in 2016 vest 100% on the third anniversary of their grant and PSUs granted in 2015 vest 50% on the second and third anniversary of their grant, respectively.

We estimated the fair value of the PSUs using a Monte Carlo simulation model on the date of grant. Compensation expense is recognized ratably over the derived service period. New shares of our common stock will be issued on the date the PSUs vest net of the minimum statutory tax withholding requirements to be paid by us on behalf of our employees. As a result, the actual number of shares issued will be fewer than the actual number outstanding at September 24, 2016.

the first nine months of fiscal 2016

, we awarded

222,316 PSUs

and we issued 172,053 shares of our common stock on vesting of previously granted awards. A

September 24, 2016, we had 403,738 PSUs outstanding with an aggregate intrinsic value of approximately $4.7 million and the weighted average remaining vesting period was approximately 1.5 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.

During

the first nine months of fiscal 2016, 56,288 shares of our common stock were sold to our employees under the Plan leaving 754,775 shares available for future issuance.