XML 90 R20.htm IDEA: XBRL DOCUMENT
v3.23.2

Share-Based Compensation | 6 Months Ended
--- | ---
Jul. 01, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company issues share-based compensation awards under the Zebra Technologies 2018 Long-Term Incentive Plan (“2018 Plan”), approved by shareholders in 2018 which superseded and replaced all prior share-based incentive plans. Outstanding awards issued prior to the 2018 Plan are governed by the provisions of those plans until such awards have been exercised, forfeited, canceled, expired, or otherwise terminated in accordance with their terms. Awards available under the 2018 Plan include stock-settled awards, including stock-settled restricted stock units, stock-settled performance stock units, restricted stock awards, performance share awards, stock appreciation rights, incentive stock options, and non-qualified stock options. Awards available under the 2018 Plan also include cash-settled awards, including cash-settled stock appreciation rights, cash-settled restricted stock units, and cash-settled performance stock units. No awards remain available for future grants under previous plans. The Company uses treasury shares as its source for issuing shares under the share-based compensation programs. As of July 1, 2023, the Company had 2,365,581 shares of Class A Common stock remaining available to be issued under the 2018 Plan. The compensation expense from the Company’s share-based compensation plans and associated income tax benefit, excluding the effects of excess tax benefits or shortfalls, were included in the Consolidated Statements of Operations as follows (in millions):
| Three Months Ended |  | Six Months Ended
Compensation costs and related income tax benefit | July 1, 2023 |  | July 2, 2022 |  | July 1, 2023 |  | July 2, 2022
Cost of sales | $ | 2 |  |  | $ | 1 |  |  | $ | 3 |  |  | $ | 2 |
Selling and marketing | 1 |  |  | 6 |  |  | 7 |  |  | 10 |
Research and development | 6 |  |  | 10 |  |  | 13 |  |  | 16 |
General and administration | (6) |  |  | 10 |  |  | 3 |  |  | 16 |
Total compensation expense | $ | 3 |  |  | $ | 27 |  |  | $ | 26 |  |  | $ | 44 |
Income tax benefit | $ | 3 |  |  | $ | 5 |  |  | $ | 7 |  |  | $ | 8 |
As of July 1, 2023, total unearned compensation cost related to the Company’s share-based compensation plans was $141 million, which will be recognized over the weighted average remaining service period of approximately 1.6 years. The majority of the Company’s share-based compensation awards are generally issued as part of its employee and non-employee director incentive program during the second quarter of each fiscal year. The Company also issues awards associated with business acquisitions or other off-cycle events. The majority of the Company’s share-based compensation is comprised of stock-settled awards. Stock-settled awards Beginning in 2021, the Company began issuing stock-settled restricted stock units (“stock-settled RSUs”) and stock-settled performance share units (“stock-settled PSUs”) for the majority of its share-based compensation awards. Prior to which, the Company primarily awarded restricted stock awards (“RSAs”), performance share awards (“PSAs”), and stock appreciation rights (“SARs”). The Company’s awards are typically time-vested with stock-settled RSUs and RSAs vesting ratably in three annual installments, stock-settled PSUs and PSAs vesting at the end of the three-year period, and SARs vesting ratably in four annual installments. Vesting for each participant is subject to restrictions, such as continuous employment, except in certain cases as set forth in each stock agreement. Upon vesting, stock-settled RSUs and PSUs convert to shares of Class A Common Stock that are released to participants. RSAs and PSAs are considered participating securities, and as such, are included as part of the Company’s Class A Common Stock outstanding at the time of grant. Compensation cost for the stock-settled RSUs, stock-settled PSUs, RSAs, and PSAs is expensed over each participant’s required service period. Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of units or awards granted, net of estimated forfeitures. The expected attainment of the performance goals for the stock-settled PSUs and PSAs is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary. As a result of this assessment, the current quarter results include a $30 million reduction in compensation costs. Fair value and compensation cost for SARs are determined using a binomial model on the grant date. The Company also issues RSAs to non-employee directors. The number of shares granted to each non-employee director is determined by dividing the value of the annual grant by the price of a share of the Company’s Class A Common Stock. New directors in any fiscal year earn a prorated amount. During the first six months of 2023, there were 6,640 shares granted to non-employee directors compared to 5,686 shares during the first six months of 2022. The shares vest immediately upon grant. A summary of the Company’s restricted and performance stock-settled awards for the six months ended July 1, 2023 is as follows:
| RSUs |  | PSUs |  | RSAs |  |  | PSAs
| Units |  | Weighted-Average Grant Date Fair Value |  | Units |  | Weighted-Average Grant Date Fair Value |  | Shares |  | Weighted-Average Grant Date Fair Value |  |  | Shares |  | Weighted-Average Grant Date Fair Value
Outstanding at beginning of period | 242,732 |  |  | $ | 404.19 |  |  | 105,928 |  |  | $ | 406.89 |  |  | 46,971 |  |  | $ | 271.92 |  |  |  | 35,246 |  |  | $ | 245.79 |
Granted | 279,224 |  |  | 265.58 |  |  | 104,446 |  |  | 258.63 |  |  | 6,640 |  |  | 271.77 |  |  |  | — |  |  | — |
Released | (74,829) |  |  | 403.10 |  |  | (64) |  |  | 482.42 |  |  | (45,129) |  |  | 252.61 |  |  |  | (34,525) |  |  | 244.97 |
Forfeited | (11,198) |  |  | 425.27 |  |  | (1,096) |  |  | 389.82 |  |  | (1,375) |  |  | 300.62 |  |  |  | (75) |  |  | 244.97 |
Outstanding at end of period | 435,929 |  |  | $ | 314.40 |  |  | 209,214 |  |  | $ | 332.94 |  |  | 7,107 |  |  | $ | 384.26 |  |  |  | 646 |  |  | $ | 291.43 |
The Company did not issue any SARs during the six months ended July 1, 2023 and July 2, 2022. A summary of the Company’s SARs for the six months ended July 1, 2023 is as follows:
|  | SARs |  | Weighted-Average Exercise Price
Outstanding at beginning of period |  | 443,476 |  |  | $ | 122.67 |
Granted |  | — |  |  | — |
Exercised |  | (24,576) |  |  | 98.86 |
Forfeited |  | (157) |  |  | 239.89 |
Expired |  | — |  |  | — |
Outstanding at end of period |  | 418,743 |  |  | $ | 124.02 |
Exercisable at end of period |  | 403,092 |  |  | $ | 118.58 |
The following table summarizes information about SARs outstanding as of July 1, 2023:
| Outstanding |  | Exercisable
Aggregate intrinsic value (in millions) | $ | 72 |  |  | $ | 72 |
Weighted-average remaining contractual life (in years) | 2.2 |  | 2.1
The intrinsic value of SARs exercised during the six months ended July 1, 2023 and July 2, 2022 was $5 million and $6 million, respectively. The total fair value of SARs that vested during the six months ended July 1, 2023 and July 2, 2022 was $2 million and $3 million, respectively. Cash-settled awards The Company also issues cash-settled share-based compensation awards, including cash-settled stock appreciation rights, cash-settled restricted stock units and cash-settled performance stock units that are classified as liability awards. These awards are expensed over the vesting period of the related award, which is typically three years. Compensation cost is calculated as the fair value on grant date multiplied by the number of share-equivalents granted. The expected attainment of the performance goals for the cash-settled performance stock units is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary. Cash settlement is based on the fair value of share equivalents at the time of vesting, which was $8 million and $4 million for the six months ended July 1, 2023 and July 2, 2022, respectively. Share-equivalents issued under these programs totaled 39,407 and 64,056 during the six months ended July 1, 2023 and July 2, 2022, respectively. Employee Stock Purchase Plan Eligible Zebra employees may purchase common stock at 95% of the fair market value at the date of purchase pursuant to the Zebra Technologies Corporation 2020 Employee Stock Purchase Plan (“2020 ESPP”). Employees may make purchases by cash or payroll deductions up to certain limits. The aggregate number of shares that may be purchased under the 2020 ESPP is 1,500,000 shares. As of July 1, 2023, 1,365,953 shares remained available for future purchase.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (l) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration