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Stockholders' Equity and Stock-Based Compensation | 12 Months Ended
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Sep. 25, 2021
Share-based Payment Arrangement [Abstract] |
Stockholders' Equity and Stock-Based Compensation | Stockholders' Equity and Stock-Based Compensation Stock Repurchase Program On June 13, 2018, the Board of Directors authorized the repurchase of up to $500.0 million of the Company's outstanding common stock. This share repurchase plan was effective August 1, 2018 and expired March 27, 2020. Under this authorization, during fiscal 2019, the Company repurchased 4.8 million shares of its common stock for total consideration of $200.1 million. During the first and second quarters of fiscal 2020, the Company repurchased 3.9 million shares of its common stock for a total consideration of $210.9 million. As of March 28, 2020, the Company had completed this authorization. On December 11, 2019, the Board of Directors authorized a new share repurchase plan to repurchase up to $500.0 million of the Company's outstanding common stock, effective at the beginning of the third quarter of fiscal 2020. On March 2, 2020 the Board of Directors approved accelerating the effective date of the new share repurchase plan from March 27, 2020 to March 2, 2020. Under this revised authorization during fiscal 2020, the Company repurchased 5.1 million shares of its common stock for a total consideration of $237.7 million. During the first quarter of fiscal 2021, the Company repurchased 1.5 million shares of its common stock under this plan for a total consideration of $101.3 million. On December 9, 2020, the Board of Directors authorized a new five-year share repurchase plan to repurchase up to $1.0 billion of the Company's outstanding common stock. The prior plan was terminated in connection with this new authorization. Under the new authorization, during fiscal 2021, the Company repurchased 4.6 million shares of its common stock for a total consideration of $308.5 million. As of September 25, 2021 $691.6 million remained available under this authorization. Subsequent to September 25, 2021, the Company repurchased 2.3 million shares of its common stock for $167.0 million. On November 19, 2019, the Board of Directors authorized the Company to repurchase up to $205 million of its outstanding shares pursuant to an accelerated share repurchase ("ASR") agreement. On November 22, 2019, the Company executed the ASR agreement with Goldman Sachs & Co. ("Goldman Sachs") pursuant to which the Company repurchased $205 million of the Company's common stock. The initial delivery of approximately 80% of the shares under the ASR was 3.3 million shares for which the Company initially allocated $164.0 million of the $205 million paid to Goldman Sachs during the first quarter of fiscal 2020. The Company evaluated the nature of the forward contract aspect of the ASR under ASC 815 and concluded equity classification was appropriate. Final settlement of the transaction under the ASR occurred in the second quarter of fiscal 2020. At settlement, Goldman Sachs delivered an additional 0.6 million shares of the Company's common stock. Stock-Based Compensation Equity Compensation Plans The Company has one share-based compensation plan pursuant to which awards are currently being issued—the 2008 amended and restated Equity Incentive Plan (“2008 Equity Plan”). The purpose of the 2008 Equity Plan is to provide stock options, restricted stock units and other equity interests in the Company to employees, officers, directors, consultants and advisors of the Company and any other person who is determined by the Board of Directors to have made (or is expected to make) contributions to the Company. The 2008 Equity Plan is administered by the Board of Directors of the Company, and a total of 31.5 million shares were reserved for issuance under this plan. As of September 25, 2021, the Company had 4.6 million shares available for future grant under the 2008 Equity Plan. The following presents stock-based compensation expense in the Company’s Consolidated Statements of Operations in fiscal 2021, 2020 and 2019:
|  | 2021 |  | 2020 |  | 2019
Cost of revenues |  | $ | 8.0 |  |  | $ | 6.7 |  |  | $ | 7.1 |
Research and development |  | 7.7 |  |  | 8.0 |  |  | 9.2 |
Selling and marketing |  | 9.5 |  |  | 10.2 |  |  | 10.2 |
General and administrative |  | 38.9 |  |  | 50.9 |  |  | 35.5 |
Restructuring |  | 0.9 |  |  | 7.5 |  |  | — |
|  | $ | 65.0 |  |  | $ | 83.3 |  |  | $ | 62.0 |
Grant-Date Fair Value The Company uses a binomial model to determine the fair value of its stock options. The Company considers a number of factors to determine the fair value of options including the assistance of an outside valuation adviser. Information pertaining to stock options granted during fiscal 2021, 2020 and 2019 and related assumptions are noted in the following table:
|  | Years ended
September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
Options granted (in millions) |  | 0.6 |  |  | 1.0 |  |  | 1.0 |
Weighted-average exercise price |  | $ | 68.62 |  |  | $ | 45.96 |  |  | $ | 41.36 |
Weighted-average grant date fair value |  | $ | 19.86 |  |  | $ | 13.92 |  |  | $ | 13.54 |
Assumptions: |  |  |  |  |  |
Risk-free interest rates |  | 0.4 | % |  | 1.7 | % |  | 3.0 | %
Expected life (in years) |  | 4.8 |  | 4.8 |  | 4.8
Expected volatility |  | 35.0 | % |  | 33.6 | % |  | 34.3 | %
Dividend yield |  | — |  |  | — |  |  | — |
The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. In projecting expected stock price volatility, the Company uses a combination of historical stock price volatility and implied volatility from observable market prices of similar equity instruments. The Company estimated the expected life of stock options based on historical experience using employee exercise and option expiration data. Stock-Based Compensation Expense Attribution The Company uses the straight-line attribution method to recognize stock-based compensation expense for stock options and restricted stock units ("RSUs"). The vesting term of stock options is generally four years with annual vesting of 25% per year on the anniversary of the grant date, and RSUs generally vest over three years with annual vesting at 33% per year on the anniversary of the grant date. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Under ASC 718, the Company's accounting policy is to estimate forfeitures at the time awards are granted and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on an analysis of historical forfeitures, the Company has determined a specific forfeiture rate for certain employee groups and has applied forfeiture rates ranging from 0% to 6.0% as of September 25, 2021 depending on the specific employee group. This analysis is re-evaluated annually and the forfeiture rate adjusted as necessary. Ultimately, the actual stock-based compensation expense recognized will only be for those stock options and RSUs that vest. Stock-based compensation expense related to stock options was $13.0 million, $15.5 million, and $14.1 million in fiscal 2021, 2020 and 2019, respectively. Stock compensation expense related to stock units, including RSUs, performance stock units ("PSUs"), free cash flow performance stock units ("FCFs") and market stock units ("MSUs") was $46.1 million, $63.3 million, and $43.7 million in fiscal 2021, 2020 and 2019, respectively. The related tax benefit recorded in the Consolidated Statements of Operations was $7.9 million, $9.5 million and $8.9 million in fiscal 2021, 2020 and 2019, respectively. At September 25, 2021, there was $15.8 million and $50.3 million of unrecognized compensation expense related to stock options and RSUs, respectively, to be recognized over a weighted average period of 2.3 years and 1.8 years, respectively. Share Based Payment Activity The following table summarizes all stock option activity under the Company’s stock option plans for the year ended September 25, 2021:
|  | Number of Shares (in millions) |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value (in millions)
Options outstanding at September 26, 2020 |  | 4.6 |  |  | $ | 40.37 |  |  | 7.0 |  | $ | 109.5 |
Granted |  | 0.6 |  |  | 68.62 |  |  |  |  |
Canceled/ forfeited |  | (0.2) |  |  | 49.67 |  |  |  |  |
Exercised |  | (0.8) |  |  | 38.46 |  |  |  |  | 30.4 |
Options outstanding at September 25, 2021 |  | 4.2 |  |  | $ | 44.66 |  |  | 6.6 |  | $ | 132.7 |
Options exercisable at September 25, 2021 |  | 2.3 |  |  | $ | 39.29 |  |  | 5.7 |  | $ | 85.4 |
Options vested and expected to vest at September 25, 2021 (1) |  | 4.1 |  |  | $ | 44.60 |  |  | 6.6 |  | $ | 132.2 |
(1)This represents the number of vested stock options as of September 25, 2021 plus the unvested outstanding options at September 25, 2021 expected to vest in the future, adjusted for estimated forfeitures. During fiscal 2020 and 2019, the total intrinsic value of options exercised (i.e., the difference between the market price on the date of exercise and the price paid by the employee to exercise the options) was $44.8 million and $26.1 million, respectively. A summary of the Company’s RSU, PSU, FCF and MSU activity during the year ended September 25, 2021 is presented below:
Non-vested Shares |  | Number of Shares (in millions) |  | Weighted-Average Grant-Date Fair Value
Non-vested at September 26, 2020 |  | 2.4 |  |  | $ | 44.22 |
Granted |  | 1.1 |  |  | 69.14 |
Vested |  | (1.7) |  |  | 43.94 |
Forfeited |  | (0.1) |  |  | 52.57 |
Non-vested at September 25, 2021 |  | 1.7 |  |  | $ | 54.21 |
The number of RSUs vested includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. The Company pays the minimum statutory tax withholding requirement on behalf of its employees. During fiscal 2021, 2020 and 2019 the total fair value of RSUs vested was $73.1 million, $34.9 million and $34.6 million, respectively. The Company granted 0.5 million, 0.6 million and 0.9 million RSUs during fiscal 2021, 2020 and 2019, respectively. In addition, included in the above chart, the Company also granted 0.1 million, 0.1 million and 0.1 million PSUs during fiscal 2021, 2020, and 2019 respectively, to members of the Company's senior management team, which includes additional shares issued upon achieving metrics within the performance criteria. The PSUs were valued at $68.51, $45.38 and $40.97 per share based on the ending stock price on the date of grant in fiscal 2021, 2020 and 2019, respectively. Each recipient of the PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three year performance period provided the Company’s defined Return on Invested Capital metrics are achieved. The Company also granted 0.1 million and 0.1 million of PSUs based on a one-year free cash flow measure (FCF) to its senior management team in fiscal 2021 and 2020, respectively. Each recipient of FCF PSUs is eligible to receive between zero and 200% of the target number of shares of the Company's common stock at the end of the one-year measurement period, but the FCF PSUs vest at the end of the three year service period. The PSUs and FCF PSUs cliff-vest three years from the date of grant, and the Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares will vest upon achieving the measurement criteria. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made. The Company also granted 0.1 million, 0.1 million and 0.1 million MSUs during fiscal 2021, 2020 and 2019, respectively, to its senior management team. Each recipient of MSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three year performance period based upon achieving a certain total shareholder return relative to a defined peer group. The MSUs were valued at $82.31, $43.54 and $55.13 per share using the Monte Carlo simulation model in fiscal 2021, 2020 and 2019, respectively. These awards cliff-vest three years from the date of grant, and the Company recognizes compensation expense for the MSUs ratably over the service period. Employee Stock Purchase Plan The Hologic, Inc. 2012 Employee Stock Purchase Plan (“2012 ESPP”) provides for the granting of up to 2.5 million shares of the Company’s common stock to eligible employees. The 2012 ESPP plan period is semi-annual and allows participants to purchase the Company’s common stock at 85% of the lower of (i) the market value per share of the common stock on the first day of the offering period or (ii) the market value per share of the common stock on the purchase date. Stock-based compensation expense in fiscal 2021, 2020 and 2019 was $5.9 million, $4.5 million and $4.2 million, respectively. The Company uses the Black-Scholes model to estimate the fair value of shares to be issued as of the grant date using the following weighted average assumptions:
|  | September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
Assumptions: |  |  |  |  |  |
Risk-free interest rates |  | 0.26 | % |  | 1.32 | % |  | 2.27 | %
Expected life (in years) |  | 0.5 |  | 0.5 |  | 0.5
Expected volatility |  | 34.1 | % |  | 26.9 | % |  | 27.1 | %
Dividend yield |  | — |  |  | — |  |  | — |

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