XML 30 R14.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Stockholders' Equity | 12 Months Ended
--- | ---
Jan. 02, 2022
Equity [Abstract] |
Stockholders' Equity |
6. STOCKHOLDERS’ EQUITY
The 2015 Stock and Incentive Compensation Plan (the 2015 Stock Plan) and the New Hire Stock and Incentive Plan allow for the issuance of stock options, performance stock options, restricted stock units and awards, and performance stock units. As of January 2, 2022, approximately 3.4 million shares remained available for future grants under the 2015 Stock Plan. There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan. Restricted Stock We issue restricted stock units (RSU) and performance stock units (PSU), both of which are considered restricted stock. We grant restricted stock pursuant to the 2015 Stock Plan and satisfy such grants through the issuance of new shares. RSU are share awards that, upon vesting, will deliver to the holder shares of our common stock. RSU generally vest over a four-year period with equal vesting annually. We issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified earnings per share targets and continued employment through the vesting period. Restricted stock activity was as follows:
|  | Restricted Stock Units (RSU) (1) |  | Performance Stock Units (PSU)(2) |  | Weighted-Average Grant- Date Fair Value per Share
Units in thousands |  |  |  | RSU |  | PSU
Outstanding at December 30, 2018 |  | 1,840 |  |  | 660 |  |  | $ | 227.00 |  |  | $ | 196.99 |
Awarded |  | 698 |  |  | (41) |  |  | $ | 313.70 |  |  | $ | 254.52 |
Vested |  | (694) |  |  | (283) |  |  | $ | 205.51 |  |  | $ | 133.11 |
Cancelled |  | (144) |  |  | (65) |  |  | $ | 225.48 |  |  | $ | 181.79 |
Outstanding at December 29, 2019 |  | 1,700 |  |  | 271 |  |  | $ | 271.49 |  |  | $ | 258.66 |
Awarded |  | 878 |  |  | (78) |  |  | $ | 329.83 |  |  | $ | 344.22 |
Vested |  | (655) |  |  | (117) |  |  | $ | 239.19 |  |  | $ | 400.74 |
Cancelled |  | (202) |  |  | (76) |  |  | $ | 273.13 |  |  | $ | 266.63 |
Outstanding at January 3, 2021 |  | 1,721 |  |  | — |  |  | $ | 313.35 |  |  | $ | — |
Awarded |  | 259 |  |  | 456 |  |  | $ | 438.46 |  |  | $ | 471.63 |
Vested |  | (606) |  |  | (72) |  |  | $ | 303.08 |  |  | $ | 492.55 |
Cancelled |  | (244) |  |  | (56) |  |  | $ | 321.93 |  |  | $ | 475.38 |
Outstanding at January 2, 2022 |  | 1,130 |  |  | 328 |  |  | $ | 345.66 |  |  | $ | 466.42 |
_____________ (1)In connection with the GRAIL acquisition, replacement awards of 59,000 RSU were awarded to GRAIL employees in 2021. (2)The number of units reflect the estimated number of shares to be issued at the end of the performance period. Awarded units are presented net of performance adjustments. Pre-tax intrinsic values and fair value of vested restricted stock was as follows:
In millions | 2021 |  | 2020 |  | 2019
Pre-tax intrinsic value of outstanding restricted stock: |  |  |  |  |
RSU | $ | 430 |  |  | $ | 637 |  |  | $ | 565 |
PSU | $ | 125 |  |  | $ | — |  |  | $ | 90 |
Fair value of restricted stock vested: |  |  |  |  |
RSU | $ | 247 |  |  | $ | 206 |  |  | $ | 210 |
PSU | $ | 35 |  |  | $ | 47 |  |  | $ | 38 |
Stock Options Stock option activity was as follows:
Units in thousands | Options |  | Weighted-Average Exercise Price |  | Performance Stock Options(1) |  | Weighted-Average Exercise Price
Outstanding at December 30, 2018 | 192 |  |  | $ | 54.52 |  |  | — |  |  | $ | — |
Exercised | (134) |  |  | $ | 53.61 |  |  | — |  |  | $ | — |
Outstanding at December 29, 2019 | 58 |  |  | $ | 56.65 |  |  | — |  |  | $ | — |
Exercised | (48) |  |  | $ | 56.16 |  |  | — |  |  | $ | — |
Outstanding at January 3, 2021 | 10 |  |  | $ | 59.11 |  |  | — |  |  | $ | — |
Granted | — |  |  | $ | — |  |  | 48 |  |  | $ | 86.73 |
Exercised | (2) |  |  | $ | 20.06 |  |  | (21) |  |  | $ | 86.72 |
Cancelled | — |  |  | $ | — |  |  | (10) |  |  | $ | 89.63 |
Outstanding at January 2, 2022 | 8 |  |  | $ | 66.42 |  |  | 17 |  |  | $ | 85.54 |
_____________ (1)In connection with the GRAIL acquisition, we issued replacement performance stock options to GRAIL employees in 2021. The number of units reflect awards that have been granted and for which it is assumed to be probable that the underlying performance goals will be achieved. As of January 2, 2022, all outstanding options were exercisable. The aggregate intrinsic value of options outstanding and options exercisable as of January 2, 2022 was $3 million. Aggregate intrinsic value represents the product of the number of options outstanding multiplied by the difference between our closing stock price per share on the last trading day of the fiscal period, which was $380.44 as of December 31, 2021, and the exercise price. Total intrinsic value of options exercised was $1 million, $14 million, and $34 million in 2021, 2020, and 2019, respectively. The weighted-average remaining life of options outstanding and exercisable was 1.4 years as of January 2, 2022. There were no outstanding performance stock options exercisable as of January 2, 2022. The aggregate intrinsic value of performance stock options outstanding as of January 2, 2022 was $6 million and the total intrinsic value of performance stock options exercised was $6 million in 2021. Outstanding performance stock options, in general, have contractual terms of ten years from the respective grant dates. Liability-Classified Awards During 2021, we granted certain GRAIL employees cash-based equity incentive awards. The cash to be awarded may subsequently increase or decrease in direct correlation to changes in the enterprise fair value of GRAIL, as defined under the Cash-Based Equity Appreciation Award Plan. The awards generally have terms of four years and vest in four equal installments on each anniversary of the respective grant date, subject to continued employment through the vesting period. These awards are accounted for as liability-classified awards. The aggregate grant date cash value for awards granted in 2021 was $218 million, of which, $42 million was forfeited in 2021. We recognized share-based compensation expense in 2021, with a corresponding liability as of January 2, 2022, included in accrued liabilities, of $11 million. As of January 2, 2022, approximately $173 million of total unrecognized compensation cost, which includes periodic estimated fair value adjustments, related to awards issued to date, was expected to be recognized over a weighted-average period of approximately 3.7 years. Additionally, in connection with the acquisition of GRAIL, we assumed a performance-based award for which vesting is based on GRAIL’s future revenues. The award has an aggregate potential value of up to $78 million and expires, to the extent unvested, in August 2030. As of January 2, 2022, it was not probable that the performance conditions associated with the award will be achieved and, therefore, no share-based compensation expense, or corresponding liability, has been recognized in the consolidated financial statements to-date. We assess the probability of achieving the performance conditions associated with the award on a quarterly basis at each reporting period. Employee Stock Purchase Plan A total of 15.5 million shares of our common stock have been reserved for issuance under our 2000 Employee Stock Purchase Plan, or ESPP. The ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. The initial offering period commenced in July 2000. Approximately 0.2 million shares were issued under the ESPP during each of the years in 2021, 2020, and 2019. As of January 2, 2022 and January 3, 2021, there were approximately 13.1 million and 13.3 million shares available for issuance under the ESPP, respectively. Share Repurchases We did not repurchase any shares during 2021. During 2020 and 2019, we repurchased approximately 2.3 million shares for $735 million and 1.1 million shares for $324 million, respectively. As of January 2, 2022, authorizations to repurchase approximately $15 million of our common stock remained available under the $750 million share repurchase program authorized by our Board of Directors on February 5, 2020. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. Share-Based Compensation Share-based compensation expense, which includes expense for both equity and liability-classified awards, reported in our consolidated statements of income was as follows:
In millions | 2021 |  | 2020 |  | 2019
Cost of product revenue | $ | 23 |  |  | $ | 21 |  |  | $ | 19 |
Cost of service and other revenue | 4 |  |  | 4 |  |  | 4 |
Research and development | 276 |  |  | 74 |  |  | 66 |
Selling, general and administrative | 638 |  |  | 95 |  |  | 105 |
Share-based compensation expense, before taxes | 941 |  |  | 194 |  |  | 194 |
Related income tax benefits | (64) |  |  | (43) |  |  | (41) |
Share-based compensation expense, net of taxes | $ | 877 |  |  | $ | 151 |  |  | $ | 153 |
In connection with the acquisition of GRAIL, we recognized share-based compensation expense of $615 million in 2021 related to the fair value of accelerated equity awards attributable to the post-combination period, of which $167 million was recorded in research and development expense and $448 million in selling, general and administrative expense. We also recognized $24 million of expense in 2021 related to the replacement awards. In February 2021, we modified the metrics and reduced the maximum potential payouts for our performance stock units granted in 2019 and 2020, which vest at the end of the three-year periods ended January 2, 2022 and January 1, 2023, respectively. The modifications affected 52 employees with units granted in 2019, which resulted in total incremental share-based compensation cost of approximately $41 million, and 72 employees with units granted in 2020, which resulted in total incremental share-based compensation cost of approximately $65 million. Additionally, in August 2020, we modified the performance period for our performance stock units granted in 2018, which vested at the end of the three-year period ended January 3, 2021. This modification affected 49 employees and resulted in total incremental share-based compensation cost of approximately $47 million in 2020. The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the ESPP were as follows:
| 2021 |  | 2020 |  | 2019
Risk-free interest rate | 0.06% - 0.12% |  | 0.11% - 2.04% |  | 1.88% - 2.56%
Expected volatility | 37% - 47% |  | 30% - 45% |  | 30% - 38%
Expected term | 0.5 - 1.0 year |  | 0.5 - 1.0 year |  | 0.5 - 1.0 year
Expected dividends | 0% |  | 0% |  | 0%
Weighted-average grant-date fair value per share | $ | 134.47 |  |  | $ | 75.57 |  |  | $ | 75.47 |
As of January 2, 2022, approximately $442 million of total unrecognized compensation cost related to restricted stock, performance stock options and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 2.1 years.

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

X
- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_ShareholdersEquityAndShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration