v3.21.1

Share-based compensation | 9 Months Ended
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Mar. 26, 2021
Share-based Payment Arrangement [Abstract] |
Share-based compensation | Share-based compensation Share-based compensation The grant date fair value of restricted share units and performance share units is based on the market value of Fabrinet's ordinary shares on the date of grant. The effect of recording share-based compensation expense for the three and nine months ended March 26, 2021 and March 27, 2020 was as follows:
| Three Months Ended |  | Nine Months Ended
(amount in thousands) | March 26, 2021 |  | March 27, 2020 |  | March 26, 2021 |  | March 27, 2020
Share-based compensation expense by type of award: |  |  |  |  |  |  |
Restricted share units | $ | 3,953 |  |  | $ | 4,094 |  |  | $ | 13,377 |  |  | $ | 12,678 |
Performance share units | 2,911 |  |  | 2,024 |  |  | 5,365 |  |  | 5,623 |
Total share-based compensation expense | 6,864 |  |  | 6,118 |  |  | 18,742 |  |  | 18,301 |
Tax effect on share-based compensation expense | — |  |  | — |  |  | — |  |  | — |
Net effect on share-based compensation expense | $ | 6,864 |  |  | $ | 6,118 |  |  | $ | 18,742 |  |  | $ | 18,301 |
Share-based compensation expense was recorded in the unaudited condensed consolidated statements of operations and comprehensive income as follows:
| Three Months Ended |  | Nine Months Ended
(amount in thousands) | March 26, 2021 |  | March 27, 2020 |  | March 26, 2021 |  | March 27, 2020
Cost of revenue | $ | 1,388 |  |  | $ | 1,489 |  |  | $ | 4,805 |  |  | $ | 4,800 |
Selling, general and administrative expense | 5,476 |  |  | 4,629 |  |  | 13,937 |  |  | 13,501 |
Total share-based compensation expense | $ | 6,864 |  |  | $ | 6,118 |  |  | $ | 18,742 |  |  | $ | 18,301 |
The Company did not capitalize any share-based compensation expense as part of any asset costs during the three and nine months ended March 26, 2021 and March 27, 2020. Share-based award activity On December 12, 2019, the Company’s shareholders approved Fabrinet’s 2020 Equity Incentive Plan (the “2020 Plan”). Upon the approval of the 2020 Plan, Fabrinet’s Amended and Restated 2010 Performance Incentive Plan (the “2010 Plan”) was simultaneously terminated. The 2020 Plan provides for the grant of equity awards thereunder with respect to (i) 1,700,000 ordinary shares, plus (ii) up to 1,300,000 ordinary shares that, as of immediately prior to the termination of the 2010 Plan, had been reserved but not issued pursuant to any awards granted under the 2010 Plan and are not subject to any awards thereunder. Upon termination of the 2010 Plan, 1,281,619 ordinary shares were reserved for issuance under the 2020 Plan pursuant to clause (ii) of the preceding sentence. As of March 26, 2021, there were 234,734 restricted share units outstanding, 188,554 performance share units outstanding and 2,515,947 ordinary shares available for future grant under the 2020 Plan. As of March 26, 2021, there were 402,651 restricted share units outstanding and 238,474 performance share units outstanding under the 2010 Plan. No ordinary shares are available for future grant under the 2010 Plan. On November 2, 2017, the Company adopted the 2017 Inducement Equity Incentive Plan (the “2017 Inducement Plan”) with a reserve of 160,000 ordinary shares authorized for future issuance solely for the granting of inducement share options and equity awards to new employees. The 2017 Inducement Plan was adopted without shareholder approval in reliance on the “employment inducement exemption” provided under the New York Stock Exchange Listed Company Manual. As of March 26, 2021, there were 12,164 restricted share units outstanding and 111,347 ordinary shares available for future grant under the 2017 Inducement Plan. The 2020 Plan, 2010 Plan and 2017 Inducement Plan are collectively referred to as the “Equity Incentive Plans.” Restricted share units and performance share units Restricted share units and performance share units have been granted under the Equity Incentive Plans. Restricted share units granted to employees generally vest in equal installments over three or four years on each anniversary of the vesting commencement date. Restricted share units granted to non-employee directors generally cliff vest 100% on the first of January, approximately one year from the grant date, provided the director continues to serve through such date. Performance share units granted to executives will vest, if at all, at the end of a two-year performance period based on the Company’s achievement of pre-defined performance criteria, which consist of revenue and non-GAAP operating margin targets. The actual number of performance share units that may vest at the end of the performance period ranges from 0% to 100% of the award grant. The following table summarizes restricted share unit activity under the Equity Incentive Plans:
| Number of Shares |  | Weighted- Average Grant Date Fair Value Per Share
Balance as of June 26, 2020 | 797,757 |  |  | $ | 46.88 |
Granted | 222,886 |  |  | $ | 69.97 |
Issued | (347,662) |  |  | $ | 45.18 |
Forfeited | (23,432) |  |  | $ | 57.71 |
Balance as of March 26, 2021 | 649,549 |  |  | $ | 55.33 |
| Number of Shares |  | Weighted- Average Grant Date Fair Value Per Share
Balance as of June 28, 2019 | 800,751 |  |  | $ | 42.48 |
Granted | 343,792 |  |  | $ | 50.32 |
Issued | (321,659) |  |  | $ | 40.82 |
Forfeited | (28,457) |  |  | $ | 42.80 |
Balance as of March 27, 2020 | 794,427 |  |  | $ | 46.54 |
The following table summarizes performance share unit activity under the Equity Incentive Plans:
| Number of Shares |  | Weighted- Average Grant Date Fair Value Per Share
Balance as of June 26, 2020 | 440,140 |  |  | $ | 48.37 |
Granted | 184,718 |  |  | $ | 69.85 |
Issued | (82,185) |  |  | $ | 48.02 |
Forfeited | (115,645) |  |  | $ | 48.02 |
Balance as of March 26, 2021 | 427,028 |  |  | $ | 57.82 |
| Number of Shares |  | Weighted- Average Grant Date Fair Value Per Share
Balance as of June 28, 2019 | 548,500 |  |  | $ | 40.97 |
Granted | 242,310 |  |  | $ | 48.65 |
Issued | — |  |  | — |
Forfeited | (350,670) |  |  | $ | 36.99 |
Balance as of March 27, 2020 | 440,140 |  |  | $ | 48.37 |
The fair value of restricted share units and performance share units is based on the market value of Fabrinet's ordinary shares on the date of grant. As of March 26, 2021, there was $13.2 million and $9.8 million of unrecognized share-based compensation expense related to restricted share units and performance share units, respectively, under the Equity Incentive Plans that is expected to be recorded over a weighted-average period of 2.4 years and 1.2 years, respectively. For the nine months ended March 26, 2021 and March 27, 2020, the Company withheld an aggregate of 160,648 shares and 91,481 shares, respectively, upon the vesting of restricted share units, based upon the closing share price on the vesting date to settle employee obligations for the applicable income and other employment taxes. For the nine months ended March 26, 2021 and March 27, 2020, the Company then remitted cash of $11.4 million and $4.7 million, respectively, to the appropriate taxing authorities, and presented it as a financing activity within the unaudited condensed consolidated statements of cash flows. The payment was recorded as a reduction of additional paid-in capital.

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