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Note 10 - Stock-based Compensation Plans | 12 Months Ended
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Jan. 03, 2026
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | Note 10 - Stock-Based Compensation Plans Employee and Director Restricted Stock and ESPP Plans As of January 3, 2026, we have three active equity incentive plans, including the "2023 Equity Incentive Plan" and the "2011 Non-Employee Director Equity Incentive Plan", under which shares remain available for grants to employees and non-employee directors, respectively. We also have the “2025 Inducement Equity Plan”, under which shares will be available for grants to new hire employees. Restricted stock unit ("RSU"), and restricted stock award ("RSA") grants are part of our equity compensation practices for employees who receive equity grants. RSUs and RSAs generally vest quarterly over a four-year period beginning on the grant date. We also maintain the 2012 Employee Stock Purchase Plan ("2012 ESPP"), pursuant to which eligible employees may contribute through payroll deductions up to 10% of base compensation, subject to certain income limits, to purchase shares of our common stock. The purchase price of the shares is the lower of 85% of the fair market value of the stock at the beginning of each six-month offering period or 85% of the fair market value at the end of such period. We have treated the 2012 ESPP as a compensatory plan. At January 3, 2026, a total of 0.7 million shares of our common stock were available for future purchases under the 2012 ESPP. At January 3, 2026, a total of 4.9 million shares of our common stock were available for future grants under the 2023 Equity Incentive Plan and the 2011 Non‑Employee Director Equity Incentive Plan. At the same date, 1.3 million shares were available for issuance under the 2025 Inducement Equity Plan, which is a standalone, non‑shareholder‑approved plan that may be used only for inducement awards to new hires. The 2023 Equity Incentive Plan, 2011 Non‑Employee Director Equity Incentive Plan, and the 2025 Inducement Equity Plan do not have any fungible share‑counting provisions. Shares subject to performance‑based restricted stock units that are not delivered due to failure to meet the maximum payout threshold generally become available for re‑issuance under the applicable equity incentive plans. Stock-Based Compensation Expense Total stock-based compensation expense included in our Consolidated Statements of Operations is presented in the following table:
|  | Year Ended |
|  | January 3, |  |  | December 28, |  |  | December 30, |
(In thousands) |  | 2026 |  |  | 2024 |  |  | 2023 |
Cost of revenue |  | $ | 5,363 |  |  | $ | 2,731 |  |  | $ | 4,506 |
Research and development |  |  | 49,873 |  |  |  | 29,033 |  |  |  | 27,782 |
Selling, general, and administrative |  |  | 60,377 |  |  |  | 21,221 |  |  |  | 37,909 |
Total stock-based compensation |  | $ | 115,613 |  |  | $ | 52,985 |  |  | $ | 70,197 |
The income tax benefit related to total stock-based compensation expense was $8.5 million, $6.3 million, and $7.6 million, respectively, for fiscal 2025, 2024, and 2023, which is reflected in Income tax expense (benefit) in the Consolidated Statements of Operations. There was no income tax benefit related to awards vested during 2025 due to shortfalls (actual tax deductions were lower than the U.S. GAAP compensation cost). The income tax benefit related to awards vested or exercised during fiscal 2024 and 2023, respectively, was $1.7 million and $10.4 million. These amounts do not include the indirect effects of stock-based compensation, which primarily relate to the R&D tax credit. Employee Stock Purchase Plan The fair values of the shares expected to be issued under the employee stock purchase plan were estimated using the Black-Scholes valuation model and the assumptions noted in the following table. The expected volatility of ESPP shares is based on the daily historical volatility of our stock price, measured over the ESPP purchase period. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the offering period. Dividend yield has no valuation impact, as we have not paid any cash dividends since inception and do not intend to pay any cash dividends in the foreseeable future. The following table summarizes the assumptions used in the valuation of ESPP compensation for the periods presented:
|  | Year Ended
|  | January 3, |  | December 28, |  | December 30,
|  | 2026 |  | 2024 |  | 2023
Employee Stock Purchase Plan |  |  |  |  |  |
Weighted average expected volatility |  | 41.6% |  | 52.6% |  | 48.2%
Weighted average risk-free interest rate |  | 3.95% |  | 4.88% |  | 5.37%
Expected term (in months) |  | 6 |  | 6 |  | 6
The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $18.30, $15.50, and $24.38 for fiscal years 2025, 2024, and 2023, respectively. Compensation expense for the ESPP is recognized using the straight-line method. We recorded stock-based compensation expense related to the ESPP of approximately $2.3 million, $1.8 million, and $2.2 million in fiscal 2025, 2024, and 2023, respectively. Time-Based Restricted Stock Unit Awards and Restricted Stock Awards The following table summarizes the activity for our time-based RSUs and RSAs for the year ended January 3, 2026:
(Shares in thousands) |  | Shares |  |  | Weighted average grant date fair value |
Balance, December 28, 2024 |  |  | 2,692 |  |  | $ | 63.78 |
Granted |  |  | 1,841 |  |  |  | 51.54 |
Vested |  |  | (982 | ) |  |  | 64.55 |
Forfeited or expired |  |  | (296 | ) |  |  | 62.92 |
Balance, January 3, 2026 |  |  | 3,255 |  |  | $ | 56.71 |
At January 3, 2026, there was $162.9 million of unrecognized compensation expense related to unvested time-based RSUs and RSAs. Compensation expense for RSUs and RSAs is recognized using the straight-line method over the related vesting period. In fiscal 2025, 2024, and 2023, we recorded stock-based compensation expense related to time-based RSUs and RSAs of approximately $70.2 million, $51.8 million, and $41.5 million, respectively. Market-Based and Performance-Based Awards In 2023 through 2025, we granted awards of RSUs with either a market condition or a performance condition to certain executives. Market-Based and Performance-Based Awards — Grants In fiscal 2025, 2024, and 2023, we granted awards of RSUs with a market condition to certain executives. Under the terms of these grants, the RSUs with a market condition vest over a three-year period based on the Company's total shareholder return ("TSR") relative to the Russell 3000 index, which condition is measured for the grants on either the third anniversary of the grant date, or equally on the first, second, and third anniversary of the grant date, depending on the executive. The awards may vest at 250% or 200%, depending on the executive, if the 75th percentile of the market condition is achieved, with 100% of the units vesting at the 55th percentile, zero vesting if relative TSR is below the 25th percentile, and vesting scaling for achievement between the 25th and 75th percentile. In fiscal 2025, we also granted awards of RSUs with a performance condition to certain executives. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth in excess of the Gartner Non-Memory Semiconductor Revenue Growth benchmark, and the number of shares that vest will scale based on achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250%. During fiscal 2025, the Compensation Committee of the Board of Directors approved a modification to the performance condition periods and vesting criteria associated with these revenue growth performance awards and similar awards that were granted to certain executives in fiscal 2024 to align the awards with the Company's growth strategy. The modification extended the beginning and end dates of each measurement period by one year, such that the performance condition will be measured annually after each fiscal year-end for one-fourth of the grants with the first measurement period beginning in fiscal 2026 and the last measurement period ending at the end of fiscal 2029. Additionally, the awards were modified such that the measurement and vesting for each tranche will occur on the later of the filing date of the Company’s Annual Report on Form 10-K for the applicable measurement period, or the date the Gartner Non-Memory Semiconductor Revenue Growth benchmark is published. Vesting of these awards occurs approximately 4 months after the end of each measurement period. All other terms of the modified awards including the size of the awards and performance criteria remain the same. This modification had no material impact on stock-based compensation expense upon adoption. Also during fiscal 2025, we granted additional awards of RSUs with a performance condition to the majority of our employee population. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth targets, and the number of shares vested will scale for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200% depending on the employee's level. The performance condition will be measured annually after each fiscal year-end for one-half of the grants with the first measurement period beginning in fiscal 2026 and the last measurement period ending at the end of fiscal 2027. Vesting of these awards occurs approximately 4 months after the end of each measurement period. In fiscal 2024, we also granted awards of RSUs with a performance condition to certain executives. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth in excess of an industry benchmark, and the number of shares vested will scale for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250%. The performance condition will be measured annually after each fiscal year-end for one-fourth of the grants beginning in fiscal 2025 through the end of fiscal 2028. Vesting of these awards occurs 13 months after the end of each measurement period and the entire award cannot be fully earned until five and a half years from grant date. In fiscal 2024, we also granted awards of RSUs with a market condition to our new chief executive officer with vesting tied to the Company's stock price appreciation. The number of shares that become eligible to vest can range from 25% to 250% of the target number of shares, based on the Company's stock price growth over the 6-year service period, which ranges from 25% to 200% stock price growth calculated based on the simple average of the closing Company share price for the trailing 60 trading days up to and including the measurement date. No vesting occurs for stock price growth below 25%. Vesting will occur annually after 3 years for a portion of the vesting eligible RSUs. Market-Based and Performance-Based Awards — Vesting During fiscal 2025, the market condition for awards granted to certain executives in previous years exceeded the 55th percentile of their TSR condition, and these awards vested at 134%. Also during 2025, the third tranche of awards granted in fiscal 2021 and 2022 with a year-over-year revenue growth performance condition vested at the 116.3% level of achievement, based on the Company's year-over-year revenue growth performance as of December 30, 2023. For the fourth tranche of these awards, the Company did not meet the year-over-year revenue growth performance criteria as of December 28, 2024. During fiscal 2024, the market condition for the majority of awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and these awards vested at 250% or 200%, as applicable for the respective executive. One award achieved the 54th percentile of its TSR condition and vested at approximately 97%, while one award did not meet its minimum TSR threshold for vesting. Also during 2024, the second tranche of awards granted in fiscal 2021 and 2022 with a year-over-year revenue growth performance condition vested at the 200% level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of December 31, 2022, and the 13-month vesting period had been met. For the third tranche of these awards, the Company met the year-over-year revenue growth performance criteria at the 116.3% level of achievement as of December 30, 2023. During fiscal 2023, the market condition for awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and applicable tranches of these awards vested at 250% or 200% for the respective executives. Also during 2023, the first tranche of awards granted in fiscal 2021 with a year-over-year revenue growth performance condition vested at the 200% level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of January 1, 2022, and the 13-month vesting period had been met. Market-Based and Performance-Based Awards — Compensation Expense For our awards with a market condition or a performance condition, we incurred stock compensation expense in fiscal 2025 of approximately $43.1 million. In fiscal 2024, we recorded benefits from forfeitures of approximately $29.0 million due to executive departures, partially offset by stock compensation expense of approximately $28.4 million. In fiscal 2023, we incurred stock-based compensation expense of approximately $26.4 million. These amounts are recorded as components of total stock-based compensation. At January 3, 2026, there was $66.2 million of unrecognized compensation expense related to unvested RSUs with a market condition or a performance condition. Awards with a market condition were valued using Monte Carlo simulation models. The following table summarizes the assumptions used at the grant date in the valuation of RSUs with a market condition:
|  | Year Ended
|  | January 3, |  | December 28, |  | December 30,
|  | 2026 |  | 2024 |  | 2023
Executive RSUs with a market condition |  |  |  |  |  |
Weighted average expected volatility |  | 52.75% to 53.01% |  | 51.04% to 53.96% |  | 50.97% to 54.31%
Weighted average risk-free interest rate |  | 3.95% to 4.25% |  | 3.39% to 4.53% |  | 4.28% to 4.59%
Expected term (years) |  | 3 |  | 3 to 6 |  | 3
The valuation of RSUs with a performance condition is based on the closing market price on the date of grant. The following table summarizes the activity for our awards with a market condition or performance condition:
(Shares in thousands) |  | Shares |  |  | Weighted average grant date fair value |
Balance, December 28, 2024 |  |  | 1,593 |  |  | $ | 62.24 |
Granted |  |  | 833 |  |  |  | 60.32 |
Effect of vesting multiplier |  |  | 19 |  |  |  |  |
Vested |  |  | (101 | ) |  |  | 75.87 |
Canceled |  |  | (229 | ) |  |  | 72.66 |
Balance, January 3, 2026 |  |  | 2,115 |  |  | $ | 59.69 |

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