Stock-Based Compensation	6 Months Ended
Stock-Based Compensation	Jun. 25, 2022
Stock-Based Compensation [Abstract]
Stock-Based Compensation	Note 10 – Stock-Based Compensation Stock-based awards are provided to certain employees under the terms of our 2020 Stock Incentive Plan and to non-employee directors under the terms of our 2015 Non-Employee Director Stock Incentive Plan (together, the “Plans”). The Plans are administered by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Historically, equity-based awards to our employees have been granted solely in the form of time-based and performance-based restricted stock units (“RSUs”). However, for our 2021 fiscal year, in light of the COVID-19 pandemic, the Compensation Committee determined it would be difficult for management to set a meaningful three-year cumulative earnings per share target as the goal applicable to performance-based restricted stock unit awards as it had done in prior years. Instead, the Compensation Committee set our equity- based awards to employees for fiscal 2021 in the form of time-based RSUs and non-qualified stock options which focus on stock value appreciation and retention instead of pre-established performance goals. Our non-employee directors continued to receive equity-based awards for fiscal 2021 solely in the form of time-based RSUs. In March 2022, the Compensation Committee reinstated performance-based RSUs for equity-based awards to employees for fiscal 2022 and awarded grants in the form of time-based RSUs, performance-based RSUs and non-qualified stock options. RSUs are stock-based awards granted to recipients with specified vesting provisions. In the case of RSUs, common stock is generally delivered on or following satisfaction of vesting conditions. We issue RSUs to employees that vest (i) solely based on the recipient’s continued service over time, primarily with four -year cliff vesting and/or (ii) based on achieving specified performance measurements and the recipient’s continued service over time, primarily with three -year cliff vesting. RSUs granted under the 2015 Non-Employee Director Stock Incentive Plan primarily are granted with 12 -month cliff vesting. For these RSUs, we recognize the cost as compensation expense on a straight-line basis. With respect to time-based RSUs, we estimate the fair value on the date of grant based on our closing stock price at the time of grant. With respect to performance-based RSUs, the number of shares that ultimately vest and are received by the recipient is based upon our performance as measured against specified targets over a specified period, as determined by the Compensation Committee. Although there is no guarantee that performance targets will be achieved, we estimate the fair value of performance-based RSUs based on our closing stock price at time of grant. Each of the Plans provide for certain adjustments to the performance measurement in connection with awards under the Plans. With respect to the performance-based RSUs granted under our 2020 Stock Incentive Plan, such performance measurement adjustments relate to significant events, including, without limitation, acquisitions, divestitures, new business ventures, certain capital transactions (including share repurchases), differences in budgeted average outstanding shares (other than those resulting from capital transactions referred to above), restructuring costs, if any, certain litigation settlements or payments, if any, changes in accounting principles or in applicable laws or regulations, changes in income tax rates in certain markets, foreign exchange fluctuations, the financial impact, either positive or negative, of the differences in projected earnings generated by sales of COVID- 19 test kits (solely with respect to performance-based RSUs granted in the 2022 plan year) and unforeseen events or circumstances affecting us. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted upward or downward based upon our estimation of achieving such performance targets. The ultimate number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on our actual performance metrics as defined under the Plans. Stock options are awards that allow the recipient to purchase shares of our common stock at a fixed price following vesting of the stock options. Stock options are granted at an exercise price equal to our closing stock price on the date of grant. Stock options issued beginning in 2021 vest one-third per year based on the recipient’s continued service, subject to the terms and conditions of the 2020 Stock Incentive Plan, are fully vested three years from the grant date and have a contractual term of ten years from the grant date, subject to earlier termination of the term upon certain events. Compensation expense for these stock options is recognized using a graded vesting method. We estimate the fair value of stock options using the Black-Scholes valuation model. In addition to equity-based awards granted in fiscal 2021 under the our long-term incentive program, the Compensation Committee granted a Special Pandemic Recognition Award under the 2020 Stock Incentive Plan to recipients of performance-based RSUs under the 2018 long-term incentive program. The payout under the performance-based restricted stock units granted under the fiscal 2018 long-term incentive program (the “2018 LTIP”) was negatively impacted by the global COVID-19 pandemic. Given the significance of the impact of the pandemic on our three-year EPS goal under such equity awards and the contributions made by our employees (including those who received such awards), on March 3, 2021, the Compensation Committee granted a Special Pandemic Recognition Award to recipients of performance-based restricted stock units under the 2018 LTIP who were employed by us on the grant date of the Special Pandemic Recognition Award. These time-based RSU awards vest 50 % on the first anniversary of the grant date and 50 % on the second anniversary of the grant date, based on the recipient’s continued service and subject to the terms and conditions of the 2020 Stock Incentive Plan, and are recorded as compensation expense using a graded vesting method. The combination of the 20 % payout based on actual performance of the 2018 LTIP and the one-time Special Pandemic Recognition Award granted in 2021 will generate a cumulative payout of 75 % of each recipient’s original number of performance-based restricted stock units awarded in 2018 if the recipient satisfies the two-year vesting schedule commencing on the grant date. Our accompanying condensed consolidated statements of income reflect pre-tax share-based compensation expense of $ 15 million ($ 12 million after-tax) and $ 27 million ($ 21 million after-tax) for the three and six months ended June 25, 2022, respectively. For the three and six months ended June 26, 2021, we recorded pre-tax share-based compensation expense of $ 17 million ($ 13 million after-tax) and $ 30 million ($ 23 million after-tax), respectively. Total unrecognized compensation cost related to unvested awards as of June 25, 2022 was $ 116 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years. Our accompanying condensed consolidated statements of cash flows present our stock-based compensation expense as an adjustment to reconcile net income to net cash provided by operating activities for all periods presented. In the accompanying condensed consolidated statements of cash flows, there were no benefits associated with tax deductions in excess of recognized compensation as a cash inflow from financing activities for the six months ended June 25, 2022 and June 26, 2021, respectively. The following weighted-average assumptions were used in determining the most recent fair values of stock options granted using the Black-Scholes valuation model: 2022 Expected dividend yield 0.0 % Expected stock price volatility 27.40 % Risk-free interest rate 3.25 % Expected life of options (years) 6.00 We have not declared cash dividends on our stock in the past and we do not anticipate declaring cash dividends in the foreseeable future. The expected stock price volatility is based on implied volatilities from traded options on our stock, historical volatility of our stock, and other factors. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant in conjunction with considering the expected life of options. The six-year expected life of the options was determined using the simplified method for estimating the expected term as permitted under SAB Topic 14. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by recipients of stock options, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by us. The following table summarizes stock option activity under the Plans during the six months ended June 25, 2022: Stock Options Weighted Average Weighted Remaining Average Contractual Aggregate Exercise Life in Intrinsic Shares Price Years Value Outstanding at beginning of period 767,717 $ 63.24 Granted 406,443 86.16 Exercised (29,892) 62.71 Forfeited (9,656) 71.72 Outstanding at end of period 1,134,612 $ 71.39 9.1 $ 10 Options exercisable at end of period 219,642 $ 62.92 Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Life (in years) Value Vested or expected to vest 894,356 $ 73.68 9.2 $ 7 The following tables summarize the activity of our unvested RSUs for the six months ended June 25, 2022: Time-Based Restricted Stock Units Weighted Average Grant Date Fair Intrinsic Value Shares/Units Value Per Share Per Share Outstanding at beginning of period 1,945,862 $ 58.79 Granted 455,169 86.13 Vested (501,944) 54.76 Forfeited (28,807) 65.88 Outstanding at end of period 1,870,280 $ 66.47 $ 77.29 Performance-Based Restricted Stock Units Weighted Average Grant Date Fair Intrinsic Value Shares/Units Value Per Share Per Share Outstanding at beginning of period 674,753 $ 59.63 Granted 390,975 75.70 Vested (392,001) 59.24 Forfeited (7,724) 66.18 Outstanding at end of period 666,003 $ 62.39 $ 77.29