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Share-Based Compensation | 12 Months Ended
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Dec. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Stock-Based Compensation Equity Incentive Plans 2017 Equity Incentive Plan On June 1, 2017, the Company’s stockholders ratified and approved the 2017 Equity Incentive Plan (2017 Equity Plan). The 2017 Equity Plan permits the grant of stock options, restricted stock, restricted stock units (RSUs), stock appreciation rights, performance share units (PSUs), performance shares, performance bonus awards and other stock or cash awards to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. The aggregate number of shares that may be awarded under the 2017 Equity Plan is 5.0 million shares. The 2017 Equity Plan provides that equity awards issued under the 2017 Equity Plan must generally vest over a period of not less than one year following the date of grant and generally expire within ten years from date of grant. The exercise price per share of each option granted under the 2017 Equity Plan may not be less than the fair market value of a share of the Company’s common stock on the date of grant, which is generally equal to the closing price of the Company’s common stock on the NASDAQ Global Select Market on the grant date. 2007 Stock Incentive Plan Effective June 1, 2017, upon the approval and ratification of the 2017 Equity Plan, the Company’s 2007 Stock Incentive Plan (2007 Equity Plan) terminated, provided that awards outstanding under the 2007 Equity Plan will continue to be governed by the terms of that plan. In addition, upon the effectiveness of the 2017 Equity Plan, an aggregate of 5.0 million shares of the Company’s common stock registered under prior registration statements for issuance pursuant to the 2007 Equity Plan were deregistered and concurrently registered under the 2017 Equity Plan. At December 30, 2017, an aggregate of 13.8 million shares of common stock were reserved for issuance under the 2017 Equity Plans, of which 3.9 million shares were available for future awards under the 2017 Equity Plan. Stock-Based Award Activity Stock Options The number and weighted-average exercise price of stock options issued and outstanding under all stock plans, is presented below (in thousands, except for exercise price):
| Year ended December 30, 2017 |  | Year ended December 31, 2016 |  | Year ended January 2, 2016
| Shares |  | Average Exercise Price |  | Shares |  | Average Exercise Price |  | Shares |  | Average Exercise Price
Options outstanding, beginning of period | 8,521 |  |  | $ | 28.56 |  |  | 9,202 |  |  | $ | 25.46 |  |  | 9,956 |  |  | $ | 23.59 |
Granted | 928 |  |  | 86.69 |  |  | 1,290 |  |  | 39.94 |  |  | 914 |  |  | 36.18 |
Canceled | (250 | ) |  | 38.59 |  |  | (172 | ) |  | 29.13 |  |  | (218 | ) |  | 24.33 |
Expired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Exercised | (2,246 | ) |  | 27.63 |  |  | (1,799 | ) |  | 20.76 |  |  | (1,450 | ) |  | 19.54 |
Options outstanding, end of period | 6,953 |  |  | $ | 36.26 |  |  | 8,521 |  |  | $ | 28.56 |  |  | 9,202 |  |  | $ | 25.46 |
Options exercisable, end of period | 3,812 |  |  | $ | 26.28 |  |  | 4,988 |  |  | $ | 26.33 |  |  | 5,609 |  |  | $ | 24.72 |
Total stock option expense for the years ended December 30, 2017, December 31, 2016 and January 2, 2016 was $12.0 million, $12.2 million and $10.8 million, respectively. As of December 30, 2017 and December 31, 2016, the Company had $39.7 million and $27.1 million of unrecognized compensation cost related to outstanding options expected to be recognized over a weighted-average period of approximately 3.7 years and 3.4 years, respectively. The number and weighted-average exercise price of outstanding and exercisable stock options segregated by exercise price ranges (in thousands, except range of exercise prices and remaining contractual life) were as follows:
| Year ended December 30, 2017 |  | Year ended December 31, 2016
| Options Outstanding |  | Options Exercisable |  | Options Outstanding |  | Options Exercisable
Range of Exercise Prices | Number of Options |  | Average Remaining Contractual Life |  | Number of Options |  | Number of Options |  | Average Remaining Contractual Life |  | Number of Options
$8.00 to $25.00 | 2,555 |  |  | 4.62 |  | 1,999 |  |  | 3,432 |  |  | 5.28 |  | 2,301 |
$25.01 to $40.00 | 3,224 |  |  | 5.80 |  | 1,712 |  |  | 4,664 |  |  | 5.65 |  | 2,526 |
$40.01 to $55.00 | 199 |  |  | 7.12 |  | 86 |  |  | 341 |  |  | 6.44 |  | 161 |
$55.01 to $70.00 | 94 |  |  | 8.80 |  | 15 |  |  | 84 |  |  | 9.76 |  | — |
$70.01 to $85.00 | 74 |  |  | 9.68 |  | — |  |  | — |  |  | 0 |  | — |
$85.01 to $105.00 | 807 |  |  | 9.57 |  | — |  |  | — |  |  | 0 |  | — |
Total | 6,953 |  |  | 5.92 |  | 3,812 |  |  | 8,521 |  |  | 5.57 |  | 4,988 |
As of December 30, 2017 and December 31, 2016, the weighted-average remaining contractual term of options outstanding was 5.9 years and 5.6 years, respectively. As of December 30, 2017 and December 31, 2016, the weighted-average remaining contractual term of options exercisable with an exercise price less than the closing price of the Company’s common stock was 4.3 years and 3.9 years, respectively. RSUs The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for grant date fair value amounts):
| Year ended December 30, 2017 |  | Year ended December 31, 2016 |  | Year ended January 2, 2016
| Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value
RSUs outstanding, beginning of period | 2,706 |  |  | $ | 95.40 |  |  | 2,703 |  |  | $ | 41.45 |  |  | — |  |  | $ | — |
Granted | 33 |  |  | 86.42 |  |  | 6 |  |  | 43.09 |  |  | 2,703 |  |  | 41.45 |
Canceled | (25 | ) |  | 85.79 |  |  | — |  |  | — |  |  | — |  |  | — |
Expired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Vested | (6 | ) |  | 43.09 |  |  | (3 | ) |  | 41.45 |  |  | — |  |  | — |
RSUs outstanding, end of period | 2,708 |  |  | $ | 95.51 |  |  | 2,706 |  |  | $ | 41.45 |  |  | 2,703 |  |  | $ | 41.45 |
Total RSU expense for the years ended December 30, 2017, December 31, 2016 and January 2, 2016 was $0.5 million and $0.3 million and less than $0.1 million, respectively. As of December 30, 2017 and December 31, 2016, the Company had $0.3 million and $0.1 million of unrecognized compensation cost related to non-vested RSU awards expected to be recognized and vest over a weighted-average period of approximately 0.4 years and 0.3 years, respectively, excluding any contingent compensation expense related to certain RSUs that were granted to the Company’s Chairman and Chief Executive Officer in connection with the amendment and restatement of his employment agreement. In July 2017, in connection with the First Amendment to Mr. Kiani’s November 4, 2015 Amended and Restated Employment Agreement (First Amendment), the Company and Mr. Kiani agreed to, among other things, modify certain vesting provisions related to the previous award of 2.7 million RSUs to the Company’s Chairman and Chief Executive Officer (see “Employment and Severance Agreements” in Note 17 to these condensed consolidated financial statements for further details). PSUs The number of PSUs outstanding under all of the Company’s equity plans are as follows (in thousands, except for grant date fair value amounts):
| Year ended December 30, 2017 |  | Year ended December 31, 2016 |  | Year ended January 2, 2016
| Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value
PSUs outstanding, beginning of period | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Granted | 248 |  |  | 90.71 |  |  | — |  |  | — |  |  | — |  |  | — |
Canceled | (15 | ) |  | 90.87 |  |  | — |  |  | — |  |  | — |  |  |
Expired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Vested | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
PSUs outstanding, end of period | 233 |  |  | $ | 90.70 |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
During the year ended December 30, 2017, the Company awarded PSUs that will vest in part over time based on the achievement of certain 2017 performance criteria approved by the Board. If earned, 20% of the PSUs granted will vest upon achievement of the performance criteria and the remaining award will vest in four equal installments at the beginning of each of the following four years after the year in which the performance achievement level has been determined. The number of shares that may be earned can range from 0% to 100% of the target amount. The total PSU expense for the year ended December 30, 2017 was $4.7 million. As of December 30, 2017, the Company had $9.3 million of unrecognized compensation cost related to non-vested PSU awards expected to be recognized and vest over a weighted-average period of approximately 2.5 years. Valuation of Stock-Based Award Activity The fair value of each RSU award is determined based on the closing price of the Company’s common stock on the grant date. The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s stock-based compensation plans. The range of assumptions used and the resulting weighted-average fair value of stock options granted at the date of grant were as follows:
| Year ended December 30, 2017 |  | Year ended December 31, 2016 |  | Year ended January 2, 2016
Risk-free interest rate | 1.7% to 2.2% |  | 1.0% to 2.1% |  | 1.3% to 1.9%
Expected term | 5.5 years to 5.6 years |  | 5.5 years to 5.7 years |  | 5.5 years to 5.7 years
Estimated volatility | 29.7% to 32.1% |  | 29.8% to 35.7% |  | 32.0% to 37.4%
Expected dividends | 0% |  | 0% |  | 0%
Weighted-average fair value of options granted | $27.81 per share |  | $13.64 per share |  | $12.20 per share
Risk-free interest rate. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the Company’s stock options. Expected term. The expected term represents the average period that the Company’s stock options are expected to be outstanding. The expected term is based on both the Company’s specific historical option exercise experience, as well as expected term information available from a peer group of companies with a similar vesting schedule. Estimated volatility. The estimated volatility is the amount by which the Company’s share price is expected to fluctuate during a period. The Company’s estimated volatilities for 2017, 2016 and 2015 are based on historical and implied volatilities of the Company’s share price over the expected term of the option. Expected dividends. The Board may from time to time declare, and the Company may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. Any determination to declare and pay dividends will be made by the Board and will depend upon the Company’s results of operations, earnings, capital requirements, financial condition, business prospects, contractual restrictions and other factors deemed relevant by the Board. In the event a dividend is declared, there is no assurance with respect to the amount, timing or frequency of any such dividends. The dividend declared in 2012 was deemed to be a special dividend and there is no assurance that special dividends will be declared again during the expected term. Based on this uncertainty and unknown frequency, for the years ended December 30, 2017, December 31, 2016 and January 2, 2016, no dividend rate was used in the assumptions to calculate the stock-based compensation expense. Estimated forfeiture rate. The Company is required to develop an estimate of the number of stock options and RSUs that will be forfeited due to employee turnover. Adjustments in the estimated forfeiture rates can have a significant effect on the Company’s reported stock-based compensation, as it recognizes the cumulative effect of the rate adjustments for all expense amortization in the period the estimated forfeiture rates were adjusted. The Company estimates and adjusts forfeiture rates based on a periodic review of recent forfeiture activity and expected future employee turnover. Adjustments in the estimated forfeiture rates could also cause changes in the amount of expense that it recognizes in future periods. The Company has elected to recognize stock-based compensation expense on a straight-line basis over the requisite service period for the entire award. The total fair value of all options that vested during fiscal years 2017, 2016 and 2015 was $27.8 million, $10.6 million and $10.4 million, respectively. The aggregate intrinsic value is calculated as the difference between the market value of the Company’s common stock on the date of exercise or the respective period end, as appropriate, and the exercise price of the options. The aggregate intrinsic value of options outstanding, with an exercise price less than the closing price of the Company’s common stock, as of December 30, 2017 was $339.7 million. The aggregate intrinsic value of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of December 30, 2017 was $223.1 million. The aggregate intrinsic value of options exercised during the years ended December 30, 2017, December 31, 2016 and January 2, 2016 was $140.3 million, $57.0 million and $26.4 million, respectively. The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense was $39.2 million, $16.2 million and $3.7 million for the years ended December 30, 2017, December 31, 2016 and January 2, 2016, respectively. During the year ended December 30, 2017, the Company early adopted ASU 2016-09, which resulted in changes to the recognition of excess tax benefits for stock-based compensation. Please see Note 2 - Summary of Significant Accounting Policies under the subheading “Recently Adopted Accounting Pronouncements” for additional information on the impact of such adoption. The following table presents the total stock-based compensation expense that is included in each functional line item of the consolidated statements of operations (in thousands):
| Year ended December 30, 2017 |  | Year ended December 31, 2016 |  | Year ended January 2, 2016
Cost of goods sold | $ | 351 |  |  | $ | 355 |  |  | $ | 348 |
Selling, general and administrative | 13,272 |  |  | 9,443 |  |  | 8,139 |
Research and development | 3,564 |  |  | 2,705 |  |  | 2,338 |
Total | $ | 17,187 |  |  | $ | 12,503 |  |  | $ | 10,825 |
The increase in total stock-based compensation expense during the year ended December 30, 2017 was due to both the composition of the equity awards granted and a significant increase in the fair market value of the Company’s stock from the prior year, which increased the value of the equity awards granted during such year.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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