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Equity Compensation | 12 Months Ended
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Mar. 30, 2024
Share-Based Payment Arrangement, Noncash Expense [Abstract] |
Equity Compensation | Equity Compensation The Company is currently granting equity awards from the 2018 Long Term Incentive Plan (the “Plan”), which was approved by stockholders in August 2018 and subsequently amended on July 29, 2022. The Plan provides for granting of stock options, restricted stock awards, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock awards, phantom stock awards (also called restricted stock units), and performance awards (also called market stock units). Each stock option granted reduces the total shares available for grant under the Plan by one share. Each full value award granted (including restricted stock awards, restricted stock units and market stock units) reduces the total shares available for grant under the Plan by 1.5 shares. Stock options generally vest between one and four years, and are exercisable for a period of ten years from the date of grant. Restricted stock units are generally subject to vesting from one to three years, depending upon the terms of the grant. Market stock units are subject to a vesting schedule of three years. The following table summarizes the activity in total shares available for grant (in thousands):
| Shares
| Available for
| Grant
Balance, March 27, 2021 | 4,025 |
Shares added | — |
Granted | (1,679) |
Forfeited | 271 |
Balance, March 26, 2022 | 2,617 |
Shares added | 2,090 |
Granted | (2,536) |
Forfeited | 303 |
Balance, March 25, 2023 | 2,474 |
Shares added | — |
Granted | (1,813) |
Forfeited | 317 |
Balance, March 30, 2024 | 978 |
Stock-based Compensation Expense The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income, and net income after taxes for shares granted under the Plan (in thousands, except per share amounts):
|  | Fiscal Year
|  | 2024 |  | 2023 |  | 2022
Cost of sales |  | $ | 1,403 |  |  | $ | 1,270 |  |  | $ | 1,024 |
Research and development |  | 63,678 |  |  | 57,312 |  |  | 44,154 |
Sales, general and administrative |  | 24,190 |  |  | 23,059 |  |  | 21,214 |
Effect on pre-tax income |  | 89,271 |  |  | 81,641 |  |  | 66,392 |
Income Tax Benefit |  | (20,646) |  |  | (15,184) |  |  | (11,521) |
Total stock-based compensation expense (net of taxes) |  | 68,625 |  |  | 66,457 |  |  | 54,871 |
Stock-based compensation effects on basic earnings per share |  | $ | 1.26 |  |  | $ | 1.19 |  |  | $ | 0.96 |
Stock-based compensation effects on diluted earnings per share |  | 1.22 |  |  | 1.16 |  |  | 0.93 |
The total stock-based compensation expense included in the table above and which is attributable to restricted stock units and market stock units was $85.1 million, $78.0 million, $63.2 million, for fiscal years 2024, 2023, and 2022, respectively. Stock-based compensation expense is presented within operating activities in the consolidated statement of cash flows. As of March 30, 2024, there was $140.6 million of compensation costs related to non-vested stock options, restricted stock units, and market stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.78 years for stock options, 1.53 years for restricted stock units, and 1.91 years for market stock units. In addition to the income tax benefit of stock-based compensation expense shown in the tabl e above, the Company recognized excess tax benefits of $0.2 million, $1.4 million and $3.9 million in fiscal years 2024, 2023, and 2022 respectively. Stock Options We estimate the fair value of each stock option on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions:
|  | March 30, 2024 |  | March 25, 2023 |  | March 26, 2022
Expected stock price volatility |  | 34.53% - 39.92% |  | 35.18% - 46.50% |  | 36.85% - 41.66%
Risk-free interest rate |  | 3.99% - 4.11% |  | 2.47% - 3.96% |  | 0.82% - 1.62%
Expected term (in years) |  | 3.85 - 4.07 |  | 4.04 - 4.33 |  | 4.22 - 4.39
The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding after becoming vested. The risk-free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield. Using the Black-Scholes option valuation model, the weighted average estimated fair values of stock options granted in fiscal years 2024, 2023, and 2022, were $39.61, $42.37, and $37.31, respectively. During fiscal years 2024, 2023, and 2022, we received a net $3.3 million, $10.1 million, and $13.2 million, respectively, from the exercise of 0.1 million, 0.2 million, and 0.3 million, respectively, stock options granted under the Company’s Stock Plan. The total intrinsic value of stock options exercised during fiscal year 2024, 2023, and 2022, was $2.8 million, $11.4 million, and $15.8 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option. Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):
|  | Outstanding Options
|  | Number |  | Weighted Average Exercise Price
Balance, March 27, 2021 |  | 1,059 |  |  | $ | 49.87 |
Options granted |  | 88 |  |  | 87.52 |
Options exercised |  | (327) |  |  | 40.31 |
Options forfeited |  | — |  |  | — |
Options expired |  | — |  |  | — |
Balance, March 26, 2022 |  | 820 |  |  | $ | 57.75 |
Options granted |  | 143 |  |  | 96.33 |
Options exercised |  | (225) |  |  | 45.10 |
Options forfeited |  | (18) |  |  | 71.14 |
Options expired |  | — |  |  | — |
Balance, March 25, 2023 |  | 720 |  |  | $ | 69.03 |
Options granted |  | 132 |  |  | 92.69 |
Options exercised |  | (66) |  |  | 50.39 |
Options forfeited |  | — |  |  | — |
Options expired |  | — |  |  | — |
Balance, March 30, 2024 |  | 786 |  |  | $ | 74.56 |
Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 30, 2024 is as follows (in thousands, except years and per share amounts):
|  | Number of Options |  | Weighted Average Exercise price |  | Weighted Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Vested and expected to vest |  | 774 |  |  | $ | 74.26 |  |  | 6.60 |  | $ | 15,226 |
Exercisable |  | 494 |  |  | $ | 63.84 |  |  | 5.25 |  | $ | 14,443 |
In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $4.2 million, $3.0 million, and $4.6 million, became vested during fiscal years 2024, 2023, and 2022, respectively. The following table summarizes information regarding outstanding and exercisable options as of March 30, 2024 (in thousands, except per share amounts):
|  | Options Outstanding |  | Options Exercisable
|  |  |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise |  | Number |  | Weighted Average
Range of Exercise Prices |  | Number |  | (years) |  | Price |  | Exercisable |  | Exercise Price
$31.25 - $54.65 |  | 135 |  |  | 3.55 |  | $ | 42.67 |  |  | 135 |  |  | $ | 42.67 |
$55.72 - $68.56 |  | 215 |  |  | 4.68 |  | 62.54 |  |  | 215 |  |  | 62.54 |
$78.00 - $82.81 |  | 127 |  |  | 7.44 |  | 79.36 |  |  | 78 |  |  | 78.94 |
$88.00 - $88.00 |  | 81 |  |  | 7.92 |  | 88.00 |  |  | 40 |  |  | 88.00 |
$93.24 - $93.24 |  | 125 |  |  | 9.86 |  | 93.24 |  |  | — |  |  | — |
$102.37 - $102.37 |  | 103 |  |  | 8.86 |  | 102.37 |  |  | 26 |  |  | 102.37 |
|  | 786 |  |  | 6.64 |  | $ | 74.56 |  |  | 494 |  |  | $ | 63.84 |
As of March 30, 2024, March 25, 2023, and March 26, 2022, the number of options exercisable was 0.5 million, 0.5 million, and 0.6 million respectively. Restricted Stock Units Restricted stock units (“RSUs”) are valued as of the grant date and amortized over the requisite vesting period. Generally, RSUs vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. A summary of the activity for RSUs in fiscal year 2024, 2023, and 2022 is presented below (in thousands, except per share amounts):
|  | Shares |  | Weighted Average Fair Value
March 27, 2021 |  | 2,613 |  |  | $ | 60.31 |
Granted |  | 1,079 |  |  | 81.61 |
Vested |  | (935) |  |  | 43.96 |
Forfeited |  | (181) |  |  | 70.60 |
March 26, 2022 |  | 2,576 |  |  | $ | 74.45 |
Granted |  | 1,574 |  |  | 75.97 |
Vested |  | (877) |  |  | 70.02 |
Forfeited |  | (183) |  |  | 75.58 |
March 25, 2023 |  | 3,090 |  |  | $ | 76.42 |
Granted |  | 1,099 |  |  | 71.12 |
Vested |  | (879) |  |  | 73.54 |
Forfeited |  | (211) |  |  | 75.70 |
March 30, 2024 |  | 3,099 |  |  | $ | 75.41 |
The aggregate intrinsic value of RSUs outstanding as of March 30, 2024, March 25, 2023, and March 26, 2022 was $286.9 million, $326.3 million, and $225.9 million, respectively. Additional information with regards to outstanding RSUs that are expected to vest as of March 30, 2024, is as follows (in thousands, except year and per share amounts):
|  | Shares |  | Weighted Average Fair Value |  | Weighted Average Remaining Contractual Term (years)
Expected to vest |  | 2,923 |  |  | $ | 75.55 |  |  | 1.50
RSUs outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. RSUs with a fair value of $64.6 million, $61.4 million, and $41.1 million became vested during fiscal years 2024, 2023, and 2022, respectively. The majority of RSUs that vested in 2024, 2023 and 2022 were net settled such that the Company withheld a portion of the shares to satisfy tax withholding requirements. In fiscal years 2024, 2023, and 2022 the vesting of RSUs reduced the authorized and unissued share balance by approximately 0.9 million, 0.9 million, and 0.9 million, respectively. Total shares withheld and subsequently retired out of the Plan were approximately 0.3 million, 0.2 million, and 0.3 million and total payments for the employees’ tax obligations to taxing authorities were $18.9 million, $18.0 million, and $22.0 million for fiscal years 2024, 2023, and 2022, respectively. Market Stock Units Market stock units (“MSUs”) granted prior to February 2024 vest based upon the relative total shareholder return (“TSR”) of the Company as compared to that of the Philadelphia Semiconductor Index, while MSUs granted after February 2024 vest based on the TSR of the Company as compared to that of the Russell 3000 Index (collectively referred to as the "Indexes". The requisite service period for these MSUs is also the vesting period, which is three years. The fair value of each MSU granted was determined on the date of grant using the Monte Carlo simulation, which calculates the present value of the potential outcomes of future stock prices of the Company and the Indexes over the requisite service period. The fair value is based on the risk-free rate of return, the volatility of the stock price of the Company and the Indexes, the correlation of the stock price of the Company with the Indexes, and the dividend yield. The fair values estimated from the Monte Carlo simulation were calculated using a dividend yield of zero and the following additional assumptions:
|  | Fiscal Years Ended
|  | March 30, 2024 |  | March 25, 2023 |  | March 26, 2022
Expected stock price volatility |  | 34.53% |  | 35.18% - 46.50% |  | 41.66 | %
Risk-free interest rate |  | 4.12% |  | 2.67% - 3.92% |  | 1.46 | %
Expected term (in years) |  | 3.00 |  | 3.00 |  | 3.00
Using the Monte Carlo simulation, the weighted average estimated fair value of the MSUs granted in fiscal year 2024 was $141.48. A summary of the activity for MSUs in fiscal year 2024, 2023, and 2022 is presented below (in thousands, except per share amounts):
|  | Shares |  | Weighted Average Fair Value
March 27, 2021 |  | 133 |  |  | $ | 73.29 |
Granted |  | 28 |  |  | 109.18 |
Vested |  | (30) |  |  | 50.11 |
Forfeited |  | (46) |  |  | 38.70 |
March 26, 2022 |  | 85 |  |  | $ | 95.75 |
Granted |  | 38 |  |  | 135.87 |
Vested |  | (10) |  |  | 87.43 |
Forfeited |  | (24) |  |  | 94.80 |
March 25, 2023 |  | 89 |  |  | $ | 113.83 |
Granted |  | 35 |  |  | 141.48 |
Vested |  | (9) |  |  | 83.96 |
Forfeited |  | (14) |  |  | 83.96 |
March 30, 2024 |  | 101 |  |  | $ | 130.46 |
The aggregate intrinsic value of MSUs outstanding as of March 30, 2024, March 25, 2023, and March 26, 2022 was $9.4 million, $9.3 million, and $7.5 million, respectively. Additional information with regard to outstanding MSUs that are expected to vest as of March 30, 2024 is as follows (in thousands, except year and per share amounts):
|  | Shares |  | Weighted Average Fair Value |  | Weighted Average Remaining Contractual Term (years)
Expected to vest |  | 94 |  |  | $ | 130.04 |  |  | 1.89
MSUs with a fair value of $0.8 million, $0.8 million, and $1.5 million became vested during fiscal year 2024, 2023, and 2022 respectively.

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