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Common Shares and Share-Based Compensation | 3 Months Ended
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Apr. 03, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Common Shares and Share-Based Compensation | 12. Common Shares and Share-Based Compensation Common Share Repurchases In October 2018, the Company’s Board of Directors approved a share repurchase plan (the “2018 Repurchase Plan”) authorizing the repurchase of $25.0 million worth of the Company’s common shares. During the three months ended April 3, 2020, the Company repurchased 65 thousand shares for an aggregate purchase price of $5.5 million at an average price of $84.55 per share under the 2018 Repurchase Plan. In February 2020, the Company’s Board of Directors approved a new share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of an additional $50.0 million worth of common shares. As of April 3, 2020, the Company had $59.5 million under the 2018 and 2020 share repurchase plans available for future share repurchases. In an effort to preserve cash in light of the economic slowdown caused by the COVID-19 pandemic, the Company has temporarily suspended repurchases under the share repurchase plans. Share-Based Compensation Expense The table below summarizes share-based compensation expense recorded in the consolidated statements of operations (in thousands):
| Three Months Ended |
| April 3, |  |  | March 29, |
| 2020 |  |  | 2019 |
Selling, general and administrative | $ | 2,798 |  |  | $ | 2,531 |
Research and development and engineering |  | 193 |  |  |  | 111 |
Cost of revenue |  | 208 |  |  |  | 85 |
Total share-based compensation expense | $ | 3,199 |  |  | $ | 2,727 |
Share-based compensation reported in selling, general and administrative expenses included expenses related to restricted stock units and deferred stock units granted to the members of the Company’s Board of Directors of $0.9 million and $0.8 million during the three months ended April 3, 2020 and March 29, 2019, respectively. Restricted Stock Units and Deferred Stock Units The Company’s restricted stock units (“RSUs”) have generally been issued with vesting periods ranging from zero to five years and vest based solely on service conditions. Accordingly, the Company recognizes compensation expense on a straight-line basis over the requisite service period. The Company reduces the compensation expense by an estimated forfeiture rate which is based on anticipated forfeitures and historical forfeiture experience. Deferred stock units (“DSUs”) are granted to the members of the Company’s Board of Directors. Compensation expense associated with the DSUs is recognized in full on the date of grant, as the DSUs are fully vested and non-forfeitable upon grant. There were 192 thousand and 187 thousand DSUs outstanding as of April 3, 2020 and December 31, 2019, respectively, which were included in the calculation of weighted average basic shares outstanding for the respective periods. The table below summarizes activities relating to RSUs and DSUs issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended April 3, 2020:
| Shares (In thousands) |  |  | Weighted Average Grant Date Fair Value |
Unvested at December 31, 2019 |  | 453 |  |  | $ | 39.74 |
Granted |  | 96 |  |  | $ | 95.58 |
Vested |  | (94 | ) |  | $ | 51.42 |
Forfeited |  | — |  |  | $ | — |
Unvested at April 3, 2020 |  | 455 |  |  | $ | 49.39 |
Expected to vest as of April 3, 2020 |  | 425 |  |  |  |  |
The total fair value of RSUs and DSUs that vested during the three months ended April 3, 2020 was $9.0 million based on the market price of the underlying shares on the date of vesting. Performance Stock Units The Company granted two types of performance-based stock awards to certain members of the executive management team: non-GAAP EPS performance-based restricted stock units (“EPS-PSUs”) and relative total shareholder return performance-based restricted stock units (“TSR-PSUs”). Both types of performance-based restricted stock units generally cliff vest on the first day following the end of the three-year performance period. The number of common shares to be issued upon settlement following vesting of the EPS-PSUs is determined based on the Company’s cumulative non-GAAP EPS over a three-year performance period against the performance targets established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes compensation expense ratably over the performance period based on the number of shares that are deemed probable of vesting at the end of the three-year performance cycle. This probability assessment is performed quarterly and the cumulative effect of a change in the estimated compensation expense, if any, is recognized in the consolidated statement of operations in the period in which such determination is made. The number of shares to be issued upon settlement following vesting of the TSR-PSUs is determined based on the relative market performance of the Company’s common shares compared to the Russell 2000 Index over a three-year performance period using a payout formula established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes the related compensation expense based on the fair value of the TSR-PSUs, determined using the Monte Carlo valuation model as of the grant date, on a straight-line basis from the grant date to the end of the three-year performance period. Compensation expense will not be affected by the number of TSR-PSUs that will actually vest at the end of the three-year performance period. The table below summarizes the activities relating to the performance-based awards issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended April 3, 2020:
| Shares (In thousands) |  |  | Weighted Average Grant Date Fair Value |
Unvested at December 31, 2019 |  | 152 |  |  | $ | 57.09 |
Granted |  | 50 |  |  | $ | 111.47 |
Performance adjustment (1) |  | 60 |  |  | $ | 28.80 |
Vested |  | (120 | ) |  | $ | 28.80 |
Unvested at April 3, 2020 |  | 142 |  |  | $ | 89.05 |
Expected to vest as of April 3, 2020 |  | 173 |  |  |  |  |
| (1) | The amount shown represents performance adjustment for performance-based awards granted on February 28, 2017. These units vested at 200% during the three months ended April 3, 2020 based on the achievement of cumulative Non-GAAP EPS and applicable relative TSR performance conditions during the performance period of fiscal years 2017 through 2019. |
The total fair value of PSUs that vested during the three months ended April 3, 2020 was $10.8 million based on the market price of the underlying shares on the date of vesting. The fair value of the TSR-PSUs at the date of grant was estimated using the Monte Carlo valuation model with the following assumptions:
| Three Months Ended April 3, 2020 |
Grant-date stock price | $ | 96.28 |
Expected volatility |  | 34.25 | %
Risk-free interest rate |  | 1.35 | %
Expected annual dividend yield |  | — |
Fair value | $ | 126.65 |
Stock Options The total intrinsic value of stock options exercised during the three months ended April 3, 2020, based on the difference between market price on the date of exercise and the date of grant, was $1.0 million. The total amount of cash received from the exercise of these stock options was $0.2 million. There were 60 thousand fully-vested stock options outstanding as of April 3, 2020. No stock options were granted during the three months ended April 3, 2020.

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