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Stock-Based Compensation | 12 Months Ended
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Jun. 29, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Note 16. Stock-Based Compensation Stock-Based Benefit Plans Stock Award Plans The Company’s Amended and Restated 2003 Plan provides for the granting of stock options, stock appreciation rights (SARs), dividend equivalent rights, restricted stocks, restricted stock units, performance units and performance shares, the vesting of which may be time-based or upon satisfaction of performance criteria or other conditions. As of June 29, 2024, the Company had 9.1 million shares subject to Full Value Awards (defined below) issued and outstanding and 13.1 million shares of common stock available for grant under the Amended and Restated 2003 Plan. Employee Stock Purchase Plans The Company’s ESPP provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions and provides a discounted purchase price as well as a look-back period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986. As of June 29, 2024, 6.8 million shares remained available for issuance. The ESPP as amended provides for a 15% discount with a look-back period of six months. Full Value Awards The Company's stock-based compensation includes a combination of time-based RSUs and performance- based MSUs and PSUs. RSUs are granted without an exercise price and are converted to shares immediately upon vesting. When converted into shares upon vesting, shares equivalent in value to the minimum withholding taxes liability on the vested shares are withheld by the Company for the payment of such taxes. For performance-based awards, shares attained over target upon vesting are reflected as awards granted during the period. Time-based RSU awards will generally vest in annual installments over a period of three to four years subject to the employees’ continuing service to the Company. The Company's performance-based MSU and PSU awards may include performance conditions, market conditions, time-based service conditions or a combination thereof and are generally expected to vest over one to four years. In addition, the actual number of shares awarded upon vesting of performance-based grants may vary from the target shares depending upon the achievement of the relevant performance or market-based conditions. Stock-Based Compensation The impact on the Company’s results of operations of recording stock-based compensation expense by function for fiscal 2024, 2023 and 2022 was as follows (in millions):
| Years Ended
| June 29, 2024 |  | July 1, 2023 |  | July 2, 2022
Cost of revenue | $ | 4.9 |  |  | $ | 4.8 |  |  | $ | 5.2 |
Research and development | 8.7 |  |  | 8.6 |  |  | 8.6 |
Selling, general and administrative | 35.8 |  |  | 37.8 |  |  | 38.5 |
Total stock-based compensation expense | $ | 49.4 |  |  | $ | 51.2 |  |  | $ | 52.3 |
Approximately $1.2 million of stock-based compensation expense was capitalized to inventory at June 29, 2024 and July 1, 2023. Stock Option Activity During fiscal 2024, 1.2 million of stock options were exercised all of which have been fully amortized and recognized since before June 29, 2019. There were no stock options outstanding as of June 29, 2024. Employee Stock Purchase Plan Activity The expense related to the ESPP is recorded on a straight-line basis over the relevant subscription period. During fiscal 2024, the Company issued shares of 400,381 and 324,219 on January 31, 2024 and July 31, 2023, respectively, as part of the ESPP. As of June 29, 2024, there was $0.2 million of unrecognized stock-based compensation cost related to the ESPP that remains to be amortized. The cost will be recognized in the first quarter of fiscal 2025. Full Value Awards Activity A summary of the status of the Company’s non-vested Full Value Awards as of June 29, 2024 and changes during fiscal years 2022, 2023 and 2024 are presented below (in millions, except Weighted-Average Grant Date Fair Value per share amounts):
| Full Value Awards
| Performance Shares(1) |  | Non-Performance Shares |  | Total Number of Shares |  | Weighted-Average Grant Date Fair Value Per Share |  |
Non-vested July 3, 2021 | 1.5 |  |  | 4.8 |  |  | 6.3 |  |  | $ | 13.98 |  |  |
Awards granted | 0.4 |  |  | 2.4 |  |  | 2.8 |  |  | $ | 16.95 |  |  |
Awards vested | (0.4) |  |  | (2.2) |  |  | (2.6) |  |  | $ | 13.38 |  |  |
Awards forfeited | (0.1) |  |  | (0.2) |  |  | (0.3) |  |  | $ | 14.64 |  |  |
Non-vested July 2, 2022 | 1.4 |  |  | 4.8 |  |  | 6.2 |  |  | $ | 15.55 |  |  |
Awards granted | 0.9 |  |  | 3.1 |  |  | 4.0 |  |  | $ | 14.35 |  |  |
Awards vested | (0.6) |  |  | (1.8) |  |  | (2.4) |  |  | $ | 15.23 |  |  |
Awards forfeited | — |  |  | (0.3) |  |  | (0.3) |  |  | $ | 14.78 |  |  |
Non-vested July 1, 2023 | 1.7 |  |  | 5.8 |  |  | 7.5 |  |  | $ | 15.06 |  |  |
Awards granted | 1.2 |  |  | 3.6 |  |  | 4.8 |  |  | $ | 10.28 |  |  |
Awards vested | (0.5) |  |  | (2.2) |  |  | (2.7) |  |  | $ | 14.96 |  |  |
Awards forfeited | (0.2) |  |  | (0.3) |  |  | (0.5) |  |  | $ | 15.55 |  |  |
Non-vested June 29, 2024 | 2.2 |  |  | 6.9 |  |  | 9.1 |  |  | $ | 12.51 |  |  |
(1) Performance Shares refer to the Company’s MSU and PSU awards, where the actual number of shares awarded upon vesting may be higher or lower than the target amount depending on the achievement of the relevant market conditions and performance goal achievement. The majority of MSUs vest in equal annual installments over three to four years based on the attainment of certain total shareholder performance measures and the employee’s continued service through the vest date. The aggregate grant-date fair value of MSUs granted during fiscal 2024, 2023 and 2022 was estimated to be $13.4 million, $11.4 million and $7.9 million, respectively, and was calculated using a Monte Carlo simulation. The Company did not grant any PSU awards in fiscal 2024, 2023 and 2022. PSU awards vest based on the attainment of certain performance measures and the employee’s continued service through the vest date. As of June 29, 2024, $54.9 million of unrecognized stock-based compensation cost related to Full Value Awards remains to be amortized. That cost is expected to be recognized over the remaining amortization period of 1.5 years. Valuation Assumptions The Company estimates the fair value of time-based RSU awards based on the closing market price of the Company’s common stock on the date of grant. In the case of PSUs that are performance-based awards without a market condition, the Company will estimate the fair value of the awards using a probability weighted model. In the case of MSUs or PSUs, that are performance-based awards and include a market condition, the Company will estimate the fair value of the awards using a combination of the closing market price of the Company’s common stock on the grant date and the Monte Carlo simulation model.The weighted-average assumptions used to measure fair value of performance-based awards with a market condition were as follows:
| Years Ended
| June 29, 2024 |  | July 1, 2023 |  | July 2, 2022
Volatility of common stock | 34.8 | % |  | 31.2 | % |  | 33.8 | %
Average volatility of peer companies | 65.8 | % |  | 62.1 | % |  | 58.7 | %
Average correlation coefficient of peer companies | 0.2305 |  |  | 0.3111 |  |  | 0.3442 |
Risk-free interest rate | 4.9 | % |  | 3.4 | % |  | 0.2 | %
The Company did not issue stock option grants during the fiscal years ended June 29, 2024, July 1, 2023 and July 2, 2022. The Company estimates the fair value ESPP purchase rights using a BSM valuation model. The fair value is estimated on the date of grant using the BSM option valuation model with the following weighted-average assumptions:
|  |  | Employee Stock Purchase Plans
|  |  | June 29, 2024 |  | July 1, 2023 |  | July 2, 2022
Expected term (in years) |  |  | 0.5 |  | 0.5 |  | 0.5
Expected volatility |  |  | 29.8 | % |  | 37.2 | % |  | 24.3 | %
Risk-free interest rate |  |  | 5.3 | % |  | 3.8 | % |  | 0.3 | %
Expected Term: The Company’s purchase right period is six months under the ESPP. Expected Volatility: The expected volatility for ESPP purchase rights was based on the historical volatility of its stock price with a similar expected term. Risk-Free Interest Rate: The Company bases the risk-free interest rate used in the BSM valuation method on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Expected Dividend: The BSM valuation model calls for a single expected dividend yield as an input. The Company has not paid and does not anticipate paying any dividends in the near future.

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