Note 15. Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the estimated fair values on the date of the grant. Stock options generally vest ratably over three years from the date of grant, subject to the recipient’s continued service over such period, and expire 10 years from the date of grant. RSUs generally vest ratably over three years from the date of grant, subject to the recipient’s continued service over such period, and contain no other service or performance conditions. PSUs vest at the end of a three-year period based on the achievement of certain Company performance metrics and the recipient’s continued service over such period. The Company’s policy is to recognize stock-based compensation expense on a straight-line basis over the requisite service or vesting period. For awards that are contingent upon performance metrics, the probability of achievement is taken into account in the calculation of the expense to be recognized and modified as needed. Forfeitures for stock options and restricted stock awards, including RSUs and PSUs, are recognized as they occur.

Stock Option Activity

The fair value of stock options vested during the 13-week periods ended June 29, 2025 and June 30, 2024 was $26 and $240, respectively. The fair value of stock options vested during the 26-week periods ended June 29, 2025 and June 30, 2024 was $967 and $1,900, respectively. As of June 29, 2025, total unrecognized stock-based compensation expense related to unvested stock options was $543, which is expected to be recognized over a weighted-average period of 0.72 years.

Restricted Stock Unit Activity

The fair value of RSU shares vested during the 13-week periods ended June 29, 2025 and June 30, 2024 was $822 and $677, respectively. The fair value of RSU shares vested during the 26-week periods ended June 29, 2025 and June 30, 2024 was $5,505 and $3,580, respectively. As of June 29, 2025, total unrecognized stock-based compensation expense related to the Company’s unvested RSU activity was $13,909, which is expected to be recognized over a weighted-average period of 2.17 years.

Performance Stock Unit Activity

In fiscal 2024 and 2025, the Company granted PSUs to certain of its officers and employees. These PSUs vest at the end of a three-year period based upon the level of achievement of certain Company performance metrics and the recipient’s continued service over such period. The number of shares that can be earned will range from 0% to 200% of the granted PSUs, based upon the Company’s level of achievement of the stated performance metrics. The number of PSUs expected to vest and for which compensation cost has been recognized is based on the number of awards that the Company believes are probable to vest as of June 29, 2025.

The fair value of PSU shares vested during the 13-week and 26-week periods ended June 29, 2025 and June 30, 2024 was $0, as no shares have vested as of such periods. As of June 29, 2025, total unrecognized stock-based compensation expense related to the Company’s unvested PSU activity was $9,487, which is expected to be recognized over a weighted-average period of 2.09 years.

2020 Equity Incentive Plan: In July 2020, the Board of Directors adopted the 2020 Incentive Plan, which was subsequently approved by the Company’s stockholders and became effective on July 30, 2020. Initially, the maximum number of the Company’s common stock that may be issued under the 2020 Incentive Plan was 8,595,871 shares. The 2020 Incentive Plan provides that the number of shares reserved and available for issuance under the 2020 Incentive Plan will automatically increase each January 1, beginning on January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to 4% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Board of Directors. As of June 29, 2025, 13,906,801 shares were available for future grants of the Company’s common stock, which includes 1,761,694 shares of common stock that were automatically added to the available reserve on January 1, 2025.

Employee Stock Purchase Plan: In July 2020, the Board of Directors adopted the 2020 ESPP, which was subsequently approved by the Company’s stockholders and became effective on July 30, 2020. The 2020 ESPP authorizes the initial issuance of up to 900,000 shares of the Company’s common stock to certain eligible employees or, as designated by the Board of Directors, employees of a related company. The 2020 ESPP provides that the number of shares reserved and available for issuance under the 2020 ESPP will automatically increase each January 1, beginning on January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to the lesser of (i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) 900,000, or such lesser number of shares as determined by the Board of Directors. As of June 29, 2025, 2,875,728 shares of the Company’s common stock were available for future issuance under the 2020 ESPP, which includes 440,423 shares of common stock that were automatically added to the available reserve on January 1, 2025. The Board of Directors authorizes six-month offering periods, with the most recent beginning on May 16, 2025.