Stockholders' Equity (Notes) | 6 Months Ended |
Jun. 28, 2014 |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity | ' |
Stockholders’ Equity |
Equity Incentive Plans |
The Company maintains three equity incentive plans, the 2000 Stock Plan, the 2002 Stock Plan and the 2010 Equity Incentive Award Plan (together, the “Plans”). These plans were approved by the stockholders and are described in the Company’s Form 10-K filed with the SEC on February 20, 2014. The Company also maintains a Long Term Incentive Program, under the 2010 Equity Incentive Award Plan. Under the Long Term Incentive Program, certain key employees of the Company are eligible for equity awards based on the Company’s stock price performance. To date, awards granted under the Plans consist of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), and performance restricted stock units ("PRSUs"). |
Stock Options |
During the three months ended June 28, 2014, the Company did not grant stock options. During the six months ended June 28, 2014, the Company granted 551,000 stock options at a weighted-average grant date fair value of $4.43 per share. During the three months ended June 28, 2014, 23,916 stock options were exercised at a weighted-average exercise price of $4.94 per share. During the six months ended June 28, 2014, 28,811 stock options were exercised at a weighted-average exercise price of $4.83 per share. As of June 28, 2014, unrecognized stock-based compensation expense of $6.8 million related to stock options, net of estimated forfeitures, was expected to be recognized over a weighted-average period of 2.5 years. |
Restricted Stock Units |
During the three months ended June 28, 2014, 663,696 RSUs were granted with a weighted-average grant date fair value of $8.77 per share. During the six months ended June 28, 2014, 679,396 RSUs were granted with a weighted-average grant date fair value of $8.76 per share. During the three months ended June 28, 2014, 223,615 RSUs vested, net of shares withheld at the then-current value equivalent to the employees' minimum statutory obligation for applicable income and other employment taxes, and were converted to an equivalent number of shares of common stock. Taxes withheld from employees of $0.7 million were remitted to the relevant taxing authorities during the three months ended June 28, 2014. During the six months ended June 28, 2014, 225,751 RSUs vested, net of shares withheld at the then-current value equivalent to the employees' minimum statutory obligation for applicable income and other employment taxes, and were converted to an equivalent number of shares of common stock. Taxes withheld from employees of $0.7 million were remitted to the relevant taxing authorities during the six months ended June 28, 2014. As of June 28, 2014, unrecognized stock-based compensation expense of $12.1 million related to RSUs, net of estimated forfeitures, was expected to be recognized over a weighted-average period of 2.3 years. |
Performance Restricted Stock Units |
In 2012, the Company commenced granting PRSUs to its executives with two-year and three-year performance periods. The performance criterion is based on the relative total shareholder return (“TSR”) of Calix common stock as compared to the TSR of the Company’s peer group. The TSR is calculated by dividing (a) the average closing trading price for the 90-day period ending on the last day of the applicable performance period by (b) the average closing trading price for the 90-day period immediately preceding the first day of the applicable performance period. This TSR is then used to derive the achievement ratio, which is then multiplied by the number of units in the grant to derive the common stock to be issued for each performance period, which may equal from zero percent (0%) to two hundred percent (200%) of the target award. |
During the three months ended June 28, 2014, no PRSUs were granted. During the six months ended June 28, 2014, the Company granted 144,000 PRSUs with a weighted-average grant date fair value of $8.00 per unit. During the three months ended June 28, 2014, 4,681 PRSUs, net of shares withheld at the then-current value equivalent to the employees' minimum statutory obligation for applicable income and other employment taxes, were converted to an equivalent number of shares of common stock. Taxes withheld from employees of $23 thousand were remitted to the relevant taxing authorities during the three months ended June 28, 2014. During the six months ended June 28, 2014, 94,249 PRSUs, net of shares withheld at the then-current value equivalent to the employees' minimum statutory obligation for applicable income and other employment taxes, were converted to an equivalent number of shares of common stock. Taxes withheld from employees of $0.5 million were remitted to the relevant taxing authorities during the six months ended June 28, 2014. As of June 28, 2014, unrecognized stock-based compensation expense of $1.9 million related to PRSUs, net of estimated forfeitures, was expected to be recognized over a weighted-average period of 1.4 years. |
Restricted Stock Awards |
During the three and six months ended June 28, 2014, no RSAs were granted. Upon the vesting of RSAs during the three and six months ended June 28, 2014, taxes withheld from employees of $0.1 million were remitted to the relevant taxing authorities. As of June 28, 2014, unrecognized stock-based compensation expense of $1.6 million related to RSAs, net of estimated forfeitures, was expected to be recognized over a weighted-average period of 1.1 years. |
Employee Stock Purchase Plan |
The Company’s Amended and Restated Employee Stock Purchase Plan (“ESPP”) allows employees to purchase shares of the Company’s common stock through payroll deductions of up to 15 percent of their annual compensation subject to certain Internal Revenue Code limitations. In addition, no participant may purchase more than 2,000 shares of common stock in each offering period. |
The offering periods under the ESPP are six-month periods commencing on June 1 and December 1 of each year. The price of common stock purchased under the plan is 85 percent of the lower of the fair market value of the common stock on the commencement date and exercise date of each six-month offering period. As of June 28, 2014, there were 2,220,221 shares available for issuance under the ESPP. |
During the three and six months ended June 28, 2014, 353,594 shares were purchased under the ESPP. As of June 28, 2014, unrecognized stock-based compensation expense of $0.6 million related to the ESPP was expected to be recognized over a remaining service period of 5 months. |
Stock-Based Compensation Expense |
In accordance with ASC Topic 718, Compensation - Stock Compensation, ("ASC Topic 718"), stock-based compensation expense associated with stock options, RSUs, PRSUs, RSAs, and purchase rights under the ESPP is measured at the grant date based on the fair value of the award, and is recognized, net of forfeitures, as expense over the remaining requisite service period on a straight-line basis. |
The Company values RSUs and RSAs at the closing market price of the Company’s common stock on the date of grant. |
The fair value of PRSUs with a market condition is estimated on the date of award, using a Monte Carlo simulation model to estimate the TSR of the Company's stock in relation to the peer group over each performance period. Compensation cost on PRSUs with a market condition is not adjusted for subsequent changes in the Company's stock performance or the level of ultimate vesting. |
The Company estimates the fair value of stock options at the grant date using the Black-Scholes option-pricing model. This model requires the use of the following assumptions: |
(i) Expected volatility of the Company's common stock - Starting in the fourth quarter of 2012, the Company computes its expected volatility assumption based on a blended volatility (50% historical volatility and 50% implied volatility from traded options on the Company's common stock). The selection of a blended volatility assumption was based upon the Company's assessment that a blended volatility is more representative of the Company's future stock price trend as it weighs the historical volatility with the future implied volatility. Prior to the fourth quarter of 2012, due to the lack of a sufficient history of the Company's stock prices, the Company’s computation of expected volatility was based on the Company’s peer group in the industry in which the Company does business. |
(ii) Expected life of the option award - Represents the weighted-average period that the stock options are expected to remain outstanding. The Company’s computation of expected life utilizes the simplified method in accordance with Staff Accounting Bulletin No. 110 ("SAB 110") due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The mid-point between the vesting date and the expiration date is used as the expected term under this method. |
(iii) Expected dividend yield - Assumption is based on the Company's history of not paying dividends and no future expectations of dividend payouts. |
(iv) Risk-free interest rate - Based on the U.S. Treasury yield curve in effect at the time of grant with maturities approximating the grant’s expected life. |
The following table summarizes the weighted-average assumptions used in estimating the grant-date fair value of stock options in the periods indicated: |
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| | Three Months Ended | | Six Months Ended |
| | June 28, | | June 29, | | June 28, | | June 29, |
2014 | 2013 | 2014 | 2013 |
Expected volatility | | N/A | | N/A | | 54% | | 62% |
Expected life (years) | | N/A | | N/A | | 6.15 | | 6.05 |
Expected dividend yield | | N/A | | N/A | | — | | — |
Risk-free interest rate | | N/A | | N/A | | 1.91% | | 1.12% |
Modification of Stock Awards |
In February 2013, the Company entered into a Transition and Separation Agreement ("Agreement") with Roger Weingarth, the Company's former Executive Vice President and Chief Operating Officer. Under the Agreement, Mr. Weingarth transitioned to the role of advisor to the Chief Executive Officer of the Company effective as of April 1, 2013, and terminated his employment with the Company on March 31, 2014 ("Termination Date"). Upon his termination, the Agreement provided for, among other things, the acceleration of the vesting of his unvested stock options, RSAs and RSUs held by him as of the Termination Date. |
In accordance with ASC Topic 718, total fair value of the accelerated stock awards after the modification was $0.6 million, which was recognized on a straight-line basis over the remaining service period through the Termination Date. During the three and six months ended June 28, 2014, $0.1 million of the total fair value has been recognized in general and administrative expenses. |