Preferred Stock and Stockholders’ Equity | Preferred Stock and Stockholders’ Equity Preferred Stock The Company has authorized 20,000,000 shares of undesignated preferred stock, $0.0001 par value per share. As of December 31, 2016 and December 26, 2015 , the Company had no shares of preferred stock issued or outstanding. Common Stock The Company has authorized 1,000,000,000 shares of common stock, $0.0001 par value per share. Each holder of common stock is entitled to one vote for each share of common stock held. Cumulative voting for the election of directors is not provided in the Company’s amended and restated certificate of incorporation. The Company’s common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of funds legally available if the Board of Directors ("the Board"), in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board may determine. As of December 31, 2016 and December 26, 2015 , the Company had 36,303,219 and 34,323,457 shares of common stock issued and outstanding, respectively. Treasury Stock As of December 26, 2015 , the Company had 8,109,848 shares of treasury stock outstanding, with a carrying value of $12.5 million , or $1.53 per share, within stockholders’ equity on its consolidated balance sheet. The treasury stock was repurchased in fiscal 2010 pursuant to a purchase and redemption agreement. During the fiscal year ended December 31, 2016 , the Board authorized the retirement of the treasury stock. Equity Award Plans 2013 Equity Incentive Plan In May 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Equity Plan”). All authorized but unissued shares of the Company’s Option Plan were added to the 2013 Equity Plan’s authorized pool in June 2013. The Company is authorized to issue up to a maximum of 2,929,481 shares of common stock for future issuance, plus up to an additional 4,967,172 shares upon termination of awards under the Option Plan. In addition, the 2013 Equity Plan is subject to increase annually on the first day of each of the Company’s fiscal years beginning with fiscal 2014, by an amount equal to the least of (i) 1,464,740 shares, (ii) 5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as determined by the Board. Vested but unexercised options, under the 2013 Equity Plan, expire three months after termination of service with the Company. As of December 31, 2016 , outstanding awards under the 2013 Equity Plan and the Option Plan covered 3,472,235 shares and 388,429 shares of the Company's common stock, respectively. The 2013 Equity Plan permits the granting of stock options, stock appreciation rights, restricted stock, RSUs, performance units and performance shares to employees, directors and consultants of the Company. Employee Stock Purchase Plan In conjunction with the completion of its initial public offering in June 2013 (the "IPO"), the Company adopted the 2013 Employee Stock Purchase Plan (the “ESPP”). A maximum of 439,422 shares were initially authorized for future issuance and the number of authorized shares under the ESPP is subject to increase on an annual basis. In the twelve months ended December 26, 2015 and December 27, 2014, the Board authorized an additional 439,422 shares of common stock for future issuance under the ESPP. Eligible employees can purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. Employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock (i) at the date of commencement of the offering period or (ii) at the last day of the purchase period. The ESPP provides for a 24 -month offering period comprised of four purchase periods of approximately six months . The offering periods are scheduled to start on the first trading day on or after February 15 and August 15 of each year, except for the first offering period, which commenced on the first trading day upon the completion of the Company’s IPO, or June 12, 2013, and ended on August 17, 2015. In fiscal 2016 , 2015 , and 2014 , the Company recorded stock-based compensation expense of $4.1 million , $2.7 million and $4.2 million , respectively for its ESPP. During fiscal 2016 there were two purchase periods that resulted in the issuance of 586,132 shares of common stock at a weighted average purchase price of $11.75 per share. Stock Options Stock options granted under the 2013 Equity Plan and formerly under the 2012 Plan (together, the “Option Plans”), are generally subject to a four -year vesting period whereby stock options become 25% vested on the first anniversary of the grant date and then ratably monthly thereafter through the end of the vesting period. Vested stock options may be exercised up to ten years from the vesting commencement date. Under the 2012 Plan, vested but unexercised stock options expire 30 days after termination of service with the Company. Under the 2013 Equity Plan, vested but unexercised stock options expire three months after termination of service with the Company. The following table summarizes the stock option activity related to shares of common stock under the Company's Option Plans. Number of Stock Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance — December 28, 2013 3,367,637 $ 9.77 8.78 $ 62,725 Options granted 646,444 $ 20.21 Options exercised (790,147 ) $ 6.73 Options canceled (843,966 ) $ 11.75 Balance — December 27, 2014 2,379,968 $ 12.91 7.50 $ 14,368 Options granted 408,000 $ 21.44 Options exercised (523,398 ) $ 8.42 Options canceled (93,850 ) $ 9.76 Balance — December 26, 2015 2,170,720 $ 15.73 7.14 $ 24,910 Options granted 170,000 $ 46.62 Options exercised (904,939 ) $ 12.92 Options canceled (44,610 ) $ 20.25 Balance — December 31, 2016 1,391,171 $ 21.19 6.39 $ 35,076 Vested and expected to vest — December 27, 2014 2,230,425 $ 12.71 8.17 $ 13,754 Exercisable — December 27, 2014 936,061 $ 9.71 7.85 $ 7,643 Vested and expected to vest — December 26, 2015 2,066,613 $ 15.55 7.14 $ 24,088 Exercisable — December 26, 2015 1,114,119 $ 13.23 7.20 $ 15,536 Vested and expected to vest — December 31, 2016 1,328,319 $ 20.66 6.40 $ 34,036 Exercisable — December 31, 2016 804,475 $ 16.58 6.44 $ 23,306 Aggregate intrinsic value represents the difference between the exercise price of the awards and the Company’s fair value per share of $45.55 , $26.82 and $17.47 as of December 31, 2016 , December 26, 2015 and December 27, 2014 , respectively, for the total number of underlying options. During fiscal 2016, the Company accelerated the vesting of 16,059 shares of common stock pursuant to outstanding stock options and 8,582 RSUs, of certain employees, pursuant to the terms of their severance agreements. This accelerated vesting resulted in an expense reversal of $0.4 million during the fiscal year 2016 as the expenses associated with the vested options and RSUs on the date of modification were lower than the previously recognized stock-based compensation expense. During fiscal 2016, the Company entered into a consulting and transition agreement with a departing executive. Pursuant to the agreement the executive continues to vest in such executive's stock options and RSU’s as a consultant until the termination of the agreement. The terms of the consulting and transition agreement resulted in an expense of $0.8 million in fiscal 2016. During fiscal 2014, the Company accelerated the vesting of 31,211 shares of common stock pursuant to outstanding stock options and 9,347 RSUs, of certain employees, pursuant to the terms of their severance agreements. This accelerated vesting resulted in a net expense reversal of $0.4 million during the fiscal year since the fair value of the accelerated options and RSUs on the date of modification was lower than the previously recognized stock-based compensation expense. During fiscal 2014, the Company entered into a consulting agreement with a departing executive. Pursuant to the agreement the executive continued to vest stock options and RSUs as a consultant until the termination of the agreement. The terms of the consulting agreement resulted in a net expense reversal of $0.3 million since the total compensation cost previously recognized exceeded the fair market value of the stock options and RSU’s expected to vest as a result of the consulting agreement. During fiscal 2014, the Company modified certain stock option grants covering 10,666 shares of common stock to restrict these options to cash settlement upon future exercises, for which these stock options are marked-to-market as of each balance sheet date until their settlement dates. Stock-based compensation recognized in connection with these modified stock options was immaterial in fiscal 2014. Additional information regarding the Company’s outstanding stock options and vested and exercisable stock options is summarized below: As of December 31, 2016 Options Outstanding Options Vested and Exercisable Exercise Prices Number of Stock Options Outstanding Weighted- Average Remaining Contractual Life (Years) Weighted- Average Exercise Price per Share Shares Subject to Stock Options Weighted- Average Exercise Price per Share $0.00 - $12.42 304,000 6.81 $ 9.80 167,960 $ 9.24 $13.11 - $17.57 370,760 6.76 $ 15.45 311,750 $ 15.27 $19.00 - $19.00 25,492 6.42 $ 19.00 16,895 $ 19.00 $21.44 - $21.44 328,167 6.13 $ 21.44 122,332 $ 21.44 $29.36 - $57.45 362,752 5.13 $ 37.89 135,381 $ 30.16 1,391,171 6.39 $ 21.19 804,475 $ 16.58 Restricted Stock Unit Activity RSUs generally vest over a period of one to four years. RSUs vest on the vesting dates determined by the Company. The vesting is subject to the employee’s continuing service with the Company over that period. Until vested, RSUs do not have the voting or dividend participation rights of the Company’s common stock and the shares of the Company’s common stock underlying the awards are not considered issued and outstanding. The cost of RSUs is determined using the fair value of the Company’s common stock on the date of the grant. The following table summarizes the RSU activity under the Company’s Option Plans: Number of RSUs Outstanding Weighted- Average Grant Date Fair Value Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance - December 28, 2013 840,949 $ 21.00 1.40 23,790 RSUs granted 1,668,228 $ 19.58 RSUs vested (397,239 ) $ 21.18 RSUs canceled (378,713 ) $ 24.64 Balance - December 27, 2014 1,733,225 $ 18.79 1.27 30,245 RSUs granted 1,364,465 $ 23.40 RSUs vested (1,010,609 ) $ 17.27 RSUs canceled (307,742 ) $ 21.90 Balance - December 26, 2015 1,779,339 $ 22.64 1.53 $ 47,722 RSUs granted 1,711,497 $ 28.75 RSUs vested (783,152 ) $ 22.86 RSUs canceled (241,635 ) $ 24.23 Balance - December 31, 2016 2,466,049 $ 26.66 1.39 $ 112,329 Vested and expected to vest — December 27, 2014 1,521,264 $ 18.66 1.18 $ 26,580 Vested and expected to vest — December 26, 2015 1,510,440 $ 22.53 1.43 $ 40,510 Vested and expected to vest — December 31, 2016 2,125,762 $ 26.41 1.30 $ 96,828 Aggregate intrinsic value for RSUs represents the Company’s fair market value per share of $45.55 , $26.82 , and $17.47 as of December 31, 2016 , December 26, 2015 and December 27, 2014 , respectively, for the total number of underlying RSUs. Performance-Based Awards During the fiscal year ended December 31, 2016 , the Company awarded 193,000 shares of performance-based RSUs, or PSUs (Performance Stock Units). The vesting conditions of these awards were tied to the Company's fiscal 2016 revenue and operating income performance. These RSUs can vest from 0% to 200% of the target grant, based on attainment of the performance goals. The target achievement percentage as of December 31, 2016 was 149% . For the fiscal year ended December 31, 2016 , the Company has recorded $3.2 million on a graded-vesting basis, in stock-based compensation expense related to these PSU awards. Stock-Based Compensation Expense The fair value of stock options is estimated on the grant date using the Black-Scholes option-pricing model. It is based on the “simplified method” for developing the estimate of the expected life of a “plain vanilla” stock option. Under this approach, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term of the option. The risk-free interest rate for the period covering the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility was determined based on historical volatility of the Company's common stock and the expected life of the options since the Company has sufficient public trading history of its common stock. The dividend yield assumption is based on the Company’s historical dividend payouts. The Company uses the graded vesting method for expense attribution. The fair value of the option awards and ESPP purchase rights granted and the assumptions used in the Black-Scholes option pricing model are summarized as follows: Fiscal Year Ended December 31, December 26, December 27, Stock option awards: Expected term (in years) 4.6 4.6 5.27 - 6.08 Risk-free interest rate 1.4%-1.67% 1.6% 1.69% - 1.90% Expected volatility 61.7% -76.1% 56.04% 58.9% - 61.9% Expected dividend rate —% —% —% Grant date fair value per award $18.62-29.31 10.11 $5.94 - $17.67 ESPP purchase right: Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Risk-free interest rate 0.42% - 0.74% 0.07% - 0.72% 0.05% - 0.42% Expected volatility 43.9% - 67.2% 37.6% - 59.9% 53.1% - 63.1% Expected dividend rate —% —% —% Grant date fair value per share $7.75 - $20.77 $5.48 - $12.64 $3.48 - $13.06 The cost of RSUs is determined using the fair value of the Company’s common stock on the date of the grant. In fiscal 2016 , the Company granted 1,711,497 RSUs with a grant date fair value per share ranging from $22.45 to $57.45 . In fiscal 2015 , the Company granted 1,364,465 RSUs with a grant date fair value per share ranging from $16.31 to $33.95 . In fiscal 2014 , the Company granted 1,668,228 RSUs with a grant date fair value per share ranging from $10.75 to $34.26 . As of December 31, 2016 , unrecognized compensation expense related to stock options, RSUs and ESPP purchase rights, net of estimated forfeitures, was $3.8 million , $26.9 million and $3.7 million , respectively, with a weighted-average remaining amortization period of 1.1 years , 1.4 years and 0.9 years , respectively. As of December 26, 2015 , unrecognized compensation expense related to unvested stock options, RSUs and ESPP purchase rights net of estimated forfeitures, was $3.3 million , $18.2 million and $1.4 million , respectively, with a weighted-average remaining amortization period of 1.0 year , 1.5 years , and 0.9 years , respectively. As of December 27, 2014 unrecognized compensation expense related to unvested stock options, RSUs and ESPP purchase rights net of estimated forfeitures, was $5.1 million , $16.2 million and $3.5 million , respectively with a weighted-average remaining amortization period of 1.1 years , 1.3 years , and 0.7 years , respectively. As of December 31, 2016 and December 26, 2015 , there was $0.1 million and $0.1 million capitalized stock-based compensation expense, respectively within the Company's inventory balance. The following table summarizes the stock-based compensation expense recorded in the Company’s consolidated statement of operations (in thousands): Fiscal Year Ended December 31, December 26, December 27, Cost of revenue $ 1,928 $ 1,872 $ 1,679 Research and development 12,841 9,126 8,102 Sales and marketing 11,955 9,466 8,212 General and administrative 12,091 9,304 6,665 Total stock-based compensation expense $ 38,815 $ 29,768 $ 24,658 Common Stock Reserved for Future Issuance The Company had the following shares of common stock reserved for future issuance (in shares): As of December 31, 2016 December 26, 2015 Option Plan: Common stock subject to options outstanding 382,577 1,068,808 RSUs outstanding 5,852 58,949 Shares available for future grants — — 2013 Equity Plan: Common stock subject to options outstanding 1,012,038 1,105,356 RSUs outstanding 2,460,197 1,720,390 Shares available for future grants 3,622,506 3,753,018 ESPP 185,641 332,351 Common stock reserved for future issuances 7,668,811 8,038,872 |