Rodgers Silicon Valley Acquisition Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

Stock-based Compensation

6 Months Ended

Jul. 02, 2023

Share-Based Payment Arrangement [Abstract]

The Company issues equity awards to employees and non-employees in the form of stock options, restricted stock units (“RSUs”) and performance based RSUs (“PRSUs”). Additionally, the Company also offers an employee stock purchase plan (“ESPP”) to its eligible employees. The Company uses Black-Scholes option pricing model to value its stock options granted and the estimated shares to be purchased under the ESPP. For both RSUs and PRSUs, the Company uses its common stock price, which is the last reported sales price on the grant date to value those securities.

In general, the Company recognizes its stock-based compensation expense on a straight-line basis over the requisite service period and records forfeitures as they occur. For PRSUs, the Company uses the graded vesting method to calculate

the stock-based compensation expense. At each reporting period, the Company would recognize and adjust the stock-based compensation expense based on its probability assessment in meeting its PRSUs' performance conditions.

Stock-based Compensation Expense

The following table summarizes the total stock-based compensation expense, by operating expense category, recognized in the Condensed Consolidated Statements of Operations for the periods presented below (in thousands).


	Quarters Ended				Fiscal Years-to-Date Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Cost of revenue	$	1,654	$	250	$	2,605	$	250
Research and development	5,456		3,821		17,123		6,333
Selling, general and administrative	7,932		4,109		24,471		6,835
Total stock-based compensation expense	$	15,042	$	8,180	$	44,199	$	13,418

For the fiscal years-to-date ended July 2, 2023 and July 3, 2022, the Company capitalized $0.7 million and $0.6 million, respectively, of stock-based compensation as property and equipment, net in the Condensed Consolidated Balance Sheet. There was no recognized tax benefit related to stock-based compensation for the periods presented. In addition, the Company accrued an immaterial amount of bonus to be settled in equity awards as accrued compensation on the Condensed Consolidated Balance Sheet as of July 2, 2023.

As of July 2, 2023, there was approximately $158.8 million of total unrecognized stock-based compensation expense related to unvested equity awards, which are expected to be recognized over a weighted-average period of 3.9 years. As of July 2, 2023, there was approximately $0.9 million of total unrecognized stock-based compensation related to the ESPP, which is expected to be recognized over a period of 1.5 years.

Equity Award Modification

For the first quarter of 2023, in connection with the retirement or resignation of several of the Company's management team members, including the Company's former Chief Executive Officer, the Company evaluated the change in employment status in accordance with ASC 718, Compensation - Stock Compensation. The Company concluded that the change in status impacted the vesting conditions as the term of equity award exercise period was extended and certain of the equity awards were accelerated and vested immediately. For the quarter ended July 2, 2023, there was no equity award modification. For the fiscal year-to-date ended July 2, 2023, the Company recognized $21.1 million of stock-based compensation expense related to the modifications. There is no equity modification occurred for the corresponding period last year.

Stock Option Activity

The following table summarizes stock option activities for the fiscal year-to-date ended July 2, 2023 (in thousands, except share and per share amount).


	Number of Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (1) (2)
Balances as of January 1, 2023	5,034,282	$	9.07

Exercised	(180,575)	5.38			$	1,570
Forfeited	(428,693)	9.69
Balances as of July 2, 2023	4,425,014	$	9.17	7.7	$	39,584


(1)			The intrinsic value of options exercised is based upon the value of the Company’s stock at exercise.
(2)			The aggregate intrinsic value of the stock options outstanding as of July 2, 2023 represents the value of the Company’s closing stock price at $18.04 on July 2, 2023 in excess of the exercise price multiplied by the number of options outstanding.

Unvested early exercised stock options which are subject to repurchase by the Company are not considered participating securities as those shares do not have non-forfeitable rights to dividends or dividend equivalents. Unvested early exercised stock options are not considered outstanding for purposes of the weighted average outstanding share calculation until they vest.

As of July 2, 2023, 1,169,899 shares remained subject to the Company’s right of repurchase as a result of early exercised stock options. The remaining liability related to early exercised shares as of July 2, 2023 was immaterial and was recorded in other current and non-current liabilities in the Condensed Consolidated Balance Sheets.

Restricted Stock Unit and Performance Restricted Stock Unit Activities

The following table summarizes RSUs and PRSUs activities for the fiscal year-to-date ended July 2, 2023 (in thousands, except share and per share amount).


	RSUs			PRSUs
	Number of Shares Outstanding	Weighted Average Grant Date Fair Value		Number of Shares Outstanding	Weighted Average Grant Date Fair Value
Issued and unvested shares balances as of January 1, 2023	5,910,097	$	14.11	1,461,061	$	13.41
Granted	8,950,531	10.65		769,006	13.13
Vested	(1,289,924)	13.08		(166,716)	13.41
Forfeited	(548,343)	13.32		(1,187,540)	13.41
Issued and unvested shares outstanding as of July 2, 2023	13,022,361	$	11.86	875,811	$	13.17