6. Equity Incentive Plan and Stock-Based Compensation

Equity Incentive Plan 

        The Company’s 2010 Equity Incentive Award Plan (2010 Plan) provides for the grant of stock options, stock appreciation rights, restricted stock units, restricted stock, performance awards, and deferred stock to its employees, consultants and non-employee members of its Board of Directors.

        In the first quarter of fiscal 2014, the Company granted performance awards to certain senior executives with vesting subject to achievement of performance goals established by the Compensation Committee of the Company’s Board of Directors. Performance goals are based on a combination of Company- specific financial targets, and a relative total shareholder return (TSR) target that compares the Company’s TSR over a three-year period to a benchmark peer-group TSR. These awards vest at the end of the performance period of three years from the grant date. The number of stock awards that can vest range from 0% to 150% of those initially awarded. In evaluating the fair value of these awards, the Company used a combination of the stock price at the close of market on grant date, for the performance condition and a Monte Carlo simulation on grant date, taking the market-based goal into consideration, for the market condition.

        The shares of common stock available for grant under the 2010 Plan are shown in the following table:

(1) Includes performance awards granted in fiscal 2014 at target. Additional awards that could be earned under the fiscal 2014 grant total 137,000.

Stock-Based Compensation

        The following table presents the total stock-based compensation expense by financial statement caption resulting from the Company’s stock options and RSU and PSU awards:

⁽¹⁾ There was no income tax benefit related to stock-based compensation because all of the Company's U.S. deferred tax assets, net of U.S. deferred tax liabilities, continue to be subject to a full valuation allowance.

The fair value of each stock option was estimated at the date of grant using a Black-Scholes option pricing model, with the following assumptions for grants:

The weighted average fair value of the Company’s stock options granted is as follows:

As of June 29, 2014, the total unrecognized compensation cost related to unvested stock options and RSU awards was approximately $27.3 million after reduction for estimated forfeitures which will be recognized by the end of first quarter of fiscal 2017. No stock options were granted in fiscal 2014.

The fair value of each PSU award granted in fiscal 2014 and fiscal 2013 was determined using a Monte Carlo pricing model, and was estimated using the following assumptions:

Stock Option and Restricted Stock Unit Activity

        The following table summarizes stock option activities and related information under the 2010 Plan for the periods presented:

No income tax benefit was realized from stock option exercises for the three and six months ended June 29, 2014.

        The following table summarizes RSU award activities and related information for the six months ended June 29, 2014:

The following table summarizes key executive RSU and PSU award activities and related information for the six months ended June 29, 2014.

(1) Includes performance awards granted in fiscal 2014 at target. Additional awards that could be earned under the fiscal 2014 grant total 137,000.

2014 Employee Stock Purchase Plan

On May 16, 2014 the stockholders of the Company approved the Spansion Inc. 2014 Employee Stock Purchase Plan (ESPP), which is qualified under Section 423 of the Internal Revenue Code. The ESPP provides that eligible employees may contribute up to 10% of their base salary towards the purchase of the Company’s common stock. The per share purchase price of the employee will be 85% of the fair market value of the stock at the beginning or the end of the offering period, whichever is lower.

The total number of shares of common stock reserved for issuance under the plan is 2.0 million shares. The plan shares will be increased automatically on an annual basis on January 1 of each year. The increase will be equal to one percent of total number of outstanding shares of the Company’s Common Stock on the immediately preceding December 31, subject to certain restrictions. The initial offering period under the ESPP commences on August 15, 2014 and ends on February 13, 2015.