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Stock-based compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based compensation | Stock-based compensation Stock compensation plans Our stock-based compensation programs are long-term retention programs that are intended to attract, retain, and provide incentives for talented employees, officers, and directors, and to align stockholder and employee interests. Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, with awards generally vesting over a 4 year period, and forfeitures recognized as incurred. We have the following stock-based compensation plans and programs: During 2013, we adopted the 2013 Performance Incentive Plan (the “2013 Plan”), which allowed us to grant options or restricted stock awards to all employees, including executive officers, outside consultants and non-employee directors. An aggregate of 3.1 million shares of common stock was initially reserved for issuance under the 2013 Plan. In May 2017, July 2020, June 2021, and June 2022, the shareholders approved an increase in the number of shares available for issuance to 4.1 million shares, 5.0 million shares, 6.5 million shares, and 8.5 million shares, respectively. As of April 25, 2023, the 2013 Plan expired as to future awards in accordance with its terms. As of December 31, 2024, there were outstanding options to purchase 127,000 shares of the Company’s common stock and approximately 0.5 million unvested restricted stock awards outstanding under the 2013 Plan. On July 21, 2023, our stockholders approved the 2023 Omnibus Performance Incentive Plan (the "2023 Plan"). The 2023 Plan allows us to grant equity awards to employees, directors, and outside consultants. An aggregate of 4.2 million shares of common stock were initially reserved for issuance under the 2023 Plan, plus any shares subject to awards under the 2013 Plan that were outstanding as of July 21, 2023, and which are subsequently forfeited or lapsed and not issued under the 2013 Plan. As of December 31, 2024, there were approximately 1.4 million unvested restricted stock awards outstanding under the 2023 Plan. Issuance of shares When options are exercised, it is the Company’s policy to issue new shares. Stock option activity Service vesting-based stock options The following is a summary of service vesting-based stock option activity for the year ended December 31, 2024 and 2023, and the status of service vesting-based stock options outstanding as of December 31, 2024 and 2023:
| 2024 |  | 2023
| Shares |  | Wtd. Avg. Exercise Price |  | Shares |  | Wtd. Avg. Exercise Price
Outstanding as of beginning of year | 217,250 |  | $ | 2.21 |  |  | 456,293 |  | $ | 2.17 |
Exercised | (90,250) |  | 2.23 |  |  | (239,043) |  | 2.12 |
Outstanding at end of year | 127,000 |  | $ | 2.19 |  |  | 217,250 |  | $ | 2.21 |
Stock options exercisable at year end | 127,000 |  | $ | 2.19 |  |  | 217,250 |  | $ | 2.21 |
We did not recognize stock compensation expense related to service-based options during the years ended December 31, 2024, 2023, and 2022. As of December 31, 2024, there was $3.0 million of aggregate intrinsic value of outstanding service vesting-based stock options, including $3.0 million of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2024. This amount will change based on the fair market value of the Company’s stock. Intrinsic value of service vesting-based awards exercised during the years ended December 31, 2024, 2023, and 2022 was $1.8 million, $3.9 million, and $4.1 million, respectively. There were no service based-vesting options granted during the years ended December 31, 2024, 2023, and 2022. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable as of December 31, 2024 is 1.4 years. There were no unrecognized compensation costs for service vesting-based stock options as of December 31, 2024. The following table summarizes information about service vesting-based stock options outstanding as of December 31, 2024:
Range of Exercise Prices |  | Number Outstanding at December 31, 2024 |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price
$1.00 - 1.50 |  | 2,000 |  | 1.85 |  | $ | 1.49 |
$1.51 - 2.00 |  | 115,000 |  | 1.32 |  | 1.89 |
$2.51 - 8.60 |  | 10,000 |  | 2.92 |  | 5.69 |
|  | 127,000 |  | 1.45 |  | $ | 2.19 |
Restricted stock Service vesting-based restricted stock The following is a summary of service vesting-based restricted stock activity for the years ended December 31, 2024 and 2023, and the status of unvested service vesting-based restricted stock outstanding as of December 31, 2024 and 2023:
| 2024 |  | 2023
| Shares |  | Wtd. Avg. Grant Date Fair Value |  | Shares |  | Wtd. Avg. Grant Date Fair Value
Outstanding as of beginning of year | 2,312,898 |  | $ | 18.32 |  |  | 1,879,215 |  | $ | 28.94 |
Granted | 484,886 |  |  | 20.65 |  |  | 1,907,101 |  |  | 13.12 |
Vested | (1,323,729) |  |  | 21.57 |  |  | (1,237,221) |  |  | 24.97 |
Forfeited | (178,415) |  | 17.09 |  |  | (236,197) |  | 25.88 |
Non-vested at year end | 1,295,640 |  | $ | 16.00 |  |  | 2,312,898 |  | $ | 18.32 |
The aggregate fair value of the service vesting-based awards granted during the years ended December 31, 2024, 2023, and 2022 was $10.0 million, $25.0 million, and $34.7 million, respectively. The aggregate fair value of the service vesting-based awards that vested during the years ended December 31, 2024, 2023, and 2022 was $27.7 million, $20.5 million, and $12.6 million, respectively. On October 19, 2023, Michael Rice, the Chief Executive Officer at that time, announced his resignation from the company. In accordance with his separation agreement, all unvested stock grants, excluding the 99,038 market-based restricted stock units awarded to him January 3, 2023 and the 70,094 market-based restricted stock units awarded to him on February 24, 2022 by the Board, were accelerated and vested as of the date of his separation. The Company recognized stock compensation expense in connection with the acceleration of his unvested stock grants of $1.7 million, representing 150,155 shares. His market-based restricted stock awards will vest once the stated market condition term for each award occurs. We recognized stock compensation expense of $10.8 million, $15.7 million, and $13.6 million related to service vesting-based awards during the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, there was $18.0 million in unrecognized compensation costs related to service vesting-based awards. We expect to recognize those costs over 2.6 years. Performance-based restricted stock On March 8, 2024, the Company granted 109,512 shares of performance-based stock to an executive in the form of restricted stock. The shares granted contain performance conditions based on Company metrics related to future performance. The performance-based award was structured to vest between 0% and 200% of the number of restricted shares granted to the recipient based on the achievement of certain financial metrics related to future performance. The grant date fair value of this award was $17.36 per share. During the fourth quarter of the year ended December 31, 2024, it was determined the probability of attainment of the performance condition increased to greater than 100% of shares granted. In accordance with ASC 718, we recognized a cumulative catch up in stock compensation expense of $0.4 million to reflect the increased probability the performance-based award would vest in excess of the shares originally granted. The fair value of this award is being expensed on a straight-line basis in accordance with the estimated quantity of shares expected to vest over the requisite service period ending on December 31, 2025. We recognized stock compensation expense of $1.2 million related to performance-based restricted stock awards for the year ended December 31, 2024. As of December 31, 2024, there was $1.5 million in unrecognized non-cash compensation costs related to performance-based restricted stock awards expected to vest. We expect to recognize those costs over 1.0 year. Non-cash compensation costs are expensed over the period for which performance was measured. The aggregate fair value of the performance-based awards granted during the year ended December 31, 2024 was $1.9 million. No performance-based awards vested during the year ended December 31, 2024. No performance-based restricted stock awards were granted or vested during the years ended December 31, 2023 and 2022. Market-based restricted stock The following is a summary of market-based restricted stock activity under our stock option plan for the years ended December 31, 2024 and 2023 and the status of market-based restricted stock outstanding as of December 31, 2024 and 2023:
| 2024 |  | 2023
| Shares |  | Wtd. Avg. Grant Date Fair Value |  | Shares |  | Wtd. Avg. Grant Date Fair Value
Outstanding as of beginning of year | 509,166 |  | $ | 26.50 |  |  | 271,044 |  | $ | 30.64 |
Granted | 312,081 |  | 26.61 |  |  | 268,738 |  | 25.19 |
Vested | (325,561) |  | 27.84 |  |  | (30,616) |  | 51.65 |
Non-vested at year end | 495,686 |  | $ | 25.69 |  |  | 509,166 |  | $ | 26.50 |
On February 8, 2021, the Company granted 30,616 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. On January 3, 2023, the Company determined the TSR attainment was 100% of the targeted shares, resulting in 30,616 shares being awarded and 30,616 shares vesting to current employees of the Company based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The market-based restricted stock awards were to vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68%, 0% dividend yield, and a risk-free interest rate of 0.1%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $1.3 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022. On February 24, 2022, the Company granted 240,428 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. On March 8, 2024, the Company’s Compensation Committee determined the TSR attainment was 125% of the targeted shares and 300,529 shares were awarded to the executives of the Company based on our TSR during the period beginning on January 1, 2022 through December 31, 2023 as compared to the TSR of 20 of our peers. The market-based restricted stock awards were to vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2022 through December 31, 2023 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 63%, 0% dividend yield, and a risk-free interest rate of 1.5%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $6.7 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2023. On January 3, 2023, the Company granted 268,738 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2023 through December 31, 2024 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 78%, 0% dividend yield, and a risk-free interest rate of 4.4%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $6.8 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2024. On March 8, 2024, the Company granted 239,464 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our TSR during the period beginning on January 1, 2024 through December 31, 2025 as compared to the TSR of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 80%, 0% dividend yield and a risk-free interest rate of 4.6%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $6.3 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2025. We recognized stock compensation expense of $4.5 million, $6.5 million, and $4.3 million related to market-based restricted stock awards for the years ended December 31, 2024, 2023, and 2022. As of December 31, 2024, there was $3.3 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over 1 year. The aggregate fair value of the market-based awards granted during the years ended December 31, 2024, 2023, and 2022 was $6.3 million, $6.5 million, and $6.7 million, respectively. The aggregate fair value of the market-based awards that vested during the years ended December 31, 2024, 2023, and 2022 was $5.7 million, $0.7 million, and $5.0 million, respectively. Total stock compensation expense We recorded total stock compensation expense for the years ended December 31, 2024, 2023, and 2022, as follows:
| 2024 |  | 2023 |  | 2022
Research and development costs | $ | 2,273 |  |  | $ | 4,665 |  |  | $ | 2,423 |
Sales and marketing costs | 1,765 |  |  | 3,615 |  |  | 2,456 |
General and administrative costs | 10,864 |  |  | 13,447 |  |  | 11,524 |
Cost of revenue | 1,612 |  |  | 1,522 |  |  | 1,323 |
Total | $ | 16,514 |  |  | $ | 23,249 |  |  | $ | 17,726 |

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