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Note 11 - Common Stock and Stock-based Compensation Plans | 6 Months Ended
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Jun. 30, 2024
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] |
NOTE 11: | COMMON STOCK AND STOCK-BASED COMPENSATION PLANS
The Company has historically granted a mix of stock options, stock appreciation rights (“SARs”) capped with a ceiling and restricted stock units (“RSUs”) to employees and non‑employee directors of the Company and its subsidiaries under the Company’s equity plans and provides the right to purchase common stock pursuant to the Company’s 2002 employee stock purchase plan to employees of the Company and its subsidiaries. As of June 30, 2024, and December 31, 2023, there were no outstanding or exercisable SARs left. The options granted under the Company’s stock incentive plans have been granted at the fair market value of the Company’s common stock on the grant date. Options granted to employees under stock incentive plans generally vest at a rate of 25% of the shares underlying the option after one year and the remaining shares vest in equal portions over the following 36 months, such that all shares are vested after four years. A summary of the Company’s stock option activities and related information for the six months ended June 30, 2024, are as follows:
|  | Number of options |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual term |  |  | Aggregate intrinsic value |
Outstanding as of December 31, 2023 |  |  | 99,425 |  |  | $ | 20.74 |  |  |  | 2.5 |  |  | $ | 316 |
Granted |  |  | 10,600 |  |  |  | 19.61 |  |  |  |  |  |  |  |  |
Exercised |  |  | (26,000 | ) |  |  | 14.77 |  |  |  |  |  |  |  |  |
Forfeited or expired |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Outstanding as of June 30, 2024 (unaudited) |  |  | 84,025 |  |  | $ | 22.45 |  |  |  | 3.2 |  |  | $ | 0 |
Exercisable as of June 30, 2024 (unaudited) |  |  | 54,000 |  |  | $ | 23.30 |  |  |  | 1.5 |  |  | $ | 0 |
As of June 30, 2024, there was $278 of unrecognized compensation expense related to unvested stock options. This amount is expected to be recognized over a weighted-average period of 2.2 years. An RSU award is an agreement to issue shares of the Company’s common stock at the time the award or a portion thereof vests. RSUs granted to employees generally vest in three equal annual installments starting on the first anniversary of the grant date. RSUs granted to non-employee directors would generally vest in two equal annual installments starting on the first anniversary of the grant date. On February 12, 2024, the Compensation Committee of the Board (the “Committee”) granted 33,318, 20,043, 16,399 and 13,535 RSUs, effective as of February 16, 2024, to each of the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Operating Officer (“COO”) and Chief Commercial Officer (“CCO”), respectively, pursuant to the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The RSU grants vest 33.4% on February 16, 2025, 33.3% on February 16, 2026 and 33.3% on February 16, 2027. Also, on February 12, 2024, the Committee granted 49,978, 13,362, 10,932 and 9,023 performance-based restricted stock units (“PSUs”), effective as of February 16, 2024, to each of the Company’s CEO, CFO, COO and CCO, respectively, pursuant to the 2011 Plan. The performance goals for the PSUs with specified weighting are as follows:
Weighting | Goals
50% (*) | Vesting of the full 50% of the PSUs occurs if the Company achieves the 2024 license and related revenue target approved by the Board (the “2024 License Revenue Target”). The vesting threshold is achievement of 90% of the 2024 License Revenue Target. If the Company’s achievement of the 2024 License Revenue Target is above 90% but less than 99% of the 2024 License Revenue Target, 91% to 99% of the eligible PSUs would be subject to vesting. If the Company’s actual result exceeds 100% of the 2024 License Revenue Target, every 1% increase of the 2024 License Revenue Target, up to 120%, would result in an increase of 2% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 3% of the eligible PSUs for the Company’s CEO.
25% | Vesting of the full 25% of the PSUs occurs if the Company achieves positive total shareholder return whereby the return on the Company’s stock for 2024 is greater than the S&P Semiconductors Select Industry index (the “S&P index”). The vesting threshold is if the return on the Company’s stock for 2024 is at least 90% of the S&P index. If the return on the Company’s stock, in comparison to the S&P index, is above 90% but less than 99% of the S&P index, 91% to 99% of the eligible PSUs would be subject to vesting. If the return on the Company’s stock exceeds 100% of the S&P index, every 1% increase in comparison to the S&P index, up to 120%, would result in an increase of 2% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 3% of the eligible PSUs for the Company’s CEO.
25% | Vesting of the full 25% of the PSUs occurs if the Company achieves positive total shareholder return whereby the return on the Company’s stock for 2024 is greater than the Russell 2000 index (the “Russell index”). The vesting threshold is if the return on the Company’s stock for 2024 is at least 90% of the Russell index. If the return on the Company’s stock, in comparison to the Russell index, is above 90% but less than 99% of the Russell index, 91% to 99% of the eligible PSUs would be subject to vesting. If the return on the Company’s stock exceeds 100% of the Russell index, every 1% increase in comparison to the Russell index, up to 120%, would result in an increase of 2% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 3% of the eligible PSUs for the Company’s CEO.
(*) As of June 30, 2024, the Company's management estimates that it is not probable that the performance condition will be met by year end. Accordingly, assuming maximum achievement of the performance goals set forth above, PSUs representing an additional 60%, meaning an additional 29,986, would be eligible for vesting of the Company’s CEO, and an additional 40%, meaning an additional 5,344, 4,372 and 3,609, would be eligible for vesting for each of the Company’s CFO, COO and CCO, respectively. Subject to achievement of the thresholds the above performance goals for 2024, the PSUs vest 33.4% on February 16, 2025, 33.3% on February 16, 2026 and 33.3% on February 16, 2027. A summary of the Company’s RSU and PSU activities and related information for the six months ended June 30, 2024, are as follows:
|  | Number of RSUs and PSUs |  |  | Weighted Average Grant- Date Fair Value |
Unvested as of December 31, 2023 |  |  | 1,281,751 |  |  | $ | 24.97 |
Granted |  |  | 693,378 |  |  |  | 18.18 |
Vested |  |  | (286,976 | ) |  |  | 32.22 |
Forfeited or expired |  |  | (142,032 | ) |  |  | 20.58 |
Unvested as of June 30, 2024 (unaudited) |  |  | 1,546,121 |  |  | $ | 20.97 |
As of June 30, 2024, there was $23,955 of unrecognized compensation expense related to unvested RSUs and PSUs. This amount is expected to be recognized over a weighted-average period of 1.6 years. The following table shows the total equity-based compensation expense included in the interim condensed consolidated statements of loss:
|  | Six months ended June 30, |  |  | Three months ended June 30, |
|  | 2024 (unaudited) |  |  | 2023 (unaudited) |  |  | 2024 (unaudited) |  |  | 2023 (unaudited) |
Cost of revenue |  | $ | 394 |  |  | $ | 420 |  |  | $ | 191 |  |  | $ | 214 |
Research and development, net |  |  | 4,445 |  |  |  | 4,446 |  |  |  | 2,438 |  |  |  | 2,344 |
Sales and marketing |  |  | 816 |  |  |  | 827 |  |  |  | 451 |  |  |  | 449 |
General and administrative |  |  | 1,816 |  |  |  | 1,758 |  |  |  | 820 |  |  |  | 897 |
Total equity-based compensation expense from continuing operations |  |  | 7,471 |  |  |  | 7,451 |  |  |  | 3,900 |  |  |  | 3,904 |
Equity-based compensation expense included in discontinued operations |  |  | — |  |  |  | 613 |  |  |  | — |  |  |  | 301 |
Total equity-based compensation expense |  | $ | 7,471 |  |  | $ | 8,064 |  |  | $ | 3,900 |  |  | $ | 4,205 |
The fair value for rights to purchase shares of common stock under the Company’s employee stock purchase plan was estimated on the date of grant using the following assumptions:
|  | Six months ended June 30 |
|  | 2024 (unaudited) |  |  | 2023 (unaudited) |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 46 | % |  |  | 45 | %
Risk-free interest rate |  |  | 5.3 | % |  |  | 4.8 | %
Contractual term of up to (months) |  |  | 6 |  |  |  | 6 |

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