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Note 11 - Common Stock and Stock-based Compensation Plans
 3 Months Ended
Mar. 31, 2025
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 March 31, 2025, and December 31, 2024, 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 three months ended March 31, 2025, are as follows:

 

   

Number of
options

   

Weighted
average

exercise
price

    

Weighted
average remaining
contractual

term

    

Aggregate
intrinsic

value

  

Outstanding as of December 31, 2024

     84,025     $ 22.45       2.7     $ 765  

Granted

     —       —                  

Exercised

     (13,000 )     19.43                  

Forfeited or expired

     —       —                  

Outstanding as of March 31, 2025 (unaudited)

     71,025     $ 23.00       2.9     $ 228  

Exercisable as of March 31, 2025 (unaudited)

     48,689     $ 24.07       1.6     $ 117  

 

As of March 31, 2025, there was $216 of unrecognized compensation expense related to unvested stock options. This amount is expected to be recognized over a weighted-average period of 1.9 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, which has historically been granted on or about July 1 of each year, will be made following a director’s election or re-election to the Board at the Company’s annual meeting, and fully vest on the first-year anniversary of the grant date instead of over a two-year period.  

 

On February 10, 2025, the Compensation Committee of the Board (the “Committee”) granted 34,612, 15,575, 13,844 and 13,844 RSUs, effective as of February 14, 2025, 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 awards vest 33.4% on February 14, 2026, 33.3% on February 14, 2027 and 33.3% on February 14, 2028. 

 

Also, on February 10, 2025, the Committee granted 51,918, 10,383, 9,229 and 9,229 performance-based stock units (“PSUs”), effective as of February 14, 2025, 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 2025 license and related revenue target approved by the Board (the “2025 License Revenue Target”). The vesting threshold is achievement of 90% of the 2025 License Revenue Target. If the Company’s achievement of the 2025 License Revenue Target is above 90% but less than 99% of the 2025 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 2025 License Revenue Target, every 1% increase of the 2025 License Revenue Target, up to 110%, would result in an increase of 7% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 10% 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 2025 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 2025 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 110%, would result in an increase of 7% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 10% 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 2025 is greater than the Russell 2000 index (the “Russell index”). The vesting threshold is if the return on the Company’s stock for 2025 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 110%, would result in an increase of 7% of the eligible PSUs for the Company’s CFO, COO and CCO and an increase of 10% of the eligible PSUs for the Company’s CEO.

 

Accordingly, assuming maximum achievement of the performance goals set forth above, PSUs representing an additional 100%, meaning an additional 51,918, would be eligible for vesting of the Company’s CEO, and an additional 70%, meaning an additional 7,268, 6,460 and 6,460, 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 2025, the PSUs vest 33.4% on February 14, 2026, 33.3% on February 14, 2027, and 33.3% on February 14, 2028. 

 

A summary of the Company’s RSU and PSU activities and related information for the three months ended March 31, 2025, are as follows:

 

   

Number of
RSUs and

PSUs

    

Weighted

Average Grant-

Date
Fair Value

  

Unvested as of December 31, 2024

     1,603,508     $ 21.01  

Granted

     426,957       25.56  

Vested

     (213,628

)

     26.92  

Forfeited or expired

     (44,422

)

     17.63  

Unvested as of March 31, 2025 (unaudited)

     1,772,415     $ 22.83  

 

As of March 31, 2025, there was $27,392 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:

 

   

Three months ended
March 31,

  
   

2025

(unaudited)

    

2024

(unaudited)

  

Cost of revenue

   $ 159     $ 203  

Research and development, net

     2,466       2,007  

Sales and marketing

     566       365  

General and administrative

     1,132       996  

Total equity-based compensation expense

   $ 4,323     $ 3,571  

 

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:

 

    Three months ended
March 31		  
   

2025

(unaudited)

    

2024

(unaudited)

  

Expected dividend yield

     0%         0 %

Expected volatility

   41% - 48%       46 %

Risk-free interest rate

   4.2% - 4.4%       5.3 %

Contractual term of up to (months)

     6         6