Stock Compensation Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

The Company has a share-based compensation plan, the OneSpan Inc. 2019 Omnibus Incentive Plan (“Plan”), under which the Board of Directors may grant share-based awards including restricted stock units (RSUs) and performance restricted stock units (PSUs).

The Plan may provide performance incentives to employees and non-employee directors, consultants and other key persons of the Company. The plan is administered by the Compensation Committee as appointed by the Board of Directors and is intended to be a non-qualified plan.

As of December 31, 2023, the remaining number of shares allowed to be issued under the Plan was 0.5 million shares of the Company’s common stock, representing 1% of the issued and outstanding shares of the Company as of such date.

The following table presents stock-based compensation expense and other long-term incentive plan compensation expense for the years ended December 31, 2023, 2022, and 2021.


	Years Ended December 31,
(In thousands)	2023		2022		2021
Stock-based compensation	$	14,252	$	8,642	$	4,354
Other long-term incentive plan compensation (1)	310		171		848
Total compensation	$	14,562	$	8,813	$	5,202

(1) Other long-term incentive compensation consists of cash incentive grants awarded to employees located in jurisdictions where the Company does not issue stock-based compensation due to tax, regulatory or similar reasons.

Time-Based Restricted Stock Awards

Non-forfeited time-based restricted stock awards granted to certain executive officers and other employees under the VASCO Data Security International, Inc. 2009 Equity Plan became fully vested during the year ended December 31, 2022. Certain shares became subject to forfeiture when the service requirement was not met. No awards were outstanding as of December 31, 2022 and, therefore, there was no compensation expense, no tax benefit or any time-based restricted stock activity for the year ended December 31, 2023. Compensation expense was less than $0.1 million and $0.3 million for 2022 and 2021, respectively. Tax benefit related to the compensation expense was less than $0.1 million and $0.1 million for 2022 and 2021, respectively.

There was no unamortized future compensation expense for time-based restricted stock awards at December 31, 2023.

Time-Based Restricted Stock Units

Under the OneSpan Inc. 2019 Omnibus Incentive Plan, the Company grants non-employee directors and certain eligible employees RSUs that settle in Company stock. RSUs granted to non-employee directors vest on the first anniversary date of the grant and have a deferred delivery feature whereby they are not delivered until resignation or upon a change in control of the Company. RSUs granted to employees vest over one to four years in equal annual or semi-annual installments in the initial year and thereafter in semi-annual installments. Shares are subject to forfeiture if the service period is not met. Compensation expense for time-based restricted stock unit awards was $10.9 million, $6.9 million, and $3.7 million for 2023, 2022, and 2021, respectively, and the related tax benefit was $0.5 million, $0.2 million, and $0.1 million, respectively. The following table summarizes the time-based restricted stock activity for the year ended December 31, 2023:


(Sharecounts in thousands)	Shares	Weighted- average remaining term (years)	Weighted- average grant date fair value
Unearned, January 1, 2023	1,733	2.41	$	13.08
Shares vested	(641)		13.49
Shares awarded	1,097		13.14
Shares forfeited	(376)		13.04
Unearned, December 31, 2023	1,813	1.85	$	12.98

The unamortized future compensation expense for time-based restricted stock awards was $18.1 million at December 31, 2023.

Performance-Based Restricted Stock Units settled in stock

Performance-based restricted stock units granted to executive officers and certain other employees were subject to achievement of one to three year performance criteria established by the Board of Directors. Under certain grants, shares related to one to three year targets are earned upon fulfillment of the performance criteria as determined by the

Compensation Committee of the OneSpan Inc. Board of Directors ("Compensation Committee") and vest upon completion of the requisite service period. Shares are subject to forfeiture if the performance criteria and the service period are not met.

The restricted stock units subject to achievement of future performance criteria awarded during the year ended December 31, 2023 will be earned if the performance criteria are met at the end of the one-year performance period and then subsequent service period is also met.

Compensation expense related to performance-based restricted stock unit awards in 2023, 2022, and 2021 was $2.8 million, $1.6 million, and $0.3 million, respectively. Tax benefit related to the compensation expense was less than $0.1 million, less than $0.1 million, and $0.1 million for 2023, 2022, and 2021, respectively.

The following table summarizes activity related to unvested performance restricted stock shares during 2023:


(Sharecounts in thousands)	Total Unvested Shares	Weighted- average remaining term (years)	Weighted- average grant date fair value
Unearned, January 1, 2023	316	1.38	$	12.96
Shares vested	(95)		13.09
Shares awarded	1,003		14.25
Shares forfeited	(258)		14.09
Unearned, December 31, 2023	966	0.84	$	13.99

Unamortized future compensation expense for performance-based restricted stock was $1.7 million at December 31, 2023.

Market-Based Restricted Stock Units settled in stock

Market-based restricted stock units granted to executive officers and certain other employees were subject to achievement of three-year or four-year market-based performance criteria established by the Board of Directors. Under certain grants, shares related to three-year or four-year targets are earned based upon fulfillment of the market-based performance criteria as determined by the Compensation Committee and cliff vest upon completion of the three-year or four-year period. Shares are subject to forfeiture if the performance criteria and service period are not met. Compensation expense for market-based restricted stock unit awards in 2023, 2022, and 2021 was $0.6 million, $0.5 million, and less than $0.1 million, respectively, and the related tax benefit was less than $0.1 million, less than $0.1 million, and $0 million respectively.

The following table summarizes activity related to unvested market and service restricted stock units settled in stock:


(Sharecounts in thousands)	Shares	Weighted- average remaining term (years)	Weighted- average grant date fair value
Unearned, January 1, 2023	257	2.75	$	12.17
Shares vested	(1)		33.31
Shares awarded	—		—
Shares forfeited	(5)		37.93
Unearned, December 31, 2023	251	1.89	$	11.58

Unamortized future compensation expense for market-based restricted stock was $1.4 million at December 31, 2023.