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EQUITY-BASED INCENTIVE PLANS | 3 Months Ended
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Mar. 31, 2025
Retirement Benefits [Abstract] |
EQUITY-BASED INCENTIVE PLANS | EQUITY-BASED INCENTIVE PLANS Stock-Based Incentive Plans The 2024 Acacia Research Corporation Stock Incentive Plan (“2024 Plan”), the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) and the 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) (collectively, the “Plans”) were approved by the stockholders of Acacia in June 2024, June 2016 and May 2013, respectively. The Plans allow grants of stock options, restricted stock units, and in the case of the 2013 Plan, allowed stock awards with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants. The 2013 Plan expired in May 2023, and as of the effective date of the 2024 Plan, the remaining shares available for issuance under the 2016 Plan were transferred to the 2024 Plan. Therefore, Acacia exclusively grants awards under the 2024 Plan. Acacia’s compensation committee administers the Plans. The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the 2024 Plan, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant, stock issuance or restricted stock units and the maximum term for which any granted option is to remain outstanding. The 2024 Plans terminates no later than the tenth anniversary of the approval of the plan by Acacia’s stockholders. The 2024 Plan provides for the following separate programs: Stock Issuance Program. Under the stock issuance program, eligible individuals may be issued shares of common stock directly, as determined by the 2024 Plan administrator. The terms and conditions of such direct stock awards include the number of shares of common stock granted, and the conditions for vesting that must be satisfied, if any, which typically will be based on continued provision of services but may include performance-based vesting requirements. Until the time at which the applicable restricted direct stock award vests, the holder of a restricted direct stock award will not have the rights of a stockholder provided, however, that any regular cash dividends with respect to unvested awards will be accrued by the Company and will be subject to the same restrictions as the award. The eligible individuals receiving awards under the 2016 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them under once those shares are vested. The eligible individuals receiving awards under the 2013 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them, whether or not their interest in those shares was vested. Discretionary Option Grant Program. Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than 100% of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100% of the fair market value of those shares on the grant date (not less than 110% of fair market value if such employee actually or constructively owns more than 10% of Acacia’s voting stock or the voting stock of any of its subsidiaries (a 10% shareholder)). Fair market value is generally equal to the closing price per share of the Company’s common stock on the principal securities exchange on which the common stock is traded on the date the option is granted (or if there was no closing price on that date, on the last preceding date on which a closing price was reported). Stock options will generally have a term of ten years from the date of grant; provided, that, the term of an incentive stock option granted to a 10% shareholder may not exceed five years from the date of grant. Discretionary Restricted Stock Unit Grant Program. Under the discretionary restricted stock unit program, Acacia’s compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service. During June 2023, Acacia’s compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company’s executive leadership team, for driving Acacia’s performance over the longer-term and to align employees and shareholders. Under the long-term incentive program, Acacia’s compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company’s Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel. The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024). The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan. The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. As of the effective date of the 2016 Plan, 625,390 shares of common stock remained available for issuance under the 2013 Plan. The number of shares of common stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, which were transferred into the 2016 Plan as of the effective date of the 2016 Plan. In May 2022, security holders approved an increase of 5,500,000 shares of common stock authorized to be issued pursuant to the 2016 Plan. As of the effective date of the 2024 Plan, 1,421,848 shares of common stock remained available for issuance under the 2016 Plan. The number of shares of common stock reserved for issuance under the 2024 Plan was 11,168,000 shares plus the 1,421,848 shares of common stock available for issuance under the 2016 Plan, which were transferred into the 2024 Plan as of the effective date of the 2024 Plan. As of March 31, 2025, there were 12,428,239 shares of common stock remain available for grant under the 2024 Plan. Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock. The plan administrator may amend or modify the 2024 Plan at any time, subject to any required stockholder approval. As of March 31, 2025, there are 15,999,789 shares of common stock reserved for issuance under the Plans. The following table summarizes stock option activity for the Plans:
| Options |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Life
|  |  |  |  | (In thousands) |  |
Outstanding at December 31, 2024 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | 437 |  |  | 7.3 years
Granted | — |  |  | $ | — |  |  | $ | — |  |  |
Exercised | — |  |  | $ | — |  |  | $ | — |  |  |
Forfeited/Expired | — |  |  | $ | — |  |  | $ | — |  |  |
Outstanding at March 31, 2025 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | — |  |  | 7.1 years
Exercisable at March 31, 2025 | 842,541 |  |  | $ | 4.19 |  |  | $ | — |  |  | 7.0 years
Vested and expected to vest at March 31, 2025 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | — |  |  | 7.1 years
Unrecognized stock-based compensation expense at March 31, 2025 (in thousands) | $ | 191 |  |  |  |  |  |  |
Weighted average remaining vesting period at March 31, 2025 | 1.0 years |  |  |  |  |  |
During the three months ended March 31, 2025, there were no stock options granted. The aggregate fair value of options vested during the three months ended March 31, 2025 and 2024 was $420,000 and $420,000, respectively. The following table summarizes nonvested restricted stock activity for the Plans:
| RSAs |  | RSUs |  | PSUs
| Shares |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2024 | 67,668 |  |  | $ | 3.63 |  |  | 833,195 |  |  | $ | 4.42 |  |  | 1,981,464 |  |  | $ | 4.61 |
Granted | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Vested | (67,668) |  |  | $ | 3.63 |  |  | (244,629) |  |  | $ | 3.97 |  |  | — |  |  | $ | — |
Forfeited | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Nonvested at March 31, 2025 | — |  |  | $ | — |  |  | 588,566 |  |  | $ | 4.61 |  |  | 1,981,464 |  |  | $ | 4.61 |
Unrecognized stock-based compensation expense at March 31, 2025 (in thousands) | $ | — |  |  |  |  | $ | 1,575 |  |  |  |  | $ | 1,052 |  |  |
Weighted average remaining vesting period at March 31, 2025 | zero years |  |  |  | 1.0 year |  |  |  | 1.2 years |  |
RSAs and RSUs granted are time-based and will vest in full after one to three years. The aggregate fair value of RSAs vested during the three months ended March 31, 2025 and 2024 was $246,000 and $440,000. The aggregate fair value of RSUs vested during the three months ended March 31, 2025 and 2024 was $1.0 million and $1.1 million. During the three months ended March 31, 2025, RSAs and RSUs totaling 312,297 shares were vested and 121,926 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on th e vesting date. PSUs granted can be earned based upon the level of achievement of the Company’s compound annual growth rate of its adjusted book value per share, measured over a three-year performance period beginning on January 1, 2023 and ending on December 31, 2025. The number of PSUs granted in 2023 that can be earned ranges from 0% to 200% of the target number of PSUs granted (up to a maximum of 750,000 shares of Acacia’s common stock per recipient). Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date. The Company has expensed $1.6 million related to the PSUs based on the probability assessment performed as of March 31, 2025. Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
|  |  |  |  | (In thousands)
Options |  |  |  |  | $ | 99 |  |  | $ | 128 |
RSAs |  |  |  |  | 45 |  |  | 106 |
RSUs |  |  |  |  | 559 |  |  | 624 |
PSUs |  |  |  |  | 219 |  |  | — |
Total compensation expense for share-based awards |  |  |  |  | $ | 922 |  |  | $ | 858 |
Total unrecognized stock-based compensation expense for time-based awards as of March 31, 2025 was $1.8 million, which will be amortized over a weighted average remaining vesting period of 1.0 year.

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