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Stock-Based Compensation (Tables) | 12 Months Ended
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Dec. 31, 2022
Stock-Based Compensation Expense Related to Stock Options, PSUs, RSUs and Restricted Stock | The following table summarizes stock-based compensation expense related to stock options, PSUs, RSUs and restricted stock for the years ended December 31, 2022, 2021 and 2020:
(In thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Stock-based compensation expense included in cost of revenue |  | $ | 2,876 |  |  | $ | 543 |  |  | $ | 426 |
Selling, general and administrative expenses |  |  | 20,844 |  |  |  | 4,571 |  |  |  | 4,036 |
Research and development expenses |  |  | 4,602 |  |  |  | 2,366 |  |  |  | 2,372 |
Stock-based compensation expense included in operating expenses |  |  | 25,446 |  |  |  | 6,937 |  |  |  | 6,408 |
Total stock-based compensation expense |  |  | 28,322 |  |  |  | 7,480 |  |  |  | 6,834 |
Tax benefit for expense associated with non-qualified stock options, PSUs, RSUs and restricted stock |  |  | (5,152 | ) |  |  | (1,849 | ) |  |  | (1,629 | )
Total stock-based compensation expense, net of tax |  | $ | 23,170 |  |  | $ | 5,631 |  |  | $ | 5,205 |
Summary of PSUs, RSUs and Restricted Stock Outstanding | The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2021 and 2022 and the changes that occurred during 2022:
|  | Number of shares (In thousands) |  |  | Weighted Average Grant Date Fair Value |
Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2021 |  |  | 1,930 |  |  | $ | 14.11 |
PSUs, RSUs and restricted stock granted |  |  | 645 |  |  | $ | 20.56 |
PSUs, RSUs and restricted stock vested |  |  | (1,440 | ) |  | $ | 12.81 |
PSUs, RSUs and restricted stock forfeited |  |  | (49 | ) |  | $ | 14.22 |
Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2022 |  |  | 1,086 |  |  | $ | 17.54 |
Summary of Weighted-Average Assumptions and Value of Options Granted | The weighted-average estimated fair value of stock options granted to employees during the year ended December 31, 2022 was $5.81 per share with the following weighted-average assumptions:
|  | 2022 |
Expected volatility |  |  | 45.00 | %
Risk-free interest rate |  |  | 3.00 | %
Expected dividend yield |  |  | 1.77 | %
Expected life (in years) |  |  | 2.4 |
Summary of Stock Options Outstanding | The following table is a summary of stock options outstanding as of December 31, 2022 and 2021 and the changes that occurred during 2022:
|  | Number of Options (In thousands) |  |  | Weighted Average Exercise Price (Per share) |  |  | Weighted Avg. Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value (In thousands) |
Stock options outstanding, December 31, 2021 |  |  | 1,721 |  |  | $ | 19.37 |  |  |  | 2.39 |  |  | $ | 6,669 |
ADVA stock options replaced by ADTRAN Holdings stock options(1) |  |  | 2,094 |  |  | $ | 11.12 |  |  |  |  |  |  |
Stock options exercised |  |  | (519 | ) |  | $ | 15.70 |  |  |  |  |  |  |
Stock options forfeited |  |  | (10 | ) |  | $ | 10.28 |  |  |  |  |  |  |
Stock options expired |  |  | (138 | ) |  | $ | 22.73 |  |  |  |  |  |  |
Stock options outstanding, December 31, 2022 |  |  | 3,148 |  |  | $ | 14.37 |  |  |  | 3.42 |  |  | $ | 16,251 |
Stock options exercisable, December 31, 2022 |  |  | 1,711 |  |  | $ | 15.95 |  |  |  | 1.95 |  |  | $ | 7,104 |
(1) Each ADVA stock option surrendered was exchanged for 0.8244 ADTRAN Holdings stock options.
Stock Options Outstanding | The following table further describes our stock options outstanding as of December 31, 2022:
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  | Options Outstanding at December 31, 2022 (In thousands) |  |  | Weighted Avg. Remaining Contractual Life in Years |  |  | Weighted Average Exercise Price |  |  | Options Exercisable at December 31, 2022 (In thousands) |  |  | Weighted Average Exercise Price |
$6.06 – $8.67 |  |  | 755 |  |  |  | 3.21 |  |  | $ | 7.37 |  |  |  | 320 |  |  | $ | 6.47 |
$8.68 – $13.74 |  |  | 833 |  |  |  | 4.65 |  |  | $ | 11.45 |  |  |  | 207 |  |  | $ | 9.63 |
$13.75 – $17.15 |  |  | 427 |  |  |  | 3.27 |  |  | $ | 15.33 |  |  |  | 368 |  |  | $ | 15.33 |
$17.16 – $21.36 |  |  | 679 |  |  |  | 3.92 |  |  | $ | 19.02 |  |  |  | 369 |  |  | $ | 18.97 |
$21.37 – $23.64 |  |  | 454 |  |  |  | 0.83 |  |  | $ | 23.64 |  |  |  | 447 |  |  | $ | 23.64 |
|  |  | 3,148 |  |  |  |  |  |  |  |  |  | 1,711 |  |  |  |
ADVA Optical Networking SE [Member] |
Summary of Stock Options Outstanding | The following table summarizes ADVA Optical Networking SE stock options outstanding as of July 15, 2022 (the Business Combination closing date) and December 31, 2022 and the changes that occurred between July 15, 2022 and December 31, 2022:
|  | Number of Options (In thousands) |  |  | Weighted Average Exercise Price (Per share) |  |  | Weighted Avg. Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value (In thousands) |
Stock options outstanding, July 15, 2022 |  |  | 2,745 |  |  | $ | 9.09 |  |  |  | 4.60 |  |  | $ | 27,205 |
Stock options exercised |  |  | (102 | ) |  | $ | 8.02 |  |  |  |  |  |  |
ADVA stock options replaced by ADTRAN Holdings stock options(1) |  |  | (2,550 | ) |  | $ | 9.80 |  |  |  |  |  |  |
Stock options forfeited |  |  | (12 | ) |  | $ | 9.57 |  |  |  |  |  |  |
Stock options outstanding, December 31, 2022 |  |  | 81 |  |  | $ | 8.58 |  |  |  | 4.00 |  |  | $ | 1,222 |
Stock options exercisable, December 31, 2022 |  |  | 27 |  |  | $ | 7.37 |  |  |  | 2.39 |  |  | $ | 432 |
(1) Each ADVA stock option surrendered was exchanged for 0.8244 ADTRAN Holdings stock options.
Stock Options Outstanding | The following table further describes ADVA's stock options outstanding as of December 31, 2022:
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  | Options Outstanding at December 31, 2022 (In thousands) |  |  | Weighted Avg. Remaining Contractual Life in Years |  |  | Weighted Average Exercise Price |  |  | Options Exercisable at December 31, 2022 (In thousands) |  |  | Weighted Average Exercise Price |
€4.98 - €7.05 |  |  | 35 |  |  |  | 3.52 |  |  | $ | 6.97 |  |  |  | 9 |  |  | $ | 5.34 |
€7.06 - €8.70 |  |  | 18 |  |  |  | 2.60 |  |  | $ | 8.41 |  |  |  | 18 |  |  | $ | 8.41 |
€8.71 - €15.68 |  |  | 28 |  |  |  | 5.48 |  |  | $ | 10.73 |  |  |  | — |  |  | $ | — |
|  |  | 81 |  |  |  |  |  |  |  |  |  | 27 |  |  |  |
Market-Based PSUs [Member] |
Summary of Weighted-Average Assumptions and Value of Options Granted | The following table details the significant assumptions that impact the fair value estimate of the market-based PSUs:
|  | 2022 |  |  | 2021 |  |  | 2020 |
Estimated fair value per share |  | $ | 24.01 |  |  | $ | 26.07 |  |  | $ | 14.43 |
Expected volatility |  |  | 45.77 | % |  |  | 53.27 | % |  |  | 51.88 | %
Risk-free interest rate |  |  | 4.28 | % |  |  | 0.85 | % |  |  | 0.24 | %
Expected dividend yield |  |  | 1.76 | % |  |  | 1.63 | % |  |  | 2.85 | %

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