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Stock-Based Compensation (Tables)

12 Months Ended

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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