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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | 4. STOCK-BASED COMPENSATION 2024 Stock Incentive Plans At the annual meeting of stockholders held on May 8, 2024, the Company’s stockholders approved, upon recommendation of the Board of Directors, the adoption of the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (“2024 Employee Plan”) and the ADTRAN Holdings, Inc. 2024 Directors Stock Plan (“2024 Directors Plan”). No additional awards will be granted under the Company’s previous stock incentive plans, including the 2020 Employee Stock Incentive Plan, the 2020 Directors Stock Plan, or the 2015 Employee Stock Incentive Plan. Outstanding awards granted under the Company's prior equity incentive plans will remain subject to the terms of such applicable plans, and shares under such plans that are cancelled or forfeited will be available for issuance under the 2024 Employee Plan or the 2024 Directors Plan, as applicable. Under the 2024 Employee Plan, the Company is authorized to issue 4.0 million shares of common stock to certain employees, key service providers and advisors through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions. RSUs and restricted stock granted under the 2024 Employee Plan will typically vest pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date. Stock options granted under the 2024 Employee Plan will typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date and have a ten-year contractual term. Stock options, RSUs and restricted stock granted under the 2024 Employee Plan reduce the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award. Forfeitures, cancellations and expirations of awards granted under the prior employee stock incentive plans increase the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award. Under the 2024 Directors Plan, the Company is authorized to issue 0.7 million shares of common stock through stock options, restricted stock and RSUs to non-employee directors. Stock awards issued under the 2024 Directors Plan typically will become vested in full on the first anniversary of the grant date. Stock options issued under the 2024 Directors Plan will have a ten-year contractual term. Stock options, restricted stock and RSUs granted under the 2024 Directors Plan reduce the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award. Forfeitures, cancellations and expirations of awards granted under the prior directors stock plan increase the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award. As of June 30, 2024, 4.7 million shares were available for issuance pursuant to awards that may be made in the future under shareholder-approved equity plans. For the three months ended June 30, 2024 and 2023, stock-based compensation expense was $3.8 million and $4.3 million, respectively, and for the six months ended June 30, 2024 and 2023, stock-based compensation expense was $7.8 million and $8.0 million, respectively. PSUs, RSUs and Restricted Stock - ADTRAN Holdings, Inc. The following table summarizes the PSUs, RSUs and restricted stock outstanding as of December 31, 2023, and June 30, 2024 and the changes that occurred during the six months ended June 30, 2024:
|  | Number of Shares (in thousands) |  |  | Weighted Avg. Grant Date Fair Value (per share) |
Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2023 |  |  | 1,942 |  |  | $ | 17.46 |
PSUs, RSUs and restricted stock granted |  |  | 1,097 |  |  | $ | 7.85 |
PSUs, RSUs and restricted stock vested |  |  | (110 | ) |  | $ | 18.13 |
PSUs, RSUs and restricted stock forfeited |  |  | (78 | ) |  | $ | 16.10 |
Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2024 |  |  | 2,851 |  |  | $ | 13.79 |
The fair value of PSUs with performance conditions, RSUs and restricted stock is equal to the closing price of the Company's stock on the date of grant. The fair value of PSUs with market conditions is calculated using a Monte Carlo simulation valuation method. As of June 30, 2024, total unrecognized compensation expense related to non-vested portion of performance-based PSUs (considered probable), market-based PSUs, RSUs and restricted stock was approximately $16.2 million, which will be recognized over the remaining weighted-average period of 2.3 years. As of June 30, 2024, there was $11.1 million of unrecognized compensation expense related to unvested performance-based PSUs (not-considered probable), which will be recognized over the remaining requisite service period of 1.5 years if achievement of the performance obligation becomes probable. Unrecognized compensation expense will be adjusted for actual forfeitures. Stock Options - ADTRAN Holdings, Inc. The following table summarizes the ADTRAN Holdings, Inc. stock options outstanding as of December 31, 2023, and June 30, 2024, and the changes that occurred during the six months ended June 30, 2024:
|  | Number of Stock Options (in thousands) |  |  | Weighted Avg. Exercise Price (per share) |  |  | Weighted Avg. Remaining Contractual Life (in years) |  |  | Aggregate Intrinsic Value (in thousands) |
Stock options outstanding, December 31, 2023 |  |  | 3,894 |  |  | $ | 10.32 |  |  |  | 5.25 |  |  | $ | 3,087 |
Stock options exercised |  |  | (36 | ) |  | $ | 6.06 |  |  |  |  |  |  |
Stock options forfeited |  |  | (140 | ) |  | $ | 6.45 |  |  |  |  |  |  |
Stock options expired |  |  | (217 | ) |  | $ | 8.39 |  |  |  |  |  |  |
Stock options outstanding, June 30, 2024 |  |  | 3,501 |  |  | $ | 10.64 |  |  |  | 4.88 |  |  | $ | 36 |
Stock options exercisable, June 30, 2024 |  |  | 1,369 |  |  | $ | 12.72 |  |  |  | 1.34 |  |  | $ | — |
As of June 30, 2024, there was $5.3 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 1.4 years. The determination of the fair value of stock options assumed or granted by ADTRAN Holdings was estimated using the Monte Carlo method and is affected by its stock price, as well as assumptions regarding a number of complex and subjective variables that may have a significant impact on the fair value estimate. The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of the Company's stock price and employee exercise behaviors. All of the options were previously issued at exercise prices that approximated fair market value at the date of grant. The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2024. The amount of aggregate intrinsic value was $36 thousand as of June 30, 2024, which will change based on the fair market value of the Company's stock. The total pre-tax intrinsic value of options exercised during the six months ended June 30, 2024, and 2023 were $34 thousand and $43 thousand, respectively. During the three and six months ended June 30, 2024, 0.1 million stock options vest ed. No stock options vested during the three and six months ended June 30, 2023.

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