Note 15 - Share-based Compensation

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 15. Share-Based Compensation

Equity Plans

The Company’s board of directors and stockholders approved the following equity plans:

●

the 2006 Share Incentive Plan

●

the 2013 Equity Incentive Plan (“2013 Plan”)

●

the 2021 Equity Incentive Plan (“2021 Plan”)

The Company issued stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to employees, consultants and non-employee directors. Stock option awards generally vest over a four-year period and have a maximum term of ten years. Stock options under these plans have been granted with an exercise price equal to the fair market value on the date of the grant. Nonqualified and Incentive Stock Options, RSAs and RSUs may be granted from these plans. Prior to the Company’s initial public offering in September 2013, the fair market value of the Company’s stock had been historically determined by the board of directors and from time to time with the assistance of third-party valuation specialists.

Stock Options

Options have been granted to the Company’s employees under the two incentive plans and generally become exercisable as to 25% of the shares on the first anniversary date following the date of grant and 12.5% on a semi-annual basis thereafter. All options expire ten years after the date of grant.

The following is a summary of option activity (in thousands, except per share data):

										*Weighted*								*Weighted*
						*Weighted*				*Average*								*Average*
						*Average*				*Share Price*				*Weighted*				*Remaining*				*Aggregate*
		*Number of*				*Exercise*				*on Date of*				*Average*				*Contractual*				*Intrinsic*
		*shares*				*Price*				*Exercise*				*Fair Value*				*Life*				*Value*
		(in thousands, except price data)
Outstanding at January 1, 2022			269			$	10.32							$	5.44				1.6879			$	-
Forfeited			(5	)			6.13								5.04								-
Outstanding, September 30, 2022			264				10.40								5.45				0.9655				-
Exercisable, September 30, 2022			264				10.40								5.45				0.9655				-
Vested and expected to vest			264				10.40								5.45				0.9655				-

As of September 30, 2022, there was no unrecognized stock option expense.

Performance Based Incentive Plan

The Company approved to grant restricted performance stock units (“PSUs”) to senior executives as a part of our long-term equity compensation program starting from June 2021. The number of shares of common stock that will ultimately be issued to settle PSUs granted ranges from 0% to 200% of the number granted and is determined based on certain performance criteria over a three-year measurement period. The performance criteria for the PSUs are based on a combination of the performance of our stock price and the Total Shareholder Return (“TSR”) for the performance period compared with the TSR of certain peer companies or index for the performance period. PSUs granted vest 100% on the third anniversary of their grant, assuming achievement of the applicable performance criteria. We estimated the fair value of the PSUs using a Monte Carlo simulation model on the date of grant. Compensation expense is recognized ratably over the explicit service period. The Company recognized PSU expenses for the three months ended September 30, 2022 and 2021 was $0.2 million and $0.4 million, respectively. The PSU expenses for the nine months ended on September 30, 2022 and 2021 was $1.2 million and $0.4 million, respectively.

Restricted Stock Units/Awards

The following is a summary of RSU/RSA activity, inclusive of performance based incentive plan (in thousands, except per share data):

						*Weighted*
						*Average Share*				*Weighted*				*Aggregate*
		*Number of*				*Price on Date*				*Average Fair*				*Intrinsic*
		*shares*				*of Release*				*Value*				*Value*
		(in thousands, except price data)
Outstanding at January 1, 2022			2,170							$	11.15			$	11,156
Granted			1,874								2				3,399
Released			(760	)							9.5				2,131
Cancelled/Forfeited			(120	)							10.85				325
Outstanding, September 30, 2022			3,164								6.14				8,607
Vested and expected to vest			3,164								6.14				8,607

As of September 30, 2022, there was $16.1 million of unrecognized compensation expense related to these RSUs and RSAs. This expense is expected to be recognized over 2.1 years.

Share-Based Compensation

Employee share-based compensation expenses recognized for the periods indicated (in thousands):

		*Three months ended*								*Nine months ended*
		*September 30,*								*September 30,*
		*2022*				*2021*				*2022*				*2021*
Share-based compensation - by expense type
Cost of goods sold		$	121			$	222			$	371			$	689
Research and development			343				489				1,019				1,682
Sales and marketing			231				272				643				820
General and administrative			1,932				2,146				5,210				5,731
Total share-based compensation expense		$	2,627			$	3,129			$	7,243			$	8,922