EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2024

EMPLOYEE BENEFIT PLANS:

EMPLOYEE BENEFIT PLANS

9. EMPLOYEE BENEFIT PLANS

On December 31, 2024, the Company had the following stock-based compensation plans:

Employee Stock Purchase Plans

On June 15, 2021, the Company’s stockholders initially approved the 2021 Employee Stock Purchase Plan, which has been amended and restated by the Board of Directors and approved by the Company’s stockholders since then (as amended through the date of this report, the “2021 Purchase Plan”).

Under the 2021 Purchase Plan, eligible employees can contribute up to 10% of their compensation, as defined in the 2021 Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85% of the lower of the fair market value at the beginning of the offering period or the end of the purchase period. The 2021 Purchase Plan commenced on August 1, 2021, and provides for twenty-four-month offering periods with four six-month purchase periods in each offering period.

The Company estimated the fair value of purchase rights granted under the 2021 Purchase Plan during the year using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:

	Year Ended December 31,
	2024			2023				2022
Expected life (in years)		1.25			1.25			1.25
Volatility		40.97	%		43.66	%		48.73	%
Risk-free interest rate		4.61	%		5.15	%		2.75	%
Expected dividend		—			—			—
Weighted average fair value of purchase rights granted during the year	$	10.91		$	15.71		$	10.00

During the years ended December 31, 2024, 2023 and 2022, a total of 155,828, 223,608 and 182,083 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $26.14 per share, $17.14 per share and $16.15 per share, respectively. During the year ended December 31, 2022, a total of 5,203 shares were issued under the previously expired Employee Stock Purchase Plan adopted in 2010, at a weighted average purchase price of $13.40 per share per share. As of December 31, 2024, unrecognized compensation cost related to the 2021 Purchase Plan was $2.0 million, which is expected to be recognized over a weighted average period of 1.2 years.

As of December 31, 2024, 638,481 shares were available for future issuance under the 2021 Purchase Plan.

Stock Incentive Plans

On November 16, 2011, the Company’s stockholders initially approved the 2011 Stock Incentive Plan, which has been amended and restated and approved by the Company’s stockholders a number of times since then (as amended through the date of this report, the “2011 Plan”). Under the 2011 Plan, the Company may award stock options, stock appreciation rights (“SARs”), stock grants or stock units covering shares of the Company’s common stock to employees, directors, non-employee directors and contractors. The aggregate number of shares reserved for awards under the 2011 Plan is 14.6 million shares, plus up to 3.5 million shares previously issued under the 2001 Stock Plan adopted by the Company in 2001, which expired in 2011 (the “2001 Plan”) that are either (i) forfeited or (ii) repurchased by the Company or are shares subject to awards previously issued under the 2001 Plan that expire or that terminate without having been exercised or settled in full on or after November 16, 2011. In case of awards other than options or SARs, the aggregate number of shares reserved under the 2011 Plan will be decreased at a rate of 1.33 shares issued pursuant to such awards. The exercise price for stock options must generally be at prices no less than the fair market value at the date of grant. Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period.

As of December 31, 2024, 15.1 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.6 million shares were available for future grant. The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after the adoption of the 2011 Plan through December 31, 2024. As of December 31, 2024, there were no outstanding awards granted outside of the 2011 Plan.

The Company estimated the fair value of share-based awards granted under the 2011 Plan during the period using the Black-Scholes-Merton option-pricing model. There were no stock options granted during the years ended December 31, 2024, 2023 and 2022.

Stock-based compensation Expense

Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years. As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expenses related to the Company’s stock plans and employee stock purchase plans were allocated as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Costs of revenues	$	5,087	$	4,169	$	2,974
Research and development		8,958		7,711		9,391
Selling, general, and administrative		11,002		9,604		7,284
Stock-based compensation expense	$	25,047	$	21,484	$	19,649

Stock Options Activity

Additional information related to stock options under the 2011 Plan were as follows:

	Outstanding Options
				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
	(in thousands)	per Share		(Years)	(in thousands)
Outstanding, January 1, 2024	38	$	15.92
Granted	—		—
Exercised	(8)		15.26
Canceled	—		—
Expired	—		—
Outstanding, December 31, 2024	30	$	16.09	3.23	$	327
Vested and expected to vest, December 31, 2024	30	$	16.09	3.23	$	327
Exercisable, December 31, 2024	30	$	16.09	3.23	$	327

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $27.08 as of December 31, 2024, which would have been received by the option holders had all option holders exercised their stock options as of that date.

The total intrinsic value of stock options exercised during the years presented were as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Intrinsic value of options exercised	$	147	$	630	$	2,287

Total fair value of stock options vested during the year ended December 31, 2024 was immaterial. As of December 31, 2024, there was no remaining unrecognized compensation cost related to unvested stock options.

Restricted Stock Units Activity

Nonvested restricted stock units were as follows:

		Weighted
		Average Grant
	Shares	Date Fair Value
	(in thousands)	Per Share
Nonvested, January 1, 2024	1,995	$	30.03
Granted	756		35.30
Vested	(804)		27.57
Forfeited	(62)		31.76
Nonvested, December 31, 2024	1,885	$	33.14

The weighted average grant date fair values of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022 were $35.30, $43.46 and $23.23, respectively.

The total fair value of restricted stock units vested during the years presented were as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Fair value of restricted stock units vested	$	26,963	$	32,786	$	22,676

As of December 31, 2024, there was $48.1 million of total unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average period of 2.4 years. Restricted stock units do not have rights to dividends prior to vesting.

401(k) Savings Plan

The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) covering substantially all of its US employees. The Company’s 401(k) Plan is a defined contribution plan with a 401(k) salary deferral arrangement qualified under appropriate provisions of the Internal Revenue Code (the “Code”) and applicable state laws. Under the 401(k) Plan, eligible employees may make pre-tax salary or after-tax contributions up to 60% of annual compensation, as defined by the 401(k) Plan. In addition, participants who have reached the age of 50 can elect to withhold additional catch-up contributions subject to the Code and the 401(k) Plan limits. Participants may also contribute amounts representing distributions from other qualified plans (rollovers). The Company may make discretionary matching contributions. During the years ended December 31, 2024, 2023 and 2022, the Company matched from 50% to 100% of each employee’s contribution up to a maximum of 4% of the employee’s total eligible earnings. The Company’s matching contributions to the 401(k) Plan aggregated $1.8 million, $1.7 million and $1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.