Note P - Share-based Compensation

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE P—SHARE-BASED COMPENSATION

Equity Plans 

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

‑ the 1998 Share Incentive Plan

‑ the 2000 Share Incentive Plan

‑ the 2004 Share Incentive Plan

‑ the 2006 Share Incentive Plan

‑ the Amended and Restated 2013 Equity Incentive Plan (“2013 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 five incentive plans and generally become exercisable as to 25% of the shares on the first anniversary date following the date of grant and semi-annually 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, January 1, 2019		287		$	10.19			$	5.31			$	1,503
Exercised		(4	)		7.79	$	12.91		3.95				15
Forfeited		(2	)		12.20				6.08				2
Outstanding, December 31, 2019		281		$	10.21			$	5.32		3.87		573
Exercisable, December 31, 2019		281		$	10.21						3.87		573
Vested and expected to vest		281		$	10.21						3.87	$	573

As of December 31, 2019, there was no unrecognized stock option expense.

Restricted Stock Unit/Awards

The following is a summary of RSU/RSA activity (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, 2019		826				$	32.07	$	12,744
Granted		445					13.30		6
Released		(452	)	$	25.95		25.95		6
Cancelled/Forfeited		(49	)				26.17		584
Outstanding, December 31, 2019		770					25.18		9,143
Vested and expected to vest		770				$	25.18	$	9,143

The aggregate intrinsic value of RSUs and RSAs outstanding at December 31, 2019 was $9.8 million. Unrecognized compensation expense related to these RSUs and RSAs at December 31, 2019 was $16.8 million. This expense is expected to be recognized over 1.99 years.

Share-Based Compensation 

The Company recognizes compensation expense on a straight-line basis over the applicable vesting term of the award and expense is adjusted as forfeitures occur.

In 2014, the Company ceased issuing stock options and began issuing RSUs and RSAs as share-based compensation to employees. The Company estimates the fair value of RSUs and RSAs at the fair market value on the grant date.

Employee share-based compensation expenses recognized for the years ended December 31, were as follows (in thousands):

Share-Based compensation - by expense type:

	2019		2018		2017
Cost of goods sold	$	772	$	795	$	461
Research and development		2,557		2,419		1,496
Sales and marketing		1,070		925		481
General and administrative		7,405		6,981		5,357
Total share-based compensation expense	$	11,804	$	11,120	$	7,795

Share-Based compensation - by award type:

	2019		2018		2017
Employee stock options	$	—	$	12	$	853
Restricted stock units		11,804		11,108		6,942
Total share-based compensation expense	$	11,804	$	11,120	$	7,795