Note 10 - Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

10. Stockholders’ Equity

Authorized Shares

Our certificate of incorporation, as amended and restated from time to time, authorizes the issuance of up to 37,000,000 shares of common stock and up to 3,000,000 shares of undesignated preferred stock.

Under the terms of our certificate of incorporation, our board of directors is authorized to issue shares of the preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Currently, we have no shares of preferred stock outstanding.

Equity Offering

On July 16, 2021, we closed an offering of 1,000,000 shares of our common stock, $0.01 par value per share, at a price to the public of $54.50 per share, less underwriting discounts. The net proceeds, after deducting the underwriting discounts and other offering expenses, were approximately $51.0 million. We used a portion of the proceeds from the offering to repay our outstanding debt. We plan to use the remaining proceeds for general corporate purposes, including working capital needs and capital expenditures, dividend payments, deferred payments related to prior acquisitions, and the funding of future acquisitions.

On August 4, 2021, the underwriters purchased an additional 150,000 shares pursuant to an option granted to them in connection with the offering described above. The net proceeds to the Company, after deducting underwriting discounts and other offering expenses, were approximately $7.6 million. We plan to use the proceeds for general corporate purposes.

Stock Award Plans

In May 2006 we approved a 2006 Stock Option and Incentive Plan (as subsequently amended, the 2006 Plan), which became effective upon our initial public offering. The 2006 Plan allows for the granting of an aggregate 5,500,000 shares of incentive stock options, non-qualified stock options, stock appreciation rights, RSUs, PSUs, unrestricted stock awards, and deferred stock awards to our officers, employees, directors, and consultants. Incentive stock options are required to be issued at not less than fair market value at the date of the grant and generally vest over four or five years. The term of the options is determined by our Board of Directors but in no event will exceed ten years from date of grant. In connection with the adoption of the 2006 Plan, no further option grants were permitted under any previous stock option plans and any expirations, cancellations, or terminations under the previous plans are available for issuance under the 2006 Plan. We may satisfy awards upon exercise of stock options, RSUs or PSUs with either newly issued shares or treasury shares. The total number of shares currently authorized for the 2006 Plan is 7,118,003 shares, of which 658,935 remain available for grant as of December 31, 2021.

We have computed the fair value of employee stock options granted each year using the following weighted average assumptions:

	2021			2020			2019
Dividend yield		0.91	%		1.02	%		0.96	%
Volatility		46.0	%		47.3	%		42.8	%
Risk-free interest rate		1.1	%		0.3	%		1.7	%
Weighted average expected option term (in years)		4.6			4.9			4.7
Weighted average fair value per share of options granted	$	17.64		$	13.24		$	12.51

A summary of option activity as of December 31, 2021 and for the three years then ended is presented below:

				Weighted		Weighted Average		Aggregate
	Number			Average		Remaining		Intrinsic
	of Shares			Exercise Price		Contractual Term		Value
						(in years)		(in thousands)
Balance outstanding at December 31, 2018		1,462,575		$	16.41		4.54	$	12,214
Granted		195,379		$	35.53
Exercised		(509,693	)	$	9.53			$	11,488
Canceled / Expired		(101,167	)	$	17.90
Balance outstanding at December 31, 2019		1,047,094		$	28.22		4.31	$	13,367
Granted		222,110		$	36.67
Exercised		(331,958	)	$	17.99			$	5,413
Canceled / Expired		(5,406	)	$	27.49
Balance outstanding at December 31, 2020		931,840		$	28.22		4.49	$	11,442
Granted		151,161		$	48.60
Exercised		(217,121	)	$	20.95			$	6,975
Canceled / Expired		(19,126	)	$	23.18
Balance outstanding at December 31, 2021		846,754		$	33.83		4.50	$	13,888
Exercisable at:
December 31, 2019		309,501		$	19.64		3.50	$	5,047
December 31, 2020		274,411		$	23.08		3.50	$	4,781
December 31, 2021		301,692		$	27.40		3.30	$	6,886
Expected to vest at:
December 31, 2019		737,593		$	24.68		4.65
December 31, 2020		657,429		$	30.37		4.93
December 31, 2021		545,062		$	37.38		5.16

Cash received from stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $4.5 million, $6.0 million and $4.9 million, respectively.

Restricted Stock Units and Performance-based Restricted Stock Units

The fair value of restricted stock unit awards with time-based vesting is based on the intrinsic value of the awards at the date of grant.

We also issue restricted stock unit awards with vesting based on performance conditions. Performance-based restricted stock units awarded in 2021 will vest based on our achievement of operating income relative to our target operating income. For restricted stock unit awards that include vesting based on performance conditions, the fair values are based on the intrinsic values of the awards at the date of grant.

A summary of our restricted stock unit activity as of December 31, 2021 and for the three years then ended is presented below:

				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Balance outstanding at December 31, 2018		217,895		$	21.21
Granted		56,567		$	35.41
Vested		(61,058	)	$	18.46
Canceled		(24,723	)	$	22.19
Balance outstanding at December 31, 2019		188,681		$	26.14
Granted		46,146		$	36.86
Vested		(50,669	)	$	22.76
Canceled		(37,143	)	$	27.88
Balance outstanding at December 31, 2020		147,015		$	30.24
Granted		48,298		$	48.65
Vested		(51,414	)	$	26.32
Canceled		(10,068	)	$	30.70
Balance outstanding at December 31, 2021		133,831		$	38.26

A summary of our performance-based restricted stock unit activity as of December 31, 2021 and for the three years then ended is presented below:

			Weighted
			Average
	Number		Grant Date
	of Shares		Fair Value
Balance outstanding at December 31, 2020		-	$	-
Granted		31,181	$	48.60
Vested		-	$	-
Canceled		-	$	-
Balance outstanding at December 31, 2021		31,181	$	48.60

The number of RSUs vested includes the shares that we withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. The fair values of the RSUs that vested during 2021, 2020 and 2019 were $2.5 million, $1.8 million, and $2.1 million, respectively.

We repurchase shares of our common stock in order to cover any minimum tax withholding liability associated with RSU vestings. A summary of our repurchases is as follows:

	2021		2020		2019
Shares of common stock repurchased for net settlement of equity awards		16,333		16,537		20,524
Average per share repurchase price	$	49.10	$	34.47	$	33.28
Aggregage purchase price (in thousands)	$	802	$	570	$	683

Stock-based Compensation

The components of stock-based compensation expense included in the consolidated statements of operations are as follows:

	2021		2020		2019
	(in thousands)
Stock option awards	$	2,199	$	1,938	$	1,580
Restricted stock units		1,247		1,084		1,062
Performance-based restricted stock units		33		-		-
Total stock-based compensation	$	3,479	$	3,022	$	2,642

Stock-based compensation is included in our statements of operations as follows:

	2021		2020		2019
	(in thousands)
Cost of sales	$	407	$	333	$	310
Sales and marketing		527		516		544
General and administrative		2,185		1,883		1,509
Research and development		360		290		279
Total stock-based compensation	$	3,479	$	3,022	$	2,642

We expect to record the unamortized portion of share-based compensation expense of $13.1 million for existing stock options and RSUs outstanding at December 31, 2021, over a weighted-average period of 3.3 years.

Stock Repurchase Plans

On February 22, 2022, our Board of Directors authorized the repurchase of up to $20.0 million of the Company’s common stock through transactions on the open market, in privately negotiated purchases or otherwise until February 22, 2023. The repurchase program may be suspended or discontinued at any time. To date we have not made any repurchases under this program.

Dividends

In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows:

Record Date	Payment Date	Per Share Amount		Dividend Payment
				(in thousands)
Fiscal Year 2021
March 9, 2021	March 25, 2021	$	0.110	$	2,262
May 19, 2021	June 3, 2021	$	0.110	$	2,267
August 26, 2021	September 9, 2021	$	0.110	$	2,401
November 19, 2021	December 2, 2021	$	0.110	$	2,405
Fiscal Year 2020
March 3, 2020	March 19, 2020	$	0.095	$	1,917
May 20, 2020	June 4, 2020	$	0.095	$	1,917
August 27, 2020	September 10, 2020	$	0.095	$	1,925
November 19, 2020	December 3, 2020	$	0.095	$	1,936

On February 22, 2022, our Board of Directors approved a quarterly cash dividend on our common stock of $0.125 per share payable on March 24, 2022, to stockholders of record at the close of business on March 8, 2022, which will total approximately $2.7 million.