Note 10 - Stockholders' Equity

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Equity [Text Block]

10. Stockholders’ Equity

Authorized Shares

The Company’s second amended and restated certificate of incorporation, as amended (the “Certificate of Incorporation”), 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 the Certificate of Incorporation, the Company’s board of directors is authorized to issue shares of the preferred stock in one or more series without stockholder approval. The Company’s 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, the Company has no shares of preferred stock outstanding.

Stock Award Plans

In May 2006 the Company approved the 2006 Stock Incentive Plan, which became effective upon the Company’s initial public offering, and which has been subsequently amended. The maximum number of shares of common stock reserved and available for issuance under the 2006 Stock Incentive Plan is the sum of (i) 6,500,000 shares, and (ii) such number of shares as equals that number of stock options or awards returned to the Company’s 1997 Stock Option Plan, 1998 Stock Option Plan, 2000 Stock Option Plan, and 2004 Stock Option Plan, each as amended and in effect from time to time (following the original effective date of the 2006 Stock Incentive Option and Incentive Plan), resulting from the expiration, cancellation, or termination of stock options or awards under those plans. The 2006 Stock Incentive Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units (“RSUs”), performance-based RSUs (“PSUs”), unrestricted stock awards, and deferred stock awards to the Company’s 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 Company’s board of directors determines the term of the options but in no event will exceed ten years from date of grant. In connection with the adoption of the 2006 Stock Incentive Plan, no further option grants were permitted under any previous stock option plans. The Company may satisfy awards upon exercise of stock options, RSUs, or PSUs with either newly issued shares or treasury shares.

A total of 8,118,003 shares are currently authorized for under the 2006 Stock Incentive Plan, of which 1,105,266 remain available for grant as of December 31, 2024.

The Company has computed the fair value of employee stock options granted each year using the following weighted average assumptions:

	2024			2023			2022
Dividend yield		0.63	%		1.02	%		1.06	%
Volatility		36.7	%		43.0	%		44.6	%
Risk-free interest rate		4.1	%		4.3	%		3.9	%
Weighted average expected option term (in years)		4.4			4.5			4.5
Weighted average fair value per share of options granted	$	34.99		$	20.75		$	18.10

A summary of option activity as of December 31, 2024, 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, 2021		846,754		$	33.83		4.50	$	13,888
Granted		159,275		$	47.21
Exercised		(133,963	)	$	25.80			$	3,021
Canceled / Expired		(12,091	)	$	35.53
Balance outstanding at December 31, 2022		859,975		$	37.53		4.35	$	7,878
Granted		148,115		$	54.71
Exercised		(207,643	)	$	29.72			$	5,914
Canceled / Expired		(19,323	)	$	41.55
Balance outstanding at December 31, 2023		781,124		$	42.78		4.42	$	10,924
Granted		125,834		$	101.12
Exercised		(178,064	)	$	36.16			$	7,271
Canceled / Expired		(9,458	)	$	47.06
Balance outstanding at December 31, 2024		719,436		$	54.57		4.35	$	28,160
Exercisable at:
December 31, 2022		369,593		$	32.16		3.17	$	5,223
December 31, 2023		356,519		$	36.83		3.21	$	7,107
December 31, 2024		349,981		$	41.39		3.16	$	17,760
Expected to vest at:
December 31, 2022		490,382		$	41.59		5.23	$	2,655
December 31, 2023		424,605		$	47.78		5.43	$	3,817
December 31, 2024		369,455		$	67.05		5.46	$	10,400

Cash received from stock options exercised during the years ended December 31, 2024, 2023, and 2022, was $6.4 million, $6.2 million, and $3.5 million, respectively.

Restricted Stock Units and Performance-based Restricted Stock Units

The Company bases the fair value of RSU awards with time-based vesting on the intrinsic value of the awards at the date of grant.

The Company also issues PSUs, which are RSU awards with vesting based on performance conditions. PSUs awarded vest based on our achievement of operating income relative to the Company’s target operating income. The Company bases the fair values of PSUs on the intrinsic values of the awards at the date of grant.

A summary of the Company’s RSU activity (excluding PSUs) as of December 31, 2024, and for the three years then ended is presented below:

				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Balance outstanding at December 31, 2021		133,831		$	38.26
Granted		51,031		$	47.11
Vested		(45,489	)	$	35.75
Canceled		(6,229	)	$	40.79
Balance outstanding at December 31, 2022		133,144		$	42.38
Granted		48,225		$	54.68
Vested		(49,400	)	$	39.31
Canceled		(5,975	)	$	42.89
Balance outstanding at December 31, 2023		125,994		$	48.20
Granted		33,851		$	100.37
Vested		(49,521	)	$	46.49
Canceled		(4,186	)	$	49.51
Balance outstanding at December 31, 2024		106,138		$	65.28

The number of RSUs vested includes the shares that the Company withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. The fair values of the RSUs that vested during 2024, 2023, and 2022 were $4.9 million, $2.7 million, and $2.1 million, respectively.

The Company repurchases shares of its common stock in order to cover any minimum tax withholding liability associated with RSU vestings. A summary of such repurchases is as follows:

	2024		2023		2022
Shares of common stock repurchased for net settlement of equity awards		17,272		15,917		13,690
Average per share repurchase price	$	91.25	$	53.59	$	46.90
Aggregate purchase price (in thousands)	$	1,576	$	853	$	642

A summary of the Company’s PSU activity as of December 31, 2024, and for the three years then ended is presented below:

				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Balance outstanding at December 31, 2021		31,181		$	48.60
Granted		28,830		$	47.13
Vested		-		$	-
Canceled		(31,538	)	$	48.53
Balance outstanding at December 31, 2022		28,473		$	47.19
Granted		26,883		$	54.65
Vested		-		$	-
Canceled		(1,192	)	$	47.19
Balance outstanding at December 31, 2023		54,164		$	50.85
Granted		21,180		$	100.79
Vested		(14,266	)	$	47.23
Canceled		(1,148	)	$	52.54
Balance outstanding at December 31, 2024		59,930		$	69.15

The number of PSUs vested includes the shares that the Company withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. The fair values of the PSUs that vested during 2024 were $1.2 million.

The Company repurchases shares of its common stock in order to cover any minimum tax withholding liability associated with PSU vestings. There were no repurchases of PSUs prior to 2024. A summary of such repurchases in 2024 is as follows:

	2024
Shares of common stock repurchased for net settlement of equity awards		2,041
Average per share repurchase price	$	70.55
Aggregate purchase price (in thousands)	$	144

Stock-based Compensation

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

	2024		2023		2022
			(in thousands)
Stock option awards	$	2,996	$	2,705	$	2,487
Restricted stock units		2,307		1,951		1,654
Performance-based restricted stock units		1,265		663		32
Total stock-based compensation	$	6,568	$	5,319	$	4,173

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

	2024		2023		2022
			(in thousands)
Cost of sales	$	927	$	686	$	494
Sales and marketing		1,104		966		771
General and administrative		3,866		3,143		2,500
Research and development		671		524		408
Total stock-based compensation	$	6,568	$	5,319	$	4,173

The Company expects to record the unamortized portion of share-based compensation expense of $18.3 million for existing stock options, RSUs, and PSUs outstanding as of December 31, 2024, over a weighted-average period of 2.0 years. 

Stock Repurchase Plans

On February 18, 2025, the Company’s board of directors authorized the repurchase of up to $75.0 million of the Company’s common stock through transactions on the open market, in privately negotiated purchases or otherwise until February 17, 2026. The repurchase program may be suspended or discontinued at any time. To date the Company has not made any repurchases under this program.

Dividends

In February 2011, the Company’s board of directors approved a policy for the payment of quarterly cash dividends on its common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the 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 2024
March 14, 2024	March 28, 2024	$	0.16	$	3,589
May 16, 2024	May 30, 2024	$	0.16	$	3,593
August 15, 2024	August 29, 2024	$	0.16	$	3,596
November 21, 2024	December 5, 2024	$	0.16	$	3,600
Fiscal Year 2023
March 9, 2023	March 23, 2023	$	0.14	$	3,099
May 17, 2023	June 1, 2023	$	0.14	$	3,116
August 17, 2023	August 31, 2023	$	0.14	$	3,117
November 16, 2023	November 30, 2023	$	0.14	$	3,117

On February 18, 2025, the Company’s board of directors approved a quarterly cash dividend on its common stock of $0.20 per share payable on March 27, 2025, to stockholders of record at the close of business on March 13, 2025, which will total approximately $4.5 million.