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Stockholders' Equity, Stock Plans and Stock-based Compensation Expense
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stockholders' Equity, Stock Plans and Stock-based Compensation Expense STOCKHOLDERS’ EQUITY, STOCK PLANS AND STOCK-BASED COMPENSATION EXPENSE
As of December 31, 2023, the Company had one class of issued common stock with a par value of $0.001. Authorized capital stock consists of 55,000,000 shares comprised of two classes: (i) 50,000,000 shares of Common Stock, of which 19,960,622 shares are issued and outstanding as of December 31, 2023, and (ii) 5,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”), of which no shares are issued and outstanding.
As of December 31, 2023, the Company had the following stock-based employee compensation plans:
2004 Equity Incentive Plan
In 1998, the Company adopted the 1998 Stock Plan, or 1998 Plan, under which 4,650,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants.
In 2004, the Board of Directors (“the Board”) adopted the 2004 Equity Incentive Plan. A total of 1,750,000 shares of common stock were originally reserved for issuance pursuant to the 2004 Equity Incentive Plan. In addition, the shares reserved for issuance under the 2004 Equity Incentive Plan included shares reserved but un-issued under the 1998 Plan and shares returned to the 1998 Plan as the result of termination of options or the repurchase of shares. In 2012 the stockholders approved a “fungible share” provision whereby each full-value award issued under the 2004 Equity Incentive Plan results in a requirement to subtract 2.12 shares from the shares reserved under the Plan.
2019 Equity Incentive Plan
At the Company’s Annual Meeting of Stockholders in 2019, the Company’s stockholders approved the 2019 Equity Incentive Plan, which is an amendment and restatement of the 2004 Equity Incentive Plan. The 2004 Equity Incentive Plan was amended to: (i) increase the number of shares available for future grant by 700,000 (in addition to the 9,701,192 shares provided under the 2004 Equity Incentive Plan); (ii) extend the term of the 2004 Equity Incentive Plan to the date of the Annual Meeting of the Company’s stockholders in 2029; (iii) amend the 2004 Equity Incentive Plan to eliminate the requirement for awards granted on or after June 14, 2019 that any shares subject to awards with an exercise price less than fair market value on the date of such grant will be counted against the Plan as 2.12 shares for each full value share awarded in accordance with the 2004 Equity Incentive Plan; (iv) amend the 2004 Equity Incentive Plan to remove the requirement that any shares subject to awards with an exercise price less than fair market value on the date of such grant will be counted against the Plan as 2.12 shares for each full value share awarded; (v) amend the 2004 Equity Incentive Plan to remove certain provisions relating to the “performance based compensation” exception under Section 162(m) of the Internal Revenue Code of 1986, as amended; (vi) include a minimum one-year vesting period with respect to awards granted under the 2004 Equity Incentive Plan.
Also in 2019, the Board also amended the Company’s Stock Ownership Guidelines to require all officers (as defined by Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) to hold at least 50% of any shares received pursuant to stock options, stock appreciation rights, vested restricted stock awards (“RSAs”), restricted stock units (“RSUs”), or performance stock units (“PSUs”) (net of taxes) for a minimum of one year following vesting and delivery.
In 2019, the Board also adopted a clawback policy to permit recovery of certain compensation paid to Named Executive Officers (as defined in Item 402 of Regulation S-K) of the Company if the Compensation Committee of the Board determines that a Named Executive Officer (i) has violated law, the Company’s Code of Business Conduct and Ethics, or any significant ethics or compliance policies, and (ii) such conduct results in material financial or reputational harm, or results in a need for a restatement of the Company’s consolidated financial statements. The Amended and Restated Plan provides for the grant of incentive stock options, non-statutory stock options, RSAs, RSUs, stock appreciation rights, PSUs, and other stock or cash awards.
In 2020, the Company's stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan and approved an additional 600,000 shares, available for future grants.
In June 2021, stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan and approved an additional 450,000 shares, available for future grants.
In June 2022, stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan and approved an additional 600,000 shares, available for future grants.
In July 2023, stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan and approved an additional 1,300,000 shares, available for future grants.
The Company’s non-employee directors are granted $150,000 of RSUs or non-statutory stock options annually on the date of the Company’s Annual Meeting of stockholders. These grants cliff-vest on the one-year anniversary of the grant date. In the years ended December 31, 2023, 2022 and 2021, the Company issued 57,039, 12,496 and 41,301 RSUs, respectively, to its non-employee directors. In the year ended December 31, 2023, the Company issued 73,964 non-statutory stock options to its non-employee directors.
In the years ended December 31, 2023, 2022 and 2021, the Company’s Board of Directors granted 533,981, 191,993 and 219,686 RSUs, respectively, to its executive officers, directors and certain members of the Company’s management related to annual grants and new hire grants. The new hire RSUs vest quarterly on each of the first four annual anniversaries of the grant date and the annual grant RSUs vest one quarter on the first annual anniversary and monthly thereafter for 36 months. The Company measured the fair market values of the underlying stock on the dates of grant and recognizes the stock-based compensation expense over the vesting period. On the vesting date, the Company issues common stock, net of stock withheld to settle the recipient’s minimum statutory tax liability.
In the years ended December 31, 2023, 2022 and 2021 the Company’s Board of Directors granted its executive officers and certain senior management employees 239,777, 169,785, and 178,222 PSUs, respectively, related to its annual grants. The 2020 grant vested on the first anniversary subject to the achievement of pre-established performance goals. The 2021 and 2022 grants vest one half on the first anniversary subject to the achievement of pre-established performance goals and the remaining half vests on the second anniversary subject to the recipient’s continued service. In addition to the 2021 annual PSU grants, in July 2021, the Company granted 265,002 PSUs to certain employees. This grant consists of four separate vesting tranches that will vest from April 2023 through June 2025 upon the achievement of operational milestones associated with each tranche and continued service.
2023 Inducement Equity Incentive Plan
At the Company’s Annual Meeting of Stockholders in 2023, the Company stockholders approved the 2023 Inducement Equity Incentive Plan, which permits the grant of equity-based awards, restricted stock units, restricted stock, stock appreciation rights, and performance awards to individuals not previously employees of the Company as an inducement material to the individuals’ entry into employment with the Company. The maximum aggregate number of shares of common stock that may be awarded and sold under the 2023 Inducement Equity Incentive Plan is 2,500,000. In 2023, 2,500,000 shares were approved and reserved to be available for future grants. In the year ended December 31, 2023, the Company issued 95,920 incentive equity awards under the 2023 Inducement Equity Incentive Plan.
Employee Stock Purchase Plan
On January 12, 2004, the Board of Directors adopted the 2004 Employee Stock Purchase Plan. Under the 2004 Employee Stock Purchase Plan, or 2004 ESPP, eligible employees are permitted to purchase common stock at a discount through payroll deductions. The 2004 ESPP offering and purchase periods are for six months. The 2004 ESPP has an evergreen provision based on which shares of common stock eligible for purchase are increased on the first day of each fiscal year by an amount equal to the lesser of:
•600,000 shares;
•2.0% of the outstanding shares of common stock on such date; or
•an amount as determined by the Board of Directors.
The price of the common stock purchased is the lower of 85% of the fair market value of the common stock at the beginning or end of the six-month offering period. In the years ended December 31, 2023, 2022, and 2021, under the 2004 ESPP, the Company issued 51,786, 49,306, and 59,635 shares, respectively. At December 31, 2023, 326,800 shares remained available for future issuance.
Due to the late filing of the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2023, participation in the ESPP was suspended.
Option and Award Activity
Activities under 2004 Equity Incentive Plan, 2019 Equity Incentive Plan and 2023 Inducement Equity Incentive Plan are summarized as follows:
Options Outstanding
Shares
Available
For Grant		Number of
Shares		Weighted-
Average
Exercise
Price		Weighted-Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic
Value
(in millions ) (1)
Balances as of December 31, 20201,085,170 217,007 $22.35 3.75$1.47 
Additional shares reserved(2)
450,000 
Options granted(172,139)172,139 $30.71 
Options exercised— (71,798)$22.02 
Options cancelled (expired or forfeited)30,173 (30,173)$37.14 
Stock awards granted(744,949)— — 
Stock awards cancelled (expired or forfeited)299,092 — — 
Balances as of December 31, 2021947,347 287,175 $25.89 4.92$4.46 
Additional shares reserved(2)
600,000 
Options granted(296,238)296,238 $40.95 
Options exercised— (39,960)$21.28 
Options cancelled (expired or forfeited)29,518 (29,518)$34.91 
Stock awards granted(374,274)— — 
Stock awards cancelled (expired or forfeited)164,572 — — 
Balances as of December 31, 20221,070,925 513,935 $34.41 6.63$5.99 
Additional shares reserved(2)
3,800,000 
Options granted— 1,099,075 $13.10 
Options exercised— (42,234)$14.50 
Options cancelled (expired or forfeited)288,536 (288,536)$29.21 
Stock awards granted(2,144,988)— — 
Stock awards cancelled (expired or forfeited)540,064 — — 
Balances as of December 31, 20233,554,537 1,282,240 $17.97 8.21$— 
Exercisable as of December 31, 2023190,997 $36.39 3.36$— 
Vested and expected to vest, net of estimated forfeitures, as of December 31, 20231,180,944 $18.37 8.11$— 
(1)Based on the closing stock price of $3.53 of the Company’s stock on December 31, 2023, $44.22 on December 31, 2022, $41.32 on December 31, 2021 and $24.11 on December 31, 2020.
(2)Approved by the board of directors and stockholders in 2023, 2022 and 2021.

The equity plans deduct the shares available for issuance by the gross number of shares for which an award is exercised or vests, not the net number of shares actually issued upon exercise, in the event the exercise price is paid in shares of the Company's common stock or shares are withheld to satisfy tax withholding obligations. Any RSU or PSU shares granted on or after July 13, 2023 are counted against the shares available for grant at a ratio of 1.65 shares for every one share granted.
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value and is the aggregate difference between the Company’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options. The aggregate intrinsic amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised in 2023, 2022 and 2021 was $0.3 million, $1.1 million, and $1.3 million, respectively. The options outstanding and exercisable at December 31, 2023 were in the following exercise price ranges:
Exercise Prices
Number of Shares Outstanding
Contractual Life
(in years)
Number of Shares
Exercisable
$3.6731,256 6.85— 
$11.02735,295 9.63— 
$14.04——$18.5587,001 8.813,250 
$19.44147,455 9.15— 
$25.70——$33.45187,927 3.37121,909 
$36.55——$39.3030,881 1.2030,881 
$39.882,187 5.001,393 
$41.3921,220 8.1810,168 
$47.404,745 0.964,745 
$63.6234,273 7.1318,651 
$3.67——$63.621,282,240 8.21190,997 
Stock Awards (RSU and PSU) Activity Table
Information with respect to RSUs and PSUs activity is as follows:
Number of
Shares		Weighted-Average
Grant-
Date Fair
Value
Aggregate
Fair Value(1)
(in thousands)
Aggregate
Intrinsic Value(2)
(in thousands)
Outstanding at December 31, 2020779,757 $23.96 $18,800 
Granted744,949 $40.16 
Vested(3)
(254,946)$22.94 $8,287 
(4)
Forfeited(236,856)$27.33 
Outstanding at December 31, 20211,032,904 $35.00 $42,680 
Granted374,274 $45.36 
Vested(3)
(340,836)$29.04 $15,443 
(5)
Forfeited(160,131)$41.48 
Outstanding at December 31, 2022906,211 $40.39 $40,073 
Granted829,866 $14.43 
Vested(3)
(298,485)$35.61 $9,597 
(6)
Forfeited(527,730)$36.56 
Outstanding at December 31, 2023909,862 $20.46 $3,212 
(1)Represents the value of the Company’s stock on the date that the restricted stock units and performance stock units vest.
(2)Based on the closing stock price of the Company’s stock of $3.53 on December 31, 2023, $44.22 on December 31, 2022, $41.32 on December 31, 2021, and $24.11 on December 31, 2020.
(3)The number of restricted stock units vested includes shares that the Company withheld on behalf of the employees to satisfy the statutory tax withholding requirements.
(4)On the grant date, the fair value for these vested awards was $5.8 million.
(5)On the grant date, the fair value for these vested awards was $9.9 million.
(6)On the grant date, the fair value for these vested awards was $10.6 million.
Stock-Based Compensation
Stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):
Year Ended December 31,
202320222021
Stock options$2,227 $2,175 $782 
RSUs6,100 6,979 5,305 
PSUs(586)4,430 6,591 
ESPP323 816 494 
Total stock-based compensation expense$8,064 $14,400 $13,172 
Total stock-based compensation expense recognized during the years ended December 31, 2023, 2022 and 2021 was recorded in the Consolidated Statements of Operations as follows (in thousands):
Year Ended December 31,
202320222021
Cost of revenue$751 $1,665 $1,408 
Sales and marketing3,387 4,998 3,160 
Research and development1,082 2,405 2,784 
General and administrative2,844 5,332 5,820 
Total stock-based compensation expense$8,064 $14,400 $13,172 
In the year ended December 31, 2023, stock-based compensation expense was impacted by the Company reducing its estimate of the probability of certain performance stock unit grants vesting, and by the reversal of previously reported stock-based compensation expense upon the forfeiture of unvested equity-based awards.
Valuation Assumptions and Fair Value of Stock Options and ESPP Grants
The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted under its equity incentive plans and rights to acquire stock granted under its employee stock purchase plan. The weighted average estimated fair values of the employee stock options and rights granted under the employee stock purchase plan and the weighted average assumptions used to calculate the grant date fair values, are as follows:
Stock OptionsStock Purchase Plan (ESPP)
202320222021202320222021
Expected term (in years)4.174.033.970.500.490.50
Risk-free interest rate4.06 %1.99 %0.48 %4.70 %3.79 %0.14 %
Volatility67 %66 %66 %70 %69 %36 %
Dividend yield(1)
— %— %— %— %— %— %
Weighted average estimated fair value at grant date$7.04 $19.76 $15.09 $14.83 $15.77 $9.64 
(1)The Company has not paid dividends since its inception.