Note 2 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

2. STOCK-BASED COMPENSATION

Stock Plan

The Board of Directors adopted the 2014 Equity Incentive Plan (the “2014 Plan”) in April 2013, and the stockholders approved it in June 2013. In October 2014, the Board of Directors approved certain amendments to the 2014 Plan. The 2014 Plan became effective on November 13, 2014. The 2014 Plan provides for the issuance of up to 5.5 million shares and will expire on November 13, 2024. As of June 30, 2015, 5.4 million shares remained available for future issuance. 

Stock-Based Compensation Expense

The Company recognized stock-based compensation expenses as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of revenue	$	284	$	219	$	526	$	424
Research and development		2,503		2,245		5,123		4,250
Selling, general and administrative		6,710		5,951		13,067		11,339
Total	$	9,497	$	8,415	$	18,716	$	16,013

Restricted Stock

The Company’s restricted stock units (“RSUs”) include time-based RSUs, performance-based RSUs (“PSUs”) and market-based RSUs (“MSUs”). Time-based RSUs generally vest over one to four years, subject to continued employment with the Company. PSUs vest over four years and MSUs vest over ten years, subject to the achievement of pre-determined performance goals and continued employment with the Company. A summary of the RSUs is presented in the table below:

	Time-Based RSUs			Weighted-Average Grant Date Fair Value Per Share		PSUs			Weighted-Average Grant Date Fair Value Per Share		MSUs		Weighted-Average Grant Date Fair Value Per Share		Total			Weighted-Average Grant Date Fair Value Per Share
	(in thousands)					(in thousands)					(in thousands)				(in thousands)
Outstanding at January 1, 2015		589		$	28.48		1,659		$	28.11		1,800	$	23.57		4,048		$	26.14
Granted (1)		252		$	49.63		659		$	48.53		-	$	-		911		$	48.83
Performance adjustment (2)		-		$	-		(130	)	$	43.45		-	$	-		(130	)	$	43.45
Released		(199	)	$	24.52		(481	)	$	23.77		-	$	-		(680	)	$	23.99
Forfeited		(38	)	$	34.91		(25	)	$	28.27		-	$	-		(63	)	$	32.32
Outstanding at June 30, 2015		604		$	38.24		1,682		$	36.17		1,800	$	23.57		4,086		$	30.92

(1) Amount for PSUs reflects the maximum number of shares that can be earned assuming the achievement of the highest level of performance conditions.

(2) Amount for PSUs reflects the number of shares that have not been earned or may not be earned based on management’s probability assessment.

The intrinsic value related to awards released for the three months ended June 30, 2015 and 2014 was $8.4 million and $8.3 million, respectively. The intrinsic value related to awards released for the six months ended June 30, 2015 and 2014 was $33.9 million and $18.5 million, respectively. As of June 30, 2015, the total intrinsic value of outstanding awards, including RSUs, PSUs and MSUs, was $207.2 million, based on the closing stock price of $50.71. As of June 30, 2015, unamortized compensation expense related to outstanding awards, including RSUs, PSUs and MSUs, was approximately $89.6 million with a weighted-average remaining recognition period of approximately five years.

2015 PSUs:

In February 2015, the Board of Directors granted to executive officers 172,000 shares of PSUs which represent a target number of RSUs to be awarded based on the Company’s average two-year (2015 and 2016) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as determined by the Semiconductor Industry Association (“2015 Executive PSUs”). The maximum number of 2015 Executive PSUs that an executive officer can ultimately earn is 300% of the target shares. 50% of the 2015 Executive PSUs will vest in February 2017 if the pre-determined performance goals are met and approved by the Compensation Committee. The remaining shares will vest over the following two years on a quarterly basis. The vesting is subject to the employees’ continued employment with the Company.

In February 2015, the Board of Directors granted to non-executive employees 58,000 shares of PSUs which represent a target number of RSUs to be awarded based on the Company’s 2016 revenue goals for certain regions or product line divisions, or the Company’s average two-year (2015 and 2016) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as determined by the Semiconductor Industry Association (“2015 Non-Executive PSUs”). The maximum number of 2015 Non-Executive PSUs that an employee can ultimately earn is either 200% or 300% of the target shares, depending on the job classifications of the employees. 50% of the 2015 Non-Executive PSUs will vest in the first quarter of 2017 if the pre-determined performance goals are met and approved by the Compensation Committee. The remaining shares will vest over the following two years on an annual or quarterly basis. The vesting is subject to the employees’ continued employment with the Company.

Stock Options

A summary of stock option activity is presented in the table below:

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(in thousands)					(in years)		(in thousands)
Outstanding at January 1, 2015		590		$	15.80		1.2	$	20,039
Exercised		(425	)	$	15.71
Forfeited and expired		(1	)	$	15.96
Outstanding at June 30, 2015		165		$	16.05		1.5	$	5,683
Options exercisable at June 30, 2015 and expected to vest		164		$	16.05		1.5	$	5,681
Options exercisable at June 30, 2015		159		$	16.18		1.5	$	5,481

Total intrinsic value of options exercised was $12.9 million and $4.9 million for the three months ended June 30, 2015 and 2014, respectively. Total intrinsic value of options exercised was $15.4 million and $11.8 million for the six months ended June 30, 2015 and 2014, respectively. The net cash proceeds from the exercise of stock options were $6.7 million and $8.6 million for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, unamortized compensation expense related to unvested options was not material.

Employee Stock Purchase Plan (“ESPP”)

No shares were issued under the ESPP for the three months ended June 30, 2015 and 2014. For the six months ended June 30, 2015 and 2014, 30,000 and 43,000 shares, respectively, were issued under the ESPP. As of June 30, 2015, 4.7 million shares were available for future issuance.

The intrinsic value of shares issued was $0.4 million and $0.5 million for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, the unamortized expense was $0.1 million, which will be recognized through the third quarter of 2015. The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

	Six Months Ended June 30,
	2015			2014
Expected term (years)		0.5			0.5
Expected volatility		35.7	%		33.9	%
Risk-free interest rate		0.1	%		0.1	%
Dividend yield		1.2	%		-

Cash proceeds from the shares issued under the ESPP were $1.1 million for both the six months ended June 30, 2015 and 2014.