Note 2 - Stock-Based Compensation

9 Months Ended

Sep. 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 and provides for the issuance of up to 5.5 million shares. The 2014 Plan will expire on November 13, 2024. As of September 30, 2015, 5.3 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 September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of revenue	$	303	$	246	$	829	$	669
Research and development		2,932		2,388		8,055		6,638
Selling, general and administrative		7,240		6,225		20,307		17,565
Total	$	10,475	$	8,859	$	29,191	$	24,872

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)			263		$	49.59			659		$	48.53			-	$	-			922		$	48.83
Performance adjustment (2)			-		$	-			(70	)	$	41.83			-	$	-			(70	)	$	41.83
Released			(257	)	$	25.58			(555	)	$	23.56			-	$	-			(812	)	$	24.20
Forfeited			(40	)	$	35.12			(24	)	$	28.27			-	$	-			(64	)	$	32.54
Outstanding at September 30, 2015			555		$	39.38			1,669		$	37.11			1,800	$	23.57			4,024		$	31.37

(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 September 30, 2015 and 2014 was $6.6 million and $5.3 million, respectively. The intrinsic value related to awards released for the nine months ended September 30, 2015 and 2014 was $40.6 million and $23.8 million, respectively. As of September 30, 2015, the total intrinsic value of outstanding awards, including RSUs, PSUs and MSUs, was $206.0 million, based on the closing stock price of $51.20. As of September 30, 2015, unamortized compensation expense related to outstanding awards, including RSUs, PSUs and MSUs, was approximately $82.8 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 classification of the employee. 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		(438	)	$	15.69
Forfeited and expired		(1	)	$	15.95
Outstanding at September 30, 2015		151		$	16.13		1.3	$	5,294
Options exercisable at September 30, 2015 and expected to vest		151		$	16.13		1.3	$	5,294
Options exercisable at September 30, 2015		149		$	16.19		1.2	$	5,213

Total intrinsic value of options exercised was $0.4 million and $2.3 million for the three months ended September 30, 2015 and 2014, respectively. Total intrinsic value of options exercised was $15.8 million and $14.1 million for the nine months ended September 30, 2015 and 2014, respectively. The net cash proceeds from the exercise of stock options were $6.9 million and $10.4 million for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, unamortized compensation expense related to unvested options was not material.

Employee Stock Purchase Plan (“ESPP”)

For the three months ended September 30, 2015 and 2014, 26,000 and 34,000 shares, respectively, were issued under the ESPP. For the nine months ended September 30, 2015 and 2014, 56,000 and 78,000 shares, respectively, were issued under the ESPP. As of September 30, 2015, 4.7 million shares were available for future issuance.

The intrinsic value of shares issued was $0.2 million and $0.5 million for the three months ended September 30, 2015 and 2014, respectively. The intrinsic value of shares issued was $0.6 million and $0.9 million for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, the unamortized expense was $0.2 million, which will be recognized through the first quarter of 2016. The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Expected term (years)		0.5			0.5			0.5			0.5
Expected volatility		24.8	%		25.1	%		30.3	%		29.5	%
Risk-free interest rate		0.2	%		0.1	%		0.2	%		0.1	%
Dividend yield		1.6	%		1.4	%		1.4	%		0.7	%

Cash proceeds from the shares issued under the ESPP were $2.2 million and $2.1 million for the nine months ended September 30, 2015 and 2014, respectively.