Stock-based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

11. Stock-Based Compensation

Stock-Based Compensation Plans

At December 31, 2023, the Company had seven stock-based compensation plans:

•On February 8, 2022, the Company adopted the Brightcove Inc. 2022 Inducement Plan (the 2022 Plan). The 2022 Plan provides for the issuance of employment inducement awards to the Company’s Chief Executive Officer (CEO).

•On March 25, 2021, the Board adopted, the Brightcove Inc. 2021 Stock Incentive Plan (the 2021 Plan) which was approved by the shareholders on May 11, 2021. On March 15, 2023, the Board adopted an amendment to the 2021 plan to increase the aggregate number of shares of Stock reserved for issuance under the Plan by 7,000,000, which was approved by the shareholders on May 10, 2023. The maximum number of shares of stock reserved and available for issuance under the 2021 Plan, as amended, is 13,200,000 shares.

•The 2018 Inducement Plan (the 2018 plan). Effective April 11, 2018, the Company adopted the 2018 Plan. The 2018 Plan provides for the issuance of stock options and restricted stock units to the Company’s CEO.

•The Brightcove Inc. 2014 Stock Option Inducement Plan (the 2014 Stock Inducement Plan). In 2014, the Company adopted the 2014 Stock Inducement Plan in connection with the Unicorn asset purchase agreement.

•The 2012 RSU Inducement Plan (the 2012 RSU Plan). In 2012, the Company adopted the 2012 RSU Plan in connection with the acquisition of Zencoder. The restricted stock units were settled in shares of the Company’s common stock upon vesting.

•The 2012 Stock Incentive Plan (the 2012 Plan). The 2012 Plan provided for the issuance of incentive and non-qualified stock options, restricted stock, and other equity awards to the Company’s employees, officers, directors, consultants and advisors. In conjunction with the effectiveness of the 2021 Plan, the Board voted that no further stock options or other equity-based awards may be granted under the 2012 Plan.

•The Amended and Restated 2004 Stock Option and Incentive Plan (the 2004 Plan). The 2004 Plan, like the 2012 Plan, provided for the issuance of incentive and non-qualified stock options, restricted stock, and other equity awards to the Company’s employees, officers, directors, consultants and advisors. In conjunction with the effectiveness of the 2012 Plan, the Board voted that no further stock options or other equity-based awards may be granted under the 2004 Plan.

The following table summarizes stock-based compensation expense as included in the consolidated statement of operations for the years ended December 31, 2023, 2022 and 2021:

	Year Ended December 31,
	2023		2022		2021
Cost of subscription and support revenue	$	506	$	508	$	627
Cost of professional services and other revenue		375		433		401
Research and development		2,453		2,746		1,677
Sales and marketing		4,197		3,990		2,957
General and administrative		6,368		5,622		4,306
Other (expense) benefit		—		249		—
	$	13,899	$	13,548	$	9,968

As of December 31, 2023, there was $25.4 million of total unrecognized stock-based compensation expense related to stock-based awards that is expected to be recognized over a weighted-average period of 2.3 years.

Stock Options

The following is a summary of the stock option activity for all stock option plans during the years ended December 31, 2023, 2022 and 2021:

	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		2,110,486		$	9.19			$	—
Granted		114,973			14.88
Exercised		(333,190	)		8.53			$	2,999
Cancelled		(210,792	)		10.26
Outstanding at December 31, 2021		1,681,477		$	9.59			$	1,938
Granted		—			—
Exercised		(28,400	)		6.24			$	40
Cancelled		(233,310	)		11.11
Outstanding at December 31, 2022		1,419,767		$	9.39			$	4
Granted		1,563,688			7.00
Exercised		—			—			$	—
Cancelled		(735,504	)		9.39
Outstanding at December 31, 2023		2,247,951		$	7.73		7.11	$	—
Exercisable at December 31, 2023		815,986		$	8.74		3.50	$	—

(1) The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on December 31, 2023, December 31, 2022, and December 31, 2021 of $2.59, $5.23, and $10.22 per share, respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.

On March 20, 2023, the Company granted 1,563,688 premium-priced options to some of its employees under its 2021 Stock Incentive Plan. The options have a strike price of $7.00 and vest in equal installments over three years following March 10, 2023. The binomial lattice model is used to estimate the fair value of the premium-priced options. The binomial lattice model calculates multiple potential outcomes for option exercises and establishes a fair value based on the most likely outcome. Key assumptions for the binomial lattice model include share price, volatility, the early exercise multiple, risk-free rate, expected dividends, and number of time steps.

Prior to 2023, the Company had only granted service-based options under its stock compensation plans. The fair value of each option grant issued under the Company’s stock-based compensation plans prior to 2023 was estimated using the Black-Scholes option-pricing model.

The weighted-average fair value of options granted and assumptions utilized to determine such values are presented in the following table:

	Year Ended December 31,
	2023		2022		2021
Weighted-average fair value of options granted during the year	$	1.75	$	—	$	6.98
Risk-free interest rate	3.4 - 4.8%			—		1.22	%
Expected volatility	47.9 - 55.5%			—		48	%
Expected life (in years)		—		—		6.2
Expected dividend yield		—		—		—

Restricted Stock Units

The Company has entered into restricted stock unit (RSU) agreements with certain of its employees pursuant to the 2012 Plan, the 2021 Plan, and the 2022 Plan. Vesting occurs periodically at specified time intervals, ranging from three months to four years, and in specified percentages. Upon vesting, the holder will receive one share of the Company’s common stock for each unit vested.

Under the 2012 Plan, the Company granted restricted stock units to certain key executives, which contain both performance-based (“P-RSU”) and service-based vesting conditions (“S-RSU”). The Company measures compensation expense for these performance-based awards based upon a review of the Company’s expected achievement against specified financial performance targets. Compensation cost is recognized on a ratable basis over the requisite service period for each series of grants to the extent management has deemed that such awards are probable of vesting based upon the expected achievement against the specified targets. On a periodic basis, management reviews the Company’s expected performance and adjusts the compensation cost, if needed, at such time. The Company determined that the conditions for a portion of the performance-based restricted stock units were achieved in the first quarter of 2020. As such, the Company recognized $0.2 million of stock-based compensation expense relating to performance-based awards for the year ended December 31, 2021. The Company did not recognize stock-based compensation expense relating to the aforementioned performance-based awards in the years ended December 31, 2022, and 2023, respectively, as the Company determined that the conditions for further portions of the performance-based restricted stock units to vest were not achieved.

Under the 2022 Plan, the Company granted 800,000 restricted stock units to the Company's CEO, in connection with the commencement of his employment on March 28, 2022. Of the total restricted stock units granted, 300,000 are subject solely to service-based vesting conditions (the “RSUs”) and 500,000 are subject to both market-based and service-based vesting conditions (the “PSUs”). The RSUs vest in equal annual installments over three years following March 28, 2022. The market-based vesting conditions applicable to the PSUs are achieved only if the volume weighted average price of the Company’s common stock during any 20 consecutive trading day period in the four year performance period following the CEO’s start date, March 28, 2022, equals or exceeds stock price hurdles ranging from $12.50 to $30.00, increasing in seven increments of $2.50. The percentage of the award that is earned upon achievement of each stock price hurdle is 10% of the PSUs for each of the first two achievement tiers, 12.5% for each of the next four achievement tiers and 15% for each of the final two achievement tiers. The PSUs vest 50% upon achievement of a stock price hurdle and 50% upon the earlier of the one-year anniversary of such achievement date or March 28, 2025, subject to the CEO’s continued employment through the applicable vesting date.

For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected dividends and the correlation coefficient.

The following table summarizes the P-RSU and S-RSU activity during the year ended December 31, 2023, 2022, and 2021:

	S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested by December 31, 2020		2,000,416		$	10.30		1,587,801		$	10.40		3,588,217		$	10.35
Granted		2,269,341			12.24		64,011			12.65		2,333,352			12.25
Vested and issued		(680,769	)		9.85		(181,910	)		8.74		(862,679	)		9.62
Cancelled		(673,268	)		11.67		(448,730	)		9.59		(1,121,998	)		10.84
Unvested by December 31, 2021		2,915,720		$	11.66		1,021,172		$	11.04		3,936,892		$	11.50
	S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested by December 31, 2021		2,915,720		$	11.66		1,021,172		$	11.04		3,936,892		$	11.50
Granted		3,803,691			6.94		500,000			4.06		4,303,691			6.61
Vested and issued		(824,127	)		11.63		—			0.00		(824,127	)		11.63
Cancelled		(1,356,935	)		10.09		(848,314	)		11.06		(2,205,249	)		10.47
Unvested by December 31, 2022		4,538,349		$	8.19		672,858		$	6.54		5,211,207		$	7.88
	S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested by December 31, 2022		4,538,349		$	8.19		672,858		$	6.54		5,211,207		$	7.88
Granted		3,102,058			4.51		—			0.00		3,102,058			4.51
Vested and issued		(1,384,242	)		8.35		—			0.00		(1,384,242	)		8.35
Cancelled		(1,153,897	)		7.61		(155,688	)		10.14		(1,309,585	)		7.91
Unvested by December 31, 2023		5,102,268		$	6.04		517,170		$	4.54		5,619,438		$	5.90