STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

6. STOCK-BASED COMPENSATION:

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2021, and March 31, 2020:

	Three Months Ended
	March 31,
(In thousands)	2021		2020
Cost of revenues	$	631	$	396
Research and development		2,391		2,109
Sales and marketing		1,614		1,392
General and administrative		3,844		2,813
Total stock-based compensation expense	$	8,480	$	6,710

Stock-based compensation expense in the three months ended March 31, 2021, was approximately $8.5 million, comprising approximately $5.3 million related to restricted stock unit (RSU) awards, $2.7 million related to performance-based (PSU) awards and long-term performance-based (PRSU) awards and $0.5 million related to the Company’s employee stock purchase plan.

In the three months ended March 31, 2020, stock-based compensation expense was approximately $6.7 million, comprising approximately $5.0 million related to RSUs, $1.3 million related to PSUs and PRSUs and $0.4 million related to the Company’s employee stock purchase plan.

Stock Options

A summary of stock options outstanding as of March 31, 2021, and activity during the three months then ended, is presented below:

				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual	Aggregate
	Shares	Exercise		Term	Intrinsic Value
	(In thousands)	Price		(In years)	(In thousands)
Outstanding at January 1, 2021	92	$	20.63
Granted	—		—
Exercised	(33)	$	19.15
Forfeited or expired	—		—
Outstanding at March 31, 2021	59	$	21.44	1.1	$	3,568
Vested and exercisable at March 31, 2021	59			1.1	$	3,568

PSU Awards

Under the performance-based awards program, the Company grants awards in the performance year in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met. The number of shares that are released at the end of the performance year can range from zero to 200% of the target number depending on the Company’s performance. The performance metrics of this program are annual targets consisting of a combination of net revenue, non-GAAP operating income and strategic goals.

As the net revenue, non-GAAP operating income and strategic goals are considered performance conditions, expense associated with these awards, net of estimated forfeitures, is recognized over the service period based on an assessment of the achievement of the performance targets. The fair value of these PSUs is determined using the fair value of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed.

In January 2021, it was determined that approximately 150,000 shares subject to the PSUs granted in 2020 vested in aggregate; the shares were released to the Company’s employees and executives in the first quarter of 2021.

A summary of PSUs outstanding as of March 31, 2021, and activity during the three months then ended, is presented below:

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
	Shares	Grant Date Fair		Contractual Term	Intrinsic Value
	(In thousands)	Value Per Share		(In years)	(In thousands)
Outstanding at January 1, 2021	150	$	46.27
Granted	57	$	84.05
Vested	(150)	$	46.27
Forfeited	—		—
Outstanding at March 31, 2021	57	$	84.05	0.75	$	4,682
Outstanding and expected to vest at March 31, 2021	57			0.75	$	4,682

PRSU Awards

The Company’s PRSU program provides for the issuance of PRSUs which will vest based on the Company’s performance measured against the PRSU program’s established performance targets. PRSUs are granted in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met. The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus the Company’s performance goals, and may range from zero to 200% of the target number. The performance goals for PRSUs granted in fiscal 2019 were based on the Company’s annual revenue growth, while the PRSUs granted in 2020 and 2021 were based on the Company’s compound annual growth rate (“CAGR”) of revenue as measured against the revenue CAGR of the analog semiconductor industry, in each case over the respective three-year performance period. Expense associated with these awards, net of estimated forfeitures, is recorded throughout the year based on an assessment of the expected achievement of the performance targets. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed.

In January 2021 it was determined that approximately 6,000 shares subject to the PRSUs granted in 2018 vested in aggregate; the shares were released to the Company’s executives in the first quarter of 2021.

A summary of PRSUs outstanding as of March 31, 2021, and activity during the three months then ended, is presented below:

				Weighted-Average	Aggregate
		Weighted-Average		Remaining	Intrinsic
	Shares	Grant Date Fair		Contractual Term	Value
	(In thousands)	Value Per Share		(In years)	(In thousands)
Outstanding at January 1, 2021	301	$	41.90
Granted	97	$	83.01
Vested	(6)	$	29.95
Forfeited	(15)	$	40.05
Outstanding at March 31, 2021	377	$	52.75	1.65	$	30,737
Outstanding and expected to vest at March 31, 2021	377			1.65	$	30,737

RSU Awards

A summary of RSUs outstanding as of March 31, 2021, and activity during the three months then ended, is presented below:

				Weighted-Average	Aggregate
		Weighted-Average		Remaining	Intrinsic
	Shares	Grant Date Fair		Contractual Term	Value
	(In thousands)	Value Per Share		(In years)	(In thousands)
Outstanding at January 1, 2021	1,518	$	35.51
Granted	89	$	82.50
Vested	(209)	$	34.57
Forfeited	(39)	$	35.73
Outstanding at March 31, 2021	1,359	$	38.72	1.83	$	110,731
Outstanding and expected to vest at March 31, 2021	1,273			1.38	$	103,716