STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

STOCK-BASED COMPENSATION

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, 2023 and 2022:

	Three Months Ended
	March 31,
(In thousands)	2023		2022
Cost of revenues	$	301	$	320
Research and development		2,668		3,055
Sales and marketing		1,653		1,948
General and administrative		2,746		3,690
Total stock-based compensation expense	$	7,368	$	9,013

Stock-based compensation expense in the three months ended March 31, 2023, was approximately $7.4 million, comprising approximately $5.9 million related to restricted stock unit (RSU) awards, $1.0 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.

Stock-based compensation expense in the three months ended March 31, 2022, was approximately $9.0 million, comprising approximately $5.6 million related to RSUs, $3.0 million related to PSUs and PRSUs and $0.4 million related to the Company’s employee stock purchase plan.

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 expected 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 February 2023, it was determined that approximately 34,000 shares subject to the PSUs granted in 2022 vested in aggregate; the shares were released to the Company’s employees and executives in the first quarter of 2023.

A summary of PSUs outstanding as of March 31, 2023, and activity during the three months ended, is presented below:

				Weighted-Average
		Weighted-Average		Remaining	Aggregate
	Shares	Grant Date Fair		Contractual Term	Intrinsic Value
	(In thousands)	Value Per Share		(In years)	(In thousands)
Outstanding at January 1, 2023	34	$	79.94
Granted	75	$	82.49
Vested	(34)	$	79.94
Forfeited	—		—
Outstanding at March 31, 2023	75	$	82.49	0.75	$	6,312
Outstanding and expected to vest at March 31, 2023	40			0.75	$	3,358

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 2021, 2022 and 2023 were based on the Company’s compound annual growth rate (“CAGR”) of revenue as measured against the revenue CAGR of the analog semiconductor industry (“Relative Measure”), in each case over the respective three-year performance period. In addition, the PRSUs granted in 2023 (“2023 PRSUs”) also include a performance goal related to the Company’s revenue growth over the respective three-year performance period as compared to defined targets (“Absolute Measure”) with the actual vesting of the 2023 PRSUs calculated based on higher achievement under the Relative Measure or the Absolute Measure. 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 February 2023, it was determined that approximately 23,000 shares subject to the PRSUs granted in 2020 vested in aggregate; the shares were released to the Company’s executives in the first quarter of 2023.

A summary of PRSUs outstanding as of March 31, 2023 and activity during the three months 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, 2023	236	$	77.82
Granted	145	$	80.92
Vested	(23)	$	49.68
Forfeited	—		—
Outstanding at March 31, 2023	358	$	80.89	1.87	$	30,329
Outstanding and expected to vest at March 31, 2023	143			2.75	$	12,094

RSU Awards

A summary of RSUs outstanding as of March 31, 2023 and activity during the three months 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, 2023	1,096	$	60.52
Granted	148	$	80.07
Vested	(166)	$	59.06
Forfeited	(4)	$	68.73
Outstanding at March 31, 2023	1,074	$	63.41	2.03	$	90,903
Outstanding and expected to vest at March 31, 2023	995			1.59	$	84,247