STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2025

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 and nine months ended September 30, 2025 and 2024:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2025		2024		2025		2024
Cost of revenues	$	517	$	496	$	1,766	$	1,549
Research and development		2,850		2,997		8,290		9,307
Sales and marketing		1,910		1,876		5,418		5,990
General and administrative		2,374		2,969		10,937		8,941
Other operating expenses		13,554		—		13,554		—
Total stock-based compensation expense	$	21,205	$	8,338	$	39,965	$	25,787

Stock-based compensation expense in the three months ended September 30, 2025, was approximately $21.2 million, comprising approximately $13.6 million related to the modification of outstanding equity awards held by the Company’s former chief executive officer (discussed in further detail below), $5.8 million related to restricted stock unit (“RSU”) awards, $1.5 million related to performance-based (“PSU”) awards and long-term performance-based (“PRSU”) awards and $0.3 million related to the Company’s employee stock purchase plan. Stock-based compensation expense in the nine months ended September 30, 2025, was approximately $40.0 million, comprising approximately $16.7 million for RSUs, $13.6 million related to the modification of outstanding equity awards held by the Company’s former CEO, $8.6 million related to PSUs and PRSUs and $1.1 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended September 30, 2024, was approximately $8.3 million, comprising approximately $6.6 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-based compensation expense in the nine months ended September 30, 2024, was approximately $25.8 million, comprising approximately $19.0 million related to RSUs, $5.6 million related to PSUs and PRSUs and $1.2 million related to the Company’s employee stock purchase plan.

In connection with his retirement in July 2025, the Company’s former chief executive officer, Balu Balakrishnan, entered into a transition agreement and a consulting agreement with the Company. Pursuant to these agreements, Mr. Balakrishnan’s outstanding equity awards continue to vest subject to his continuous service and the applicable award agreements. The vast majority of these awards are subject to performance criteria established at the time of grant and will only be earned if such criteria are met at the conclusion of the applicable performance periods. As the services to be performed by Mr. Balakrishnan under the transition agreement and the consulting agreement do not qualify as “substantive services” under ASC 718, Compensation–Stock Compensation, the continued vesting of the outstanding equity awards represents a modification of the original awards. As a result, in the quarter ended September 30, 2025, the Company recorded stock-based compensation in the amount of $13.6 million in other operating expenses on the condensed consolidated statements of income (loss) related to the accounting modification. Subsequent changes in performance criteria measurement could result in an adjustment to expense in future periods.

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 2025, it was determined that approximately 66,000 shares subject to the PSUs granted in 2024 vested in aggregate; the shares were released to the Company’s employees and executives in the first quarter of 2025.

A summary of PSUs outstanding as of September 30, 2025 and activity during the nine 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, 2025	66	$	69.95
Granted	214	$	53.91
Vested	(66)	$	69.95
Forfeited	(8)	$	57.54
Outstanding at September 30, 2025	206	$	53.77	0.25	$	8,284
Outstanding and expected to vest at September 30, 2025	123			0.25	$	4,954

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 2023, 2024 and 2025 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”) or the Company’s revenue growth over as compared to defined targets (“Absolute Measure”) in each case over the respective three-year performance period. Actual vesting of the PRSUs is 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 2025, it was determined that no shares subject to the PRSUs granted in 2022 vested, thus no shares were released to the Company’s executives.

A summary of PRSUs outstanding as of September 30, 2025 and activity during the nine 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, 2025	317	$	73.85
Granted	307	$	52.56
Vested	—		—
Forfeited	—		—
Outstanding at September 30, 2025	624	$	63.37	1.52	$	25,074
Outstanding and expected to vest at September 30, 2025	456			1.92	$	18,335

RSU Awards

A summary of RSUs outstanding as of September 30, 2025 and activity during the nine 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, 2025	929	$	70.82
Granted	535	$	50.66
Vested	(324)	$	67.70
Forfeited	(96)	$	66.42
Outstanding at September 30, 2025	1,044	$	61.87	1.64	$	41,991
Outstanding and expected to vest at September 30, 2025	977			1.58	$	39,288