CAPITAL STOCK (Notes)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

CAPITAL STOCK

CAPITAL STOCK

Preferred Stock

We have authorized up to one million shares of preferred stock, $0.01 par value per share, for issuance. Each series of preferred stock shall have such rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, as may be determined by our board of directors.

Common Stock Repurchases

On September 9, 2021, our board of directors approved the repurchase of up to $115.0 million of our outstanding shares. This authorization does not have a prescribed expiration date. As of December 31, 2021, approximately $89.9 million of the $115.0 million share repurchase authorization remained available. The Company has no obligation to repurchase any amount of

its common stock, and the program may be suspended or discontinued at any time. For the year ended December 31, 2021 the Company repurchased 874,085 shares of its common stock for $25.1 million. These amounts may differ from the repurchases of common stock amounts in the condensed consolidated statements of cash flows due to unsettled share repurchases at the end of a period. As of February 28, 2022, we have purchased an additional 328,883 shares for $9.9 million.

Stock Incentive Plans

There is an aggregate of 9,940,000 of our shares of $0.01 par value per share common stock authorized and reserved for issuance under the Avid Technology, Inc. Amended and Restated 2014 Stock Incentive Plan (the “Plan”). The Plan was originally adopted by our board of directors on September 14, 2014 and approved by our stockholders on October 29, 2014. In connection with the approval of the Plan, our Amended and Restated 2005 Stock Incentive Plan has been closed; no additional awards may be granted under that 2005 plan. As of December 31, 2021, there were no remaining shares available for issuance under the 2005 plan.

Under the Plan, we may grant stock awards or options to purchase our common stock to employees, officers, directors, and consultants. The exercise price for options generally must be no less than market price on the date of grant. Awards may be performance-based where vesting or exercisability is conditioned on achieving performance objectives, time-based, or a combination of both. Option grants become exercisable over various periods, typically three years to four years for employees and one year for non-employee directors, and have a maximum term of seven years to ten years. Restricted stock and restricted stock unit awards with time-based vesting typically vest over three years to four years for employees and one year for non-employee directors.

We use the Black-Scholes option pricing model to estimate the fair value of stock option grants with time-based vesting. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair value. The assumed dividend yield of zero is based on the fact that we have never paid cash dividends and has no present expectation to pay cash dividends. The expected volatility is based on actual historic stock volatility for periods equivalent to the expected term of the award. The assumed risk-free interest rate is the U.S. Treasury security rate with a term equal to the expected life of the option. The assumed expected life is based on company-specific historical experience considering the exercise behavior of past grants and models the pattern of aggregate exercises.

The fair value of restricted stock and restricted stock unit awards with time-based vesting is based on the intrinsic value of the awards at the date of grant, as the awards have a purchase price of $0.01 per share.

We also issue option grants or restricted stock unit awards with vesting based on market conditions. Performance-based restricted stock units will vest based on achievement of our relative total shareholder return against the Russell 2000 Index over a three-year period. The fair values and derived service periods for all grants that include vesting based on market conditions are estimated using the Monte Carlo valuation method. For stock option grants that include vesting based on performance conditions, the fair values are estimated using the Black-Scholes option pricing model. For restricted stock unit awards that include vesting based on performance conditions, the fair values are estimated based on the intrinsic values of the awards at the date of grant, as the awards have a purchase price of $0.01 per share.

Information with respect to options granted under all stock option plans for the year ended December 31, 2021 was as follows:

	Total Number of Options	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Options Outstanding at December 31, 2018	891,892	$8.46	1.55	—
Granted	—	—
Exercised	(70,006)	7.39
Forfeited or Expired	(256,886)	10.70
Options Outstanding at December 31, 2019	565,000	$7.57	1.17	$	571
Granted	—	—
Exercised	(319,000)	7.65
Forfeited or Expired	—	—
Options outstanding at December 31, 2020	246,000	$7.48	0.44	$	1,358
Granted	—	—
Exercised	(246,000)	7.48
Forfeited or Expired	—	—
Options outstanding at December 31, 2021	—	$—	0.00	$	—
Exercisable at:
December 31, 2019	565,000	$7.57	1.17	$571
December 31, 2020	246,000	$7.48	0.44	$1,358
December 31, 2021	—	$—	0.00	$—

The cash received from stock options exercised during the years ended December 31, 2020 and 2019 were $1.6 million and $0.5 million, respectively. There was no cash received from stock options exercised during the year ended December 31, 2021.

Information with respect to non-vested time-based restricted stock units for the year ended December 31, 2021 was as follows:

	Number of Restricted Stock Units	Weighted- Average Grant-Date Fair Value	Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at December 31, 2018	1,978,676	$5.12
Granted	1,320,536	7.33
Vested	(991,819)	5.16	307,005
Forfeited	(219,460)	5.98
Outstanding at December 31, 2019	2,087,933	$6.41
Granted	1,518,714	7.20
Vested	(1,193,553)	6.33	403,798
Forfeited	(298,215)	6.52
Outstanding at December 31, 2020	2,114,879	$7.01
Granted	458,469	29.01
Vested	(1,466,907)	6.83	492,008
Forfeited	(44,607)	10.43
Outstanding at December 31, 2021	1,061,834	$16.60

Information with respect to non-vested performance-based restricted stock units for the year ended December 31, 2021 was as follows:

	Number of Performance-based Restricted Stock Units	Weighted- Average Grant-Date Fair Value	Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at December 31, 2018	966,143	$4.48
Granted	411,043	7.11
Vested	(666,451)	4.48	280,613
Forfeited	(156,470)	4.64
Outstanding at December 31, 2019	554,265	$6.39
Granted	578,316	6.64
Vested	(328,673)	5.80	133,596
Forfeited	(150,480)	7.11
Outstanding at December 31, 2020	653,428	$6.74
Granted	397,048	15.07
Vested	(471,112)	5.81	196,703
Forfeited	—	—
Outstanding at December 31, 2021	579,364	$13.20

The weighted-average grant date fair value of time and performance-based restricted stock units granted during the years ended December 31, 2021, 2020, and 2019 was $22.54, $7.05, and $7.28, respectively. The total weighted-average fair value of time and performance-based restricted stock units vested during the years ended December 31, 2021, 2020, and 2019 was $12.8 million, $9.5 million, and $8.1 million, respectively.

Employee Stock Purchase Plan

On February 27, 2008, the board of directors approved our Second Amended and Restated 1996 Employee Stock Purchase Plan (the “ESPP”). On May 27, 2008 our stockholders approved an increase of the number of shares of our common stock authorized for issuance under the Second Amended and Restated ESPP from 1,700,000 to 2,500,000 shares. In May 2018, we registered an aggregate of 650,000 of our shares of $0.01 par value per share common stock, which have been authorized and reserved for issuance under the Avid Technology, Inc. Second Amended and Restated ESPP.

Our Second Amended and Restated ESPP offers our shares for purchase at a price equal to 85% of the closing price on the applicable offering period termination date. Shares issued under the ESPP are considered compensatory. Accordingly, we are required to measure fair value and record compensation expense for share purchase rights granted under the ESPP. In July 2015, the board of directors approved an amendment to the ESPP to change the subscription period from three to six months and accordingly to adjust the payroll cap to $5,000 per plan period. A total of 492,194 shares remained available for issuance under the ESPP at December 31, 2021.

We use the Black-Scholes option pricing model to calculate the fair value of shares issued under the ESPP. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. The following table sets forth the weighted-average key assumptions and fair value results for shares issued under the ESPP during the years ended December 31, 2021, 2020, and 2019:

	Year Ended December 31,
	2021	2020	2019
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	0.08%	0.82%	2.37%
Expected volatility	62.9%	72.1%	48.6%
Expected life (in years)	0.49	0.50	0.49
Weighted-average fair value of shares issued (per share)	$3.77	$1.40	$1.04

The following table sets forth the quantities and average prices of shares issued under the ESPP for the years ended December 31, 2021, 2020, and 2019:

	Year Ended December 31,
	2021	2020	2019
Shares issued under the ESPP	26,988	61,750	69,179
Average price of shares issued	$29.95	$8.67	$7.48

We did not realize a material tax benefit from the tax deductions for stock option exercises, vested restricted stock units and shares issued under the ESPP during the years ended December 31, 2021, 2020, or 2019.

Stock-Based Compensation Expense

The following table sets forth Stock-based compensation expense by award type for the years ended December 31, 2021, 2020, and 2019, respectively (in thousands):

	Year Ended December 31,
	2020		2019		2018
Share-based compensation expense by type:
Time-based Restricted Stock Units	$	10,010	$	8,340	$	5,900
Performance-based Restricted Stock Units	3,575		2,211		1,964
ESPP	152		113		94
Total Share-based compensation expense	$	13,737	$	10,664	$	7,958

Stock-based compensation was included in the following captions in our consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, respectively (in thousands):

	Year Ended December 31,
	2021		2020		2019
Cost of revenues	$	1,800	$	1,339	$	617
Research and development expenses	1,620		1,725		1,068
Marketing and selling expenses	2,484		2,176		1,797
General and administrative expenses	7,833		5,424		4,476
Total	$	13,737	$	10,664	$	7,958

At December 31, 2021, there was $17.1 million of total unrecognized compensation cost related to non-vested stock-based compensation awards granted under our stock-based compensation plans. We expect this amount to be amortized approximately as follows: $9.6 million in 2022, $5.8 million in 2023, and $1.7 million in 2024. At December 31, 2021, the weighted-average recognition period of the unrecognized compensation cost was approximately 1.1 years.