Annual report pursuant to Section 13 and 15(d)

Equity Incentive Plans

v3.21.1
Equity Incentive Plans
12 Months Ended
Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Equity Incentive Plans

Note 16. Equity Incentive Plans

In February 2005, the Company adopted the 2005 Stock Plan, as amended in January 2010 and November 2012 (the “2005 Plan”). Under the 2005 Plan provisions, the Company was authorized to grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, and shares of restricted stock.

In May 2017, the Board and the Company’s stockholders approved the 2017 Equity Incentive Plan (the “2017 Plan”), which became effective in connection with the IPO. As a result of the adoption of the 2017 Plan, no further grants may be made under the 2005 Plan. The 2017 Plan provides for the issuance of stock options, restricted stock units and other awards to employees, directors and consultants of the Company. The 2017 Plan included an evergreen provision which provides for the number of shares of common stock reserved for issuance under the 2017 Plan to automatically increase on January 1 of each year by the lesser of (1) 5% of the number of shares of the Company’s capital stock outstanding on December 31st of the preceding calendar year or (2) such number of shares as determined by the Board. The Company’s 2017 Plan was automatically increased on January 1, 2020 by 565,707 shares, which was equal to 5% of the total number of shares of capital stock outstanding on December 31, 2019.

The following table summarizes the activity of shares available for grant under the 2017 Equity Incentive Plan:

 

Shares available for grant at December 31, 2019

 

 

1,632,636

 

Increase in accordance with the evergreen provision

 

 

565,707

 

Options issued during the year

 

 

(347,095

)

Canceled during the year

 

 

54,890

 

RSUs granted

 

 

(91,759

)

Shares available for grant at December 31, 2020

 

 

1,814,379

 

 

Stock Options

Incentive stock options may only be granted to Company employees and may only be granted with an exercise price not less than the fair value of the common stock, or not less than 110% of fair value when the grant is issued to a person who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of stock. Non-statutory stock options may be granted to Company employees, directors and consultants, and may be granted at a price per share not less than fair value on the date of the grant.

Options granted under the 2005 Plan and 2017 Plan generally vest over four years and expire no later than 10 years from the grant date. The 2005 Plan and 2017 Plan grants the Board discretion to determine when the options granted will become exercisable. The 2005 Plan and 2017 Plan allows for the exercise of unvested options with repurchase rights over the restricted common stock issued. At December 31, 2020, 2019, and 2018, there were no unvested options resulting from early exercises.

 

The fair value of stock option grants is set forth below and was determined using the Black-Scholes option pricing model with the following assumptions:

 

 

 

Year Ended December 31,

 

 

2020

 

2019

 

2018

Fair value of common stock

 

$23.49-$34.07

 

$20.07-$44.95

 

$23.72-$47.39

Expected term (in years)

 

6

 

6

 

6

Risk-free interest rate

 

0.36%-0.83%

 

1.71%-2.49%

 

2.60%-3.00%

Expected volatility

 

64%-68%

 

64%-67%

 

64%-67%

Expected dividend yield

 

 

 

 

A summary of stock option activities during 2020, 2019 and 2018 is as follows:

 

 

 

Number

of Options

Outstanding

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Grant Date Fair Value per Option

 

 

Aggregate Intrinsic Value Exercised (in thousands)

 

Outstanding at December 31, 2017

 

 

1,294,128

 

 

$

1.79

 

 

 

 

 

 

 

 

 

Granted

 

 

157,078

 

 

$

33.70

 

 

$

20.59

 

 

 

 

 

Exercised

 

 

(609,985

)

 

$

0.90

 

 

 

 

 

 

$

12,574

 

Canceled

 

 

(21,035

)

 

$

6.78

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2018

 

 

820,186

 

 

$

8.44

 

 

 

 

 

 

 

 

 

Granted

 

 

138,200

 

 

$

35.76

 

 

$

21.86

 

 

 

 

 

Exercised

 

 

(307,365

)

 

$

1.47

 

 

 

 

 

 

$

12,117

 

Canceled

 

 

(33,528

)

 

$

24.80

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2019

 

 

617,493

 

 

$

17.13

 

 

 

 

 

 

 

 

 

Granted

 

 

347,095

 

 

$

32.14

 

 

$

19.15

 

 

 

 

 

Exercised

 

 

(96,456

)

 

$

3.25

 

 

 

 

 

 

$

2,257

 

Canceled

 

 

(54,890

)

 

$

26.07

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2020

 

 

813,242

 

 

$

24.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional information for stock options at December 31, 2020 were as follows:

 

 

Number

of Options

 

 

Weighted

Average

Exercise

Price

 

 

Aggregate Intrinsic Value (in thousands)

 

 

Weighted

Average

Remaining Contractual term (in years)

 

Outstanding at December 31, 2020

 

813,242

 

 

 

24.58

 

 

$

11,445

 

 

7.69

 

Exercisable at December 31, 2020

 

391,438

 

 

 

16.22

 

 

$

8,779

 

 

 

6.29

 

 

 

At December 31, 2020, total unrecognized stock-based compensation cost related to unvested stock options was $7.9 million, which will be recognized ratably over a weighted-average period of 3.0 years.

 

No income tax benefits from stock-based compensation arrangements have been recognized in the consolidated statements of operations.  

 

Restricted Stock Units 

 

The Company grants restricted stock units (“RSU”) under the 2017 Plan to executive management and its non-employee Board directors. RSUs granted to executive management generally vest over four years. RSUs granted to non-employee Board directors generally vest annually. A new non-employee Board director will receive an initial grant upon joining the Board and all Board directors will receive new annual grants at each annual meeting of shareholders.

 

The following table summarizes the activity of RSU awards:

 

 

Number

of Restricted Stock Units

 

 

Weighted

Average

Grant Date Fair Value per RSU

 

 

Aggregate Fair Value of RSUs Vested (in thousands)

 

Unvested RSUs at December 31, 2017

 

 

47,312

 

 

$

11.85

 

 

 

 

 

Granted

 

 

110,764

 

 

$

19.58

 

 

 

 

 

Vested

 

 

(47,312

)

 

$

11.85

 

 

$

1,346

 

Unvested RSUs at December 31, 2018

 

 

110,764

 

 

$

19.58

 

 

 

 

 

Granted

 

 

62,382

 

 

$

44.05

 

 

 

 

 

Vested

 

 

(58,150

)

 

$

24.75

 

 

$

2,610

 

Unvested RSUs at December 31, 2019

 

 

114,996

 

 

$

30.24

 

 

 

 

 

Granted

 

 

91,759

 

 

$

31.75

 

 

 

 

 

Vested

 

 

(54,970

)

 

$

32.12

 

 

$

1,766

 

Forfeited

 

 

(10,277

)

 

$

41.50

 

 

 

 

 

Unvested RSUs at December 31, 2020

 

 

141,508

 

 

$

29.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the year ended December 31, 2019, the Company granted 8,031 RSU awards to certain members of executive management subject to certain financial milestones, with vesting 100% upon the first anniversary, if the Compensation Committee of the Board of Directors of the Company believes that the associated financial milestones were met. The weighted average fair value of $43.58 per unit was calculated using the closing stock price on the grant date. At the end of 2019 no expense was recorded because the associated milestones were not met.

 

At December 31, 2020, total unrecognized stock-based compensation cost related to RSUs was $3.5 million, which will be recognized ratably over a weighted-average period of 2.5 years.

2017 Employee Stock Purchase Plan

In May 2017, the Board and the Company’s stockholders adopted the 2017 Employee Stock Purchase Plan (“2017 ESPP”).The 2017 ESPP permits the maximum discounted purchase price permitted under U.S. tax rules, including a “lookback”, which allows eligible employees to purchase shares of the Company’s common stock at a 15% discount to the lesser of the fair market value of common stock at the beginning and end of the offering period.

The 2017 ESPP initial offering period, which began in June 2017, ran for approximately 24 months in length, and contained four 6-month purchase periods. Subsequent offering periods generally run for six months each. An employee’s purchase rights terminate immediately upon termination of employment or other withdrawal from the 2017 ESPP. No participant will have the right to purchase shares of common stock in an amount that has a fair market value of more than $25,000 determined as of the first day of the applicable purchase period, for each calendar year.

The 2017 ESPP contains a provision which provides for an automatic annual share increase on January 1 of each year, in an amount equal to the lesser of (1) 2% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, (2) 150,000 shares or (3) such number of shares as determined by the Board.

The following table summarizes the activity of shares available under the 2017 ESPP:

 

Shares available for grant at December 31, 2019

 

 

316,623

 

Increase in accordance with the evergreen provision

 

 

150,000

 

Issued during the year

 

 

(37,102

)

Shares available for grant at December 31, 2020

 

 

429,521

 

 

The Company accounts for employee stock purchases made under its 2017 ESPP using the estimate grant date fair value of accounting in accordance with ASC 718, Stock Compensation. The Company values ESPP shares using the Black-Scholes model.

Total stock-based compensation expense is recorded in the consolidated statements of operations and was allocated as follows (in thousands):

 

 

 

 

Year Ended December 31,

 

 

 

 

2020

 

 

2019

 

 

2018

 

Cost of revenues

 

 

$

1,093

 

 

$

670

 

 

$

316

 

Sales and marketing

 

 

 

1,268

 

 

 

955

 

 

 

770

 

Research and development

 

 

 

580

 

 

 

365

 

 

 

272

 

General and administrative

 

 

 

1,521

 

 

 

1,067

 

 

 

1,110

 

Total

 

 

$

4,462

 

 

$

3,057

 

 

$

2,468

 

 

Stock-based compensation expense is recognized over the award’s expected vesting schedule. Forfeitures are recognized as and when they occur.