A summary of the reserved shares of common stock for future issuance are as follows:


	December 31,
Stock Plan	2022		2021
PCTEL, Inc. 2019 Stock Incentive Plan		1,463,639		1,870,260
PCTEL, Inc. 2015 Stock Incentive Plan		299,979		299,979
PCTEL, Inc. 2019 Employee Stock Purchase Plan		1,276,529		1,478,036
Total shares reserved		3,040,147		3,648,275

At the 2019 Annual Meeting of Shareholders, the shareholders adopted and approved the PCTEL, Inc. 2019 Stock Incentive Plan (the “2019 Stock Plan”) upon the recommendation of the Board of Directors. The purpose of the 2019 Stock Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors, and non-employee directors capable of assuring the future success of the Company, to provide such persons with opportunities for stock ownership in the Company and to offer such persons incentives to put forth maximum effort for the success of the Company’s business. The 2019 Stock Plan replaced the PCTEL, Inc. Stock Incentive Plan adopted in 2015 (the “2015 Stock Plan”).

The 2019 Stock Plan, which is administered by the Compensation Committee of the Company’s Board of Directors, authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. The aggregate number of shares that may be issued under all stock-based awards made under the 2019 Stock Plan will be the sum of (i) 2,213,000 shares and (ii) any shares subject to any outstanding award under the 2015 Stock Plan that after the effective date of the 2019 Stock Plan are not purchased, are forfeited, or are reacquired by the Company or otherwise not delivered to the participant due to termination or cancellation of such award. At December 31, 2022, the number of shares available in the 2019 Stock Plan that were from the 2015 Plan was 299,979. The Board of Directors may from time to time amend, suspend, or terminate the 2019 Stock Plan, subject to its terms. Currently the 2019 Stock Plan does not allow share “recycling”, repricing of stock options or stock appreciation rights or dividend equivalents to be paid on unvested awards. Further, the 2019 Stock Plan does not contain an “evergreen” provision that will automatically increase the number of shares authorized for issuance under the 2019 Stock Plan.

The PCTEL, Inc. 2019 Employee Stock Purchase Plan (“the 2019 ESPP”) is to provide employees with an opportunity to purchase shares of PCTEL common stock through accumulated payroll deductions. Encouraging employees to acquire equity ownership in PCTEL assures a closer alignment of the interests of participating employees with those of the Company’s stockholders. The 2019 ESPP is administered by the Compensation Committee of the Company’s Board of Directors. Subject to change by the administrator, shares of PCTEL common stock may be purchased during consecutive offering periods that begin approximately every six months commencing on the first trading day on or after April 1 and terminating on the last trading day of the offering period ending on September 30 and commencing on the first trading day on or after October 1 and terminating on the last trading day of the offering period ending on March 31. Unless and until the administrator determines otherwise, the purchase price will be equal to 85% of the fair market value of PCTEL common stock on the first day of an offering period or the last day of an offering period, whichever is lower. The administrator may from time to time amend, suspend, or terminate the 2019 ESPP, subject to its terms.

The consolidated statements of income include $4.0 million and $2.9 million of stock compensation expense for the years ended December 31, 2022 and 2021, respectively. The Company did not capitalize any stock compensation expense during the years ended December 31, 2022, and 2021.

The stock-based compensation expense by type is as follows:


	Years Ended December 31,
	2022		2021
Service-based awards	$	1,267	$	1,405
Director awards		313		373
Performance-based awards (long-term incentive plan)		968		576
Performance-based awards (short-term incentive plan)		1,160		300
Employee stock purchase plan		280		267
Total	$	3,988	$	2,921

The stock-based compensation is reflected in the consolidated statements of income as follows:


	Years Ended December 31,
	2022		2021
Cost of revenues	$	213	$	268
Research and development		632		543
Sales and marketing		845		658
General and administrative		2,298		1,452
Total	$	3,988	$	2,921

The following table presents a summary of the remaining unrecognized share-based compensation expense related to outstanding share-based awards as of December 31, 2022:


Award Type	Remaining Unrecognized Compensation Expense		Weighted Average Life (Years)
Service-based awards	$	1,389		1.3
Performance-based awards	$	1,523		1.5

The Company grants service-based restricted shares as employee incentives under the 2019 Stock Plan. When service-based restricted stock is granted to employees, the Company records deferred stock compensation within additional paid-in capital, representing the fair value of the restricted stock on the grant date. The Company records stock compensation expense on a straight-line basis over the vesting period of the applicable service-based restricted shares. During the years ended December 31, 2022 and 2021, the Company awarded executives and key-managers long-term incentives comprised one-third of service-based restricted stock and two-thirds of performance-based restricted stock. The Company awarded service-based restricted stock to all other participating employees. The service-based restricted shares vest in three substantially equal annual increments.

The following table summarizes service-based restricted stock activity:


	Year Ended December 31,
	2022					2021
Unvested Restricted Stock Awards	Shares			Weighted Average Fair Value		Shares			Weighted Average Fair Value
Beginning of year		326,336		$	7.76		432,422		$	6.91
Shares awarded		233,744			4.66		170,158			8.04
Shares vested		(179,317	)		7.26		(272,274	)		6.58
Shares cancelled		(26,726	)		5.76		(3,970	)		7.84
End of year		354,037		$	6.12		326,336		$	7.76

The intrinsic values of service-based restricted shares that vested were $0.9 million and $2.2 million during the years ended December 31, 2022, and 2021, respectively.

The Company grants service-based restricted stock units as employee incentives. Restricted stock units are primarily granted to foreign employees for long-term incentive purposes. Employee restricted stock units are service-based awards and are amortized over the vesting period. At the vesting date, these units are converted to shares of common stock. The Company records expense on a straight-line basis for restricted stock units.

The following summarizes the service-based restricted stock unit activity:


	Year Ended December 31,
	2022					2021
Unvested Restricted Stock Units	Shares			Weighted Average Fair Value		Shares			Weighted Average Fair Value
Beginning of year		21,437		$	7.23		9,083		$	7.02
Units awarded		26,667			4.40		17,800			7.11
Units vested		(4,501	)		7.33		(5,446	)		6.47
Units cancelled		(8,350	)		5.72		0			0
End of year		35,253		$	5.42		21,437		$	7.23

The intrinsic values of service-based restricted stock units that vested were $21 and $42, during the years ended December 31, 2022, and 2021, respectively.

The Company may grant stock options to purchase common stock to employees, but generally issues stock options only to new employees. The Company issues stock options with exercise prices no less than the fair value of the Company’s stock on the grant date. Employee options are subject to installment vesting and although the vesting may vary from year to year, it is typically over a period of three years. Stock options may be exercised at any time prior to their expiration date or within 180 days of termination of employment, or such shorter time as may be provided in the related stock option agreement. The Company grants stock options with a ten-year life.

The following table summarizes the stock option activity:


	Year Ended December 31,
	2022				2021
	Options Outstanding		Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Beginning of Year		4,000	$	6.02		16,250		$	6.54
Options exercised		0		0		(6,000	)		5.48
Options cancelled/expired		0		0		(6,250	)		7.89
End of Year		4,000	$	6.02		4,000		$	6.02
Exercisable		4,000	$	6.02		3,916		$	6.00

During the year ended December 31, 2022, no stock options were exercised. During the year ended December 31, 2021, the Company received proceeds of $8 and issued 1,420 shares for the exercise of 6,000 options. The intrinsic value of the options exercised was $53.

The following table summarizes information about stock options outstanding under all stock option plans at December 31, 2022:


	Options Outstanding								Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Contractual Life (Years)		Intrinsic Value		Weighted- Average Exercise Price		Number Exercisable		Weighted Average Contractual Life (Years)		Intrinsic Value		Weighted Average Exercise Price
$ 5.06 - $ 6.98		4,000		1.42	$	0	$	6.02		4,000		1.42	$	0	$	6.02

For the outstanding stock options, the Company used the Black-Scholes option valuation model for estimating the fair value. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions including the expected stock price volatility and expected option life as well a risk-free rate and the dividend yield. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models may not necessarily provide a reliable single measure of the fair value of the employee stock options.

The dividend yield rate was calculated by dividing the Company’s annual dividend by the closing price on the grant date. The risk-free interest rate was based on the U.S. Treasury yields with a remaining term that approximates the expected life of the options granted. The Company calculated the volatility based on a five-year historical period of the Company’s stock price. The expected life used for options granted was based on historical data of employee exercise performance. The Company records expense based on the grading vesting method.

Incentive compensation earned by executives and key managers under the Company’s 2022 Short-Term Incentive Plan (“STIP”) will be settled 50% in cash and 50% in shares of the Company’s stock. Executives and key managers earned shares valued at $1.2 million for the year ended December 31, 2022, based on achievement of revenue and Adjusted EBITDA. The shares earned under the 2022 STIP will be issued to participants during the first quarter 2023. For the year ended December 31, 2021, the Company’s board of directors approved bonuses of $0.3 million payable in the Company’s stock to executive and key managers. The shares related to the 2021 bonus were issued to executives and key managers during the first quarter 2022.

The Company grants performance-based awards to executives and key managers under its Long-Term Incentive Plan (“LTIP”) to encourage sustainable growth, consistent earnings, and management retention. Based on the fair value of the shares on the grant date, the Company records stock compensation expense over the performance period based on the estimated achievement of the award.

The following table summarizes the performance award activity:


	Years Ended December 31,
	2022					2021
Unvested Performance Awards - at Target	Awards			Weighted Average Fair Value		Awards			Weighted Average Fair Value
Beginning of Year		333,153		$	8.39		316,726		$	6.84
Awards granted		269,618			4.84		187,864			8.15
Awards cancelled		(81,567	)		6.57		(171,437	)		5.27
End of Year		521,204		$	6.84		333,153		$	8.39

The Company granted performance awards under its long-term incentive plan to executives and key managers in February 2022 ("2022 LTIP"). The performance period for the 2022 LTIP is from January 1, 2022 through December 21, 2024. At target, the total fair market value of the award was $1.3 million based on a weighted average share price of $4.84. On the award date, the aggregate number of shares that could be earned at target was 269,618 and the maximum number of aggregate shares that could be earned was 471,832.

Under the 2022 LTIP and similar plans from 2021 and 2020, shares of the Company’s stock can be earned based on achievement of a three-year revenue growth target with a penalty if a certain adjusted EBITDA level is not maintained. If the Company achieves less than the target growth over the performance period, the participant will receive fewer shares than the target award, determined on a straight-line basis. If the Company achieves greater than the target growth, the participant will receive more shares than the target award on an accelerated basis. Participants are required to be in service at the determination date of the award following the end of the performance period in order to receive the award. Shares earned will be fully vested shares. The Company will award 53,358 shares as a result of achieving 39% of the 2020 LTIP plan. The Company records stock compensation expense over the performance periods based on the Company’s estimate of the aggregate number of shares that will be earned under the incentive plans.

The following table summarizes the active performance-based long-term incentive plans at December 31, 2022:


			Number of Shares
	Share Price		That Could Be Earned:
LTIP award	on Grant Date		Target		Maximum		Performance Period
2020 LTIP	$	8.70		145,289		254,256	January 1, 2020 through December 31, 2022
2021 LTIP	$	8.25		153,697		268,970	January 1, 2021 through December 31, 2023
2022 LTIP	$	4.84		231,618		405,332	January 1, 2022 through December 31, 2024
				530,604		928,558

The following table summarizes the ESPP activity:


	Years Ended December 31,
	2022					2021
	Shares			Weighted Average Fair Value at Grant Date		Shares			Weighted Average Fair Value at Grant Date
Outstanding, beginning of year		0		$	0.00		0		$	0.00
Granted		201,507			1.38		164,258			1.62
Vested		(201,507	)		1.38		(164,258	)		1.62
Outstanding, end of year		0		$	0.00		0		$	0.00

Based on the 15% discount and the fair value of the option feature of this plan, the ESPP is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. The Company received proceeds of $0.8 million from the ESPP during each of the years ended December 31, 2022 and 2021.

The Company calculated the fair value of each employee stock purchase grant under the ESPP on the date of grant using the Black-Scholes option-pricing model using the following assumptions:


	Employee Stock Purchase Plan
	2022			2021
Dividend yield		4.7	%		3.1	%
Risk-free interest rate		1.7	%		0.1	%
Expected volatility		48	%		48	%
Expected life (in years)		0.5			0.5

The dividend yield rate was calculated by dividing the Company’s annual dividend by the closing price on the grant date. The risk-free interest rate was based on the U.S. Treasury yields with remaining term that approximates the expected life of the options granted. The Company calculated the volatility based on a five-year historical period of the Company’s stock price. The expected life used was based on the offering period.

The Company grants equity awards to members of its Board of Directors as an annual retainer and for committee service. These awards are shares of the Company’s stock that vest one year after issuance. In addition, new directors receive a one-time grant of $55 paid in service-based restricted shares which vest in equal annual increments over three years. In May 2022, the remaining 11,534 shares vested with a fair value of $47. In May 2022, the Company issued 120,768 shares to directors for their annual retainer and committee services. In July 2022, in conjunction with the changes in the directors serving as Chairman of the Board and the Audit Committee Chair

positions, an additional 4,033 shares were issued and 4,105 shares were cancelled. In May 2021, the Company issued 61,186 shares of the Company’s stock to directors for their annual retainer and committee services, of which 49,652 with a fair value of $0.3 million vested immediately upon issuance, with the remainder vesting one year after issuance.

The following table summarizes the director awards activity:


	Years Ended December 31,
	2022					2021
	Shares			Weighted Average Fair Value at Grant Date		Shares			Weighted Average Fair Value at Grant Date
Outstanding, beginning of year		11,534		$	6.57		2,416		$	6.90
Granted		124,801			4.02		61,186			6.57
Vested		(11,534	)		6.57		(52,068	)		(6.65	)
Cancelled		(4,105	)		4.02		0			0.00
Outstanding, end of year		120,696		$	4.02		11,534		$	6.57

For ease in administering the issuance of stock awards, the Company holds back shares of vested restricted stock awards and short-term incentive plan stock awards, if paid in the Company’s stock, for the value of the statutory withholding taxes. For each individual receiving a stock award, the Company redeems the shares it computes as the value for the withholding tax and remits this amount to the appropriate tax authority. For withholding taxes related to stock awards, the Company paid $0.4 million and $0.8 million during the years ended December 31, 2022 and December 31, 2021, respectively.

On November 4, 2020, the Board of Directors approved a share repurchase program, pursuant to which the Company was authorized to repurchase $5.0 million of its common stock through the end of 2021 (“2020 Repurchase Plan”). The 2020 Repurchase Plan became effective November 10, 2020 and was completed in September 2021. The Company spent $1.8 million to repurchase 288,573 shares at an average price of $6.30 during the three months ended December 31, 2020 and spent $3.2 million during the nine months ended September 30, 2021 to repurchase 495,144 shares at an average price of $6.45. The Company retired all repurchased shares.

The Company did not repurchase shares of common stock during the year ended December 31, 2022.