The condensed consolidated statements of operations include $1.0 million of stock compensation expense for the three months ended June 30, 2021 and 2020, respectively. The condensed consolidated statements of operations include $1.7 million and $1.6 million of stock compensation expense for the six months ended June 30, 2021 and 2020, respectively. The Company accounts for forfeitures as they occur.

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Service-based awards	$	640	$	865	$	1,095	$	1,287
Performance-based awards (short-term incentive plan)		138		0		196		0
Performance-based awards (long-term incentive plan)		194		77		233		155
Employee stock purchase plan		67		59		133		121
Total	$	1,039	$	1,001	$	1,657	$	1,563

Total stock-based compensation is reflected in the condensed consolidated statements of operations as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenues	$	65	$	74	$	134	$	146
Research and development		140		145		282		282
Sales and marketing		226		164		386		314
General and administrative		608		618		855		821
Total	$	1,039	$	1,001	$	1,657	$	1,563

The following table presents a summary of the remaining unrecognized share-based compensation expense related to outstanding share-based awards as of June 30, 2021:

Award Type	Remaining Unrecognized Compensation Expense		Weighted Average Life (Years)
Service-based awards	$	2,140		1.5
Performance-based awards	$	2,185		2.4

The Company grants service-based stock awards to employees under its long-term incentive plan (“LTIP”). All stock awards to employees are issued under the PCTEL, Inc. 2019 Stock Incentive Plan. For the annual awards granted to executives and key

managers in the six months ended June 30, 2021 and 2020, respectively, the awards were comprised one-third of service-based restricted awards and two-thirds of performance-based awards. When service-based restricted stock is granted, the Company records deferred stock compensation within additional paid-in capital, representing the fair value of the common stock on the date the restricted shares are granted. The Company records stock compensation expense on a straight-line basis over the vesting period of the applicable service-based restricted shares.

The following table summarizes service-based restricted stock activity for the six months ended June 30, 2021:

	Shares			Weighted Average Fair Value
Unvested Restricted Stock Awards - December 31, 2020		432,422		$	6.90
Shares awarded		170,158			8.04
Shares vested		(270,607	)		6.60
Shares cancelled		(3,102	)		7.76
Unvested Restricted Stock Awards - June 30, 2021		328,871		$	7.75

In March 2021, the Company issued to employees 170,158 service-based restricted stock awards that vest in three substantially equal annual increments commencing in 2022. In February 2020, the Company issued to employees 153,694 service-based restricted stock awards under the LTIP that vest in three substantially equal annual increments commencing in 2021. In April 2020, the Company reduced the salary of each executive and key manager by 10% and in connection therewith issued. 47,539 shares of restricted stock, with a one-year vesting period to such employee equal to 5% of his/her salary. .

The intrinsic value of service-based restricted shares that vested during the six months ended June 30, 2021 and 2020 was $2.2 million and $1.9 million, 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 table summarizes the restricted stock unit activity during the six months ended June 30, 2021:

	Shares			Weighted Average Fair Value
Unvested Restricted Stock Units - December 31, 2020		9,083		$	7.02
Units awarded		17,800			7.11
Units vested/Shares awarded		(5,446	)		6.47
Unvested Restricted Stock Units - June 30, 2021		21,437		$	7.23

The intrinsic value of service-based restricted stock units that vested and were issued as shares during the six months ended June 30, 2021 and 2020 was $42 and $44, respectively. In June 2021, the Company issued 15,000 service-based restricted stock units to employees of the Swedish subsidiary, Smarteq, with a four-year vesting period commencing in 2022.

The Company may grant employees stock options to purchase common stock. The Company issues stock options with exercise prices no less than the fair value of the Company’s stock on the grant date. Employee stock options are subject to installment vesting typically over a period of not less than 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 stock options outstanding at June 30, 2021 have a seven-year life.

The following tables summarizes the stock option activity for the six months ended June 30, 2021:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2020		16,250		$	6.54
Options exercised		(6,000	)		5.48
Options cancelled/expired		(6,250	)		7.89
Outstanding at June 30, 2021		4,000		$	6.02
Exercisable at June 30, 2021		3,664		$	5.93

During the six months ended June 30, 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. During the six months ended June 30, 2020, the Company received proceeds of $0.1 million from the exercise of options for 9,412 shares and issued 10,194 shares for the exercise of 52,355 options. The intrinsic value of the options exercised was $0.1 million. The Company did not grant stock options during the six months ended June 30, 2021 or 2020.

The following table summarizes information about stock options outstanding under all stock option plans:

Options Outstanding

Options Exercisable

Range of

Exercise Prices

Number

Outstanding

Weighted

Average

Contractual

Life (Years)

Weighted-

Average

Exercise

Price

Number

Exercisable

Weighted

Average

Exercise

Price

$ 5.06 - $ 6.98

4,000

2.92

6.02

3,664

5.93

The weighted average contractual life and intrinsic value of options outstanding and options exercisable at June 30, 2021, was the following:

Weighted

Average

Contractual

Life (years)

Intrinsic

Value

Options Outstanding

2.92

Options Exercisable

2.86

For outstanding stock options, the Company calculated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model. 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. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility and expected option life.

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

Incentive compensation earned by executives and key managers under the Company’s 2021 Short-Term Incentive Plan (“STIP”) will be settled 50% in cash and 50% in shares of the Company’s stock as was the case with the 2020 STIP. Under both the 2021 STIP and 2020 STIP, payouts could be earned based on annual revenue and adjusted EBITDA targets. No shares were earned under the 2020 STIP because the Company did not exceed the revenue or EBITDA thresholds.

The Company grants performance-based awards to executives and key managers 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.

	Awards at Target		Weighted Average Fair Value
Unvested Performance Awards - December 31, 2020		316,726	$	6.84
Awards granted		187,864		8.15
Unvested Performance Awards - June 30, 2021		504,590	$	7.33

The Company granted performance awards under its long-term incentive plan to executives and key managers in February 2021 (“2021 LTIP”). The performance period for the 2021 LTIP is from January 1, 2021 through December 31, 2023. At target, the total fair market value of the award was $1.5 million based on the average share price of $8.15 on the grant date. On the award date, the aggregate number of shares that could be earned at target was 187,864 and the maximum number of aggregate shares that could be earned was 328,762.

Under the 2021 LTIP and similar plans from 2019 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 records stock compensation expense over the performance period based on the Company’s estimate of the aggregate number of shares that will be earned under the incentive plan.

The following table summarizes the active performance-based long-term incentive plans at June 30, 2021:

			Number of Shares
	Share Price		That Could Be Earned:
LTIP award	on Grant Date		Target		Maximum		Performance Period
2019 LTIP	$	5.27		171,437		295,325	January 1, 2019 through December 31, 2021
2020 LTIP	$	8.70		145,289		254,256	January 1, 2020 through December 31, 2022
2021 LTIP	$	8.15		187,864		328,762	January 1, 2021 through December 31, 2023
				504,590		878,343

The ESPP enables eligible employees to purchase common stock at the lower of 85% of the fair market value of the common stock on the first or last day of each offering period. Each offering period is approximately six months.

Based on the 15% discount and the fair value of the option feature of the ESPP, it is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model.

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

	Employee Stock Purchase Plan
	2021			2020
Dividend yield		3.1	%		4.1	%
Risk-free interest rate		0.1	%		0.1	%
Expected volatility		48	%		44	%
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 a remaining term that approximates the expected life of the options granted. The volatility was based on a five-year historical period of the Company’s stock price. The expected life 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 upon issuance or, in some cases, one year after issuance. In addition, new directors receive a one-time grant that vests over three years. In May 2021, the Company issued 61,186 shares to directors for their annual retainer and committee services of which 49,652 shares vested immediately upon issuance, with the remainder vesting one year after issuance. The fair value of the service based restricted shares for directors that vested during the six months ended June 30, 2021 was $0.3 million.

	Shares			Weighted Average Fair Value
Outstanding - December 31, 2020		2,416		$	6.90
Shares awarded		61,186			6.57
Shares vested		(52,068	)		6.65
Outstanding - June 30, 2021		11,534		$	6.57

For ease in administering the issuance of stock awards, the Company holds back shares of vested restricted stock awards, stock option exercises and short-term and long-term incentive plan stock awards for the value of the statutory withholding taxes. For everyone receiving a share 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 $0.8 million and $1.1 million during the six months ended June 30, 2021 and 2020, respectively.

On November 6, 2019, the Board of Directors approved a share repurchase program (“2019 Repurchase Plan”), which was reauthorized on March 10, 2020 under the 2019 Repurchase Plan, the Company was authorized to repurchase up to $7.0 million of its common stock through the end of 2020. The Company spent $2.0 million to repurchase 375,046 shares at an average price of $5.36 during the three months ended March 31, 2020. Due to uncertainties related to the COVID-19 pandemic and to protect the Company’s cash position, on April 1, 2020 the Board of Directors approved the termination of the 2019 Repurchase Plan.

On November 4, 2020, the Board of Directors approved a $5.0 million share repurchase program (“2020 Repurchase Plan”). 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 the Company spent $0.7 million during the six months ended June 30, 2021 to repurchase 112,951 shares at an average price of $6.49. The Company retired all repurchased shares.

On May 29, 2020, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation (i) changing the Company’s name from “PC-Tel, Inc.” to “PCTEL, Inc.” and (ii) decreasing the number of authorized shares of common stock from 100,000,000 shares to 50,000,000 shares.