Note 15 - Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

15.         Stock-Based Compensation

Overview

On July 22, 2021, at the 2021 Annual Meeting of Stockholders, stockholders voted to approve the Company’s Amended and Restated Incentive Compensation Plan (the “Plan”) to increase the number of shares reserved for issuance under the Plan by 22,000,000 shares. As of December 31, 2021, there were 32,072,308 shares authorized for issuance, and 20,755,273 shares available for future issuance under the Plan. To date all equity awards under the Plan have consisted of nonqualified stock options, incentive stock options, and restricted stock units.

Under the Plan, which is administered by the Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock and/or deferred stock to employees, officers, directors, consultants and vendors. The exercise price of stock options or stock appreciation rights may not be less than the fair market value of the Company’s shares at the date of grant. Additionally, no stock options or stock appreciation rights granted under the Plan may have a term exceeding ten years.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized approximately $9.4 million, $7.9 million, and $11.5 million, respectively, of stock-based compensation expense, including stock options and restricted stock units.

Stock Options

The Company recognizes as expense, the grant-date fair value of stock options and other stock-based compensation issued to employees and non-employee directors over the requisite service periods, which are typically the vesting periods. The Company uses the Black-Scholes-Merton model to estimate the fair value of its stock-based payments. The volatility assumption used in the Black-Scholes-Merton model is based on the calculated historical volatility based on the Company’s historical volatility. The expected term of options granted by the Company has been determined based upon the simplified method, because the Company does not have sufficient historical information regarding its options to derive the expected term. Under this approach, the expected term is the mid-point between the weighted average of vesting period and the contractual term. The risk-free interest rate is based on U.S. Treasury rates whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company estimates forfeitures based on the historical experience of the Company and adjusts the estimated forfeiture rate based upon actual experience.

The fair value of options granted were estimated using the Black-Scholes-Merton option pricing model based on the assumptions in the table below:

	Year Ended December 31,
	2021				2020				2019
Expected dividend yield			0%				0%				0%
Expected volatility		118%	-	139%		82%	-	126%		81%	-	92%
Risk-free interest rate		0.33%	-	1.11%		0.2%	-	1.69%		1.39%	-	2.66%
Expected life (in years)		3.8	-	4.5		3.8	-	6.1		5.5	-	6.1

The following table summarizes the Company’s stock option activity, including grants to non-employees, for the year ended December 31, 2021:

	Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Options outstanding at December 31, 2020		4,361,872		$	10.49		6.05
Granted		1,490,266			4.06
Forfeited		(285,391	)		8.10
Cancelled		(610,287	)		30.32
Exercised		(315,800	)		0.67
Options outstanding at December 31, 2021		4,640,660		$	6.64		5.66

The following table summarizes information about stock options outstanding at December 31, 2021:

	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (Millions)
Exercisable at December 31, 2021		1,887,155	$	11.50		5.40	$	0.7
Vested or expected to vest at December 31, 2021		4,498,953	$	6.75		5.65	$	1.4

The Company granted 1,490,266, 3,005,964, and 623,272 options to employees and non-employees during the years ended December 31, 2021, 2020, and 2019, respectively, with a weighted-average grant date fair value of $2.40, $0.53, and $21.23, respectively.

As of December 31, 2021, the Company had future employee stock-based compensation expense of approximately $4.0 million related to unvested stock options, which is expected to be recognized over an estimated weighted-average period of 1.5 years.

Restricted Stock Units

During 2021, 2020, and 2019, the Company issued Restricted Stock Units (“RSUs”) to certain employees which vest over two years and three years. The RSUs vest on defined vesting dates and in certain circumstances subject to certain performance criteria, subject to the continuous service with the Company at the applicable vesting event. Vesting can be accelerated upon a change in control under the Plan if the RSUs are not assumed by the successor company, and will be accelerated for certain executive officers under existing employment agreements if any such executive officer has a termination of employment in connection with a change in control event.  When vested, the RSUs represent the right to be issued the number of shares of the Company’s common stock that is equal to the number of RSUs granted. The fair value of each RSU is estimated based upon the closing price of the Company’s common stock on the grant date. Share-based compensation expense related to RSUs is recognized over the requisite service period as adjusted for estimated forfeitures.

The following is a summary of the RSU activity, including performance restricted stock units, for the years ended December 31, 2021, 2020, and 2019:

	Number of Restricted Stock Units Oustanding			Weighted- Average Grant Date Fair Value
Unvested December 31, 2018		382,098		$	20.24
Granted		192,987			31.42
Vested		(85,153	)		25.98
Forfeited		(46,005	)		21.38
Unvested December 31, 2019		443,927		$	23.88
Granted		3,112,382			0.67
Vested		(313,508	)		19.38
Forfeited		(245,402	)		6.54
Unvested December 31, 2020		2,997,399		$	1.41
Granted		3,133,753			2.77
Vested		(1,891,869	)		1.63
Forfeited		(400,253	)		1.86
Unvested December 31, 2021		3,839,030		$	2.36

As of December 31, 2021, 2020, and 2019, the Company recorded approximately $4.8 million, $1.7 million, and $3.2 million, respectively, in compensation expense for the RSUs. As of December 31, 2021, the unrecognized stock-based compensation expense related to unvested RSUs was approximately $4.3 million, which is expected to be recognized over a weighted average period of approximately 1.3 years.

Performance Restricted Stock Units

In 2021 and 2020, the Company granted performance-based restricted stock units with vesting terms based on our attainment of certain operational targets by October 1, 2023 and October 1, 2022, respectively. The number of shares earnable under the 2021 and 2020 awards were based on achieving designated corporate goals. As of December 31, 2021 and 2020, the Company recorded approximately $0.9 million and $0.1 million, respectively, in compensation expense for these performance-based restricted stock units.