DATA I/O CORP Stock Compensation Disclosure
NOTE 10 – SHARE-BASED COMPENSATION
For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method. For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures. The impact on our results of operations of recording share-based compensation for the years ended December 31, 2024 and 2023 was as follows:
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| Year Ended December 31, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Cost of goods sold |
| $ | 112 |
|
| $ | 95 |
|
Research and development |
|
| 228 |
|
|
| 257 |
|
Selling, general and administrative |
|
| 636 |
|
|
| 838 |
|
Total share-based compensation |
| $ | 976 |
|
| $ | 1,190 |
|
An immaterial amount of share-based compensation was capitalized into inventory as overhead for the years ended December 31, 2024 and 2023, respectively.
The following table summarizes stock option activity under our stock option plans for the twelve months ended December 31, 2024 and 2023:
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| 2024 |
|
| 2023 |
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| Options |
|
| Weighted-Average Exercise Price |
|
| Weighted-Average Remaining Contractual Life in Years |
|
| Options |
|
| Weighted-Average Exercise Price |
|
| Weighted-Average Remaining Contractual Life in Years |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Outstanding at beginning of year |
|
| 12,500 |
|
| $ | 4.98 |
|
|
|
|
|
| 12,500 |
|
| $ | 4.98 |
|
|
|
| ||
Granted |
|
| 200,000 |
|
| $ | 2.39 |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Exercised |
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Cancelled, Expired or Forfeited |
|
| (12,500 | ) |
| $ | 4.98 |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Outstanding at end of year |
|
| 200,000 |
|
| $ | 2.39 |
|
|
| 5.67 |
|
|
| 12,500 |
|
| $ | 4.98 |
|
|
| 1.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest at the end of the period |
|
| 182,676 |
|
| $ | 2.39 |
|
|
| 1.33 |
|
|
| 12,500 |
|
| $ | 4.98 |
|
|
| 1.33 |
|
Exercisable at end of year |
|
| 12,500 |
|
| $ | 2.39 |
|
|
| 1.33 |
|
|
| 12,500 |
|
| $ | 4.98 |
|
|
| 1.33 |
|
The aggregate intrinsic value of outstanding options is $81,540. There were no stock option awards exercised in 2024.
Restricted stock award activity including performance-based stock award activity under our share-based compensation plan was as follows:
|
| 2024 |
|
| 2023 |
| ||||||||||
|
| Awards |
|
| Weighted - Average Grant Date Fair Value |
|
| Awards |
|
| Weighted - Average Grant Date Fair Value |
| ||||
Outstanding at beginning of year |
|
| 728,625 |
|
| $ | 4.17 |
|
|
| 665,200 |
|
| $ | 3.94 |
|
Granted |
|
| 363,150 |
|
|
| 2.87 |
|
|
| 387,100 |
|
|
| 4.36 |
|
Vested |
|
| (296,209 | ) |
|
| 4.12 |
|
|
| (284,925 | ) |
|
| 3.93 |
|
Cancelled |
|
| (323,666 | ) |
|
| 3.66 |
|
|
| (38,750 | ) |
|
| 3.96 |
|
Outstanding at end of year |
|
| 471,900 |
|
| $ | 3.55 |
|
|
| 728,625 |
|
| $ | 4.17 |
|
During the years ended December 31, 2024 and 2023, 86,007 and 83,753 shares, respectively, were withheld from issuance related to restricted stock units vesting and stock option exercises to cover employee taxes and stock options exercise price.
Non-employee directors Restricted Stock Units (“RSUs”) typically vest over the earlier of one year or the next annual meeting of shareholders and Non-Qualified stock options vest over three years and have a six-year exercise period. Employee RSUs typically vest annually over three or four years and employee Non-Qualified stock options typically vest quarterly over four years and have a six-year exercise period. Performance Stock Units (“PSUs”) typically cliff vest at the end of the performance period and the performance metric for 2023 awards is cumulative revenue growth over the three-year period ending December 31, 2025 with a cumulative revenue threshold, target, and maximum performance measure. For 2024 awards, the performance metrics included revenue growth, EBITDA and project objective targets over the three-year period ending December 31, 2026. The table above includes performance shares granted in 2024 of 124,000 shares at the target performance level (the threshold level would be 50% and the maximum level would be 150% of the target level).
The remaining unamortized expected future compensation expense and remaining amortization period associated with unvested option grants and restricted stock awards are:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
Unamortized future compensation expense |
| $ | 1,413,500 |
|
| $ | 2,317,524 |
|
Remaining weighted average amortization period in years |
|
| 2.31 |
|
|
| 2.44 |
|
The weighted average number of shares outstanding used to compute earnings (loss) per share included the following:
|
| Year Ended December 31, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
Weighted average shares outstanding |
|
| 9,149,538 |
|
|
| 8,940,612 |
|
Restricted and Performance Stock Units |
|
| - |
|
|
| 132,360 |
|
Stock Options |
|
| - |
|
|
| 216 |
|
Weighted average shares |
|
| 9,149,538 |
|
|
| 9,073,188 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Apr 1, 2025 | Showing above |
| 2021 | Mar 29, 2022 | |
| 2020 | Mar 26, 2021 | |
| 2019 | Mar 27, 2020 | |
| 2018 | Mar 28, 2019 | |
| 2017 | Mar 28, 2018 | |
| 2015 | Mar 28, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.