GCT Semiconductor Holding, Inc. Stock Compensation Disclosure
11. Stock-Based Compensation
2011 Incentive Compensation Plan
Legacy GCT’s 2011 Incentive Compensation Plan (the “2011 Plan”) permitted the grant of options, stock awards, and RSUs. In connection with the Closing of the Business Combination, the 2011 Plan was terminated, and the remaining unallocated shares reserved under the 2011 Plan were cancelled. In March 2024, each award of Legacy GCT stock options and RSUs were converted into equivalent Company stock options and RSUs with the same terms and conditions under the plan described below.
2024 Employee Stock Purchase Plan
In December 2023, the Company’s board of directors adopted the 2024 Employee Stock Purchase Plan, which was subsequently approved by the Company’s stockholders in February 2024 (the “2024 ESPP”), under which eligible employees may be provided with the opportunity to periodically purchase shares of the Company’s common stock at a discount through their accumulated periodic payroll deductions. As of December 31, 2024, the Company had 600,000 shares authorized for issuance under the 2024 ESPP, and no offering periods started.
2024 Incentive Compensation Plan
In March 2024, the Company adopted the 2024 Omnibus Incentive Compensation Plan (the “2024 Plan”), under which 3,983,334 shares of common stock were initially reserved for issuance. The 2024 Plan permits the grant of stock options, stock appreciation rights, stock awards, RSUs, dividend equivalent rights, cash awards, and other awards to employees and non-employees, including members of the board of directors, consultants, or advisors.
Stock options outstanding under the 2024 Plan were as follows (in thousands, except per share amounts and years):
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Balance as of December 31, 2023 |
|
|
3,579 |
|
|
$ |
0.02 |
|
|
|
5.5 |
|
|
$ |
4,045 |
|
Reverse recapitalization |
|
|
(2,911 |
) |
|
|
0.09 |
|
|
|
— |
|
|
|
— |
|
Balance as of December 31, 2023(1) |
|
|
668 |
|
|
|
0.11 |
|
|
|
5.5 |
|
|
|
4,045 |
|
Exercised |
|
|
(133 |
) |
|
|
0.11 |
|
|
|
|
|
|
|
||
Balance as of December 31, 2024 |
|
|
535 |
|
|
$ |
0.11 |
|
|
|
4.4 |
|
|
$ |
1,189 |
|
Vested and expected to vest as of December 31, 2024 |
|
|
535 |
|
|
$ |
0.11 |
|
|
|
4.4 |
|
|
$ |
1,189 |
|
Exercisable as of December 31, 2024 |
|
|
526 |
|
|
$ |
0.11 |
|
|
|
4.4 |
|
|
$ |
1,169 |
|
No options were granted or cancelled during the year ended December 31, 2024. As of December 31, 2024, unrecognized compensation cost related to stock options was nominal. The aggregate intrinsic value of the options exercised during the year ended December 31, 2024 was $0.4 million.
Founder Awards to Board of Directors
In 2021, an aggregate of 90,000 shares of common stock were transferred to three members of Concord III’s board of directors (“Founder Shares”). The Founder Shares contained double-trigger vesting, which required continuous service and a liquidity event for any shares to vest. As the required conditions were met upon the Closing, the Company recognized $0.9 million of stock-based compensation upon the Closing in March 2024.
Restricted Stock Units
In December 2023, various employees and directors of Legacy GCT were granted 392,000 RSUs that contain both a performance condition based upon a liquidity event and a service vesting condition such that (subject to the liquidity event condition being satisfied) the RSUs vest in four equal annual installments from the grant date (“2023 RSUs”). The liquidity condition was met upon the Closing.
In June 2024, the Company granted to the members of its board of directors certain share-based awards with a fixed monetary amount of $0.7 million equally allocated among six grantees (“2024 RSUs”). The number of shares issuable to each grantee under the 2024 RSUs is calculated by dividing one-fourth of the allocated fixed monetary amount by the closing price of the Company’s common stock at the end of each fiscal quarter between April 1, 2024 and March 31, 2025. The RSUs will vest on March 31, 2025, subject to the grantees’ continuous service to the Company and will be settled in common stock on various dates in 2026 and 2027. The 2024 RSUs are initially classified as a liability and reclassified to equity up to the monetary amount for which the number of shares to be issued becomes determinable. Through December 31, 2024, this determination was made for 151,728 shares based on the closing price of the Company’s common stock as of each fiscal quarter-end after the grant date.
In August 2024, the Company granted various employees 140,000 RSUs that vest in four equal annual installments subject to continuous service.
In December 2024, the Company granted various employees 629,500 RSUs, of which 329,500 RSUs vest in four equal installments subject to continuous service, and 300,000 RSUs vest quarterly between April 2025 and ending February 2026.
RSUs outstanding under the 2024 Plan were as follows (in thousands, except per share amounts):
|
|
Number of RSUs |
|
|
Weighted |
|
||
Balance as of December 31, 2023 |
|
|
2,100 |
|
|
$ |
1.15 |
|
Reverse recapitalization |
|
|
(1,708 |
) |
|
|
5.01 |
|
Balances as of December 31, 2023(1) |
|
|
392 |
|
|
$ |
6.16 |
|
Granted |
|
|
921 |
|
|
|
2.77 |
|
Vested |
|
|
(98 |
) |
|
|
6.16 |
|
Cancelled |
|
|
(1 |
) |
|
|
6.16 |
|
Balance as of December 31, 2024 |
|
|
1,214 |
|
|
$ |
3.59 |
|
During the years ended December 31, 2024 and 2023, the Company recognized $1.8 million and less than $0.1 million of stock-based compensation related to the outstanding RSUs. As of December 31, 2024, there was $3.2 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted average period of 2.5 years. Any unvested RSUs are forfeited upon separation from the Company. Forfeitures are accounted for as they occur.
Stock-Based Compensation
The following table summarizes stock-based compensation included in the Company’s consolidated statements of operations (in thousands):
|
|
Year Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cost of revenues |
|
|
44 |
|
|
|
— |
|
Research and development |
|
|
543 |
|
|
|
18 |
|
Sales and marketing |
|
|
147 |
|
|
|
9 |
|
General and administrative |
|
|
1,966 |
|
|
|
16 |
|
Total |
|
$ |
2,700 |
|
|
$ |
43 |
|
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.