SkyWater Technology, IncSKYT
SkyWater Technology, Inc Stock Compensation Disclosure
Equity-Based Compensation
2021 Equity Incentive Plan
In connection with its initial public offering (“IPO”), the Company adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan became effective upon the consummation of the IPO. On June 7, 2023, the stockholders of the Company approved an amendment to increase the number of shares available for issuance under the 2021 Equity Plan. Under the 2021 Equity Plan, as amended, 9,522,000 shares of common stock are available for issuance to eligible individuals in the form of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards.
Stock Options
Stock options generally vest either (1) ratably on the first, second, third, and fourth anniversaries of the grant date and expire in ten years from the date of grant; or (2) in full on the first anniversary of the grant date and expire 15 months after the grant date. Equity-based compensation expense related to stock option awards was $3,067, $2,157, and $1,647, for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively. Forfeitures are recognized as they occur and the stock compensation expense on forfeited awards that have not vested is reversed.
The fair value of each stock option is estimated on the date of grant using Black-Scholes and the following assumptions. The expected life of an option represents the period of time that options granted are expected to be outstanding and is based on the SEC Simplified Method (midpoint of average vesting time and contractual term). Expected volatility is based on an average of the historical, daily volatility of a peer group of similar companies blended with SkyWater’s historic daily volatility over a period consistent with the expected life assumption ending on the grant date. Risk-free interest rates are based on yields available on the grant dates for U.S. Treasury Strips with maturities consistent with the expected life assumptions. The Company assumed no dividend yield in the valuation of the options granted as it has never declared or paid dividends on its common stock and has no current plans to introduce dividends as it intends to retain earnings for use in operations.
Fiscal Year Ended | |||||||||||||||||
| December 29, 2024 | December 31, 2023 | January 1, 2023 | |||||||||||||||
Expected life | 6.25 years | 6.25 years | 6.25 years | ||||||||||||||
Expected volatility | 73.1% - 78.7% | 75.1% - 76.5% | 73.0% | ||||||||||||||
Risk-free interest rate | 3.80% - 4.70% | 3.47% - 4.66% | 2.1% | ||||||||||||||
The following table summarizes the stock option activity during the fiscal year ended December 29, 2024:
| Number of Stock Options (in thousands) | Weighted Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Balance outstanding as of December 31, 2023 | 1,637 | $ | 11.32 | ||||||||||||||||||||
| Granted | 688 | 9.98 | |||||||||||||||||||||
| Exercised | (15) | 9.08 | |||||||||||||||||||||
| Forfeited or canceled | (308) | 11.55 | |||||||||||||||||||||
| Balance outstanding as of December 29, 2024 | 2,002 | 10.87 | 8.0 years | $ | 8,131 | ||||||||||||||||||
| Balance vested and exercisable as of December 29, 2024 | 351 | $ | 12.26 | 7.0 years | $ | 1,796 | |||||||||||||||||
The weighted average grant-date fair value of options granted in the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 was $6.77, $6.65, and $5.50 respectively. As of December 29, 2024, total unrecognized compensation expense related to stock options was $8,131 and is expected to be recognized over the remaining weighted average vesting period of approximately 2.7 years.
Restricted Common Stock Units
Restricted common stock units are granted to eligible employees and generally vest ratably on each of the first, second, and third anniversaries of the grant date. Restricted common stock units granted to directors vest in full on the first anniversary of the grant date. The common stock relating to restricted common stock units is issued upon vesting. The grantee has no rights as a common stockholder until the common stock related to the restricted common stock units have been issued.
Equity-based compensation expense related to restricted common stock unit awards was $4,005, $3,560, and $5,692, for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively. Forfeitures are recognized as they occur and the stock compensation expense on forfeited awards that have not vested are reversed. Total unrecognized compensation cost related to restricted common stock units was $3,956 as of December 29, 2024, and is expected to be recognized over the weighted average vesting period of approximately 1.89 years. The estimated fair value of restricted common stock units is based on the grant date closing price of SkyWater’s common stock. The total fair value of restricted stock units vested during the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 was $3,542, $5,001, and $6,749 respectively.
The following table summarizes the restricted common stock unit activity during the fiscal year ended December 29, 2024:
| Number of Restricted Common Stock Units (in thousands) | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Balance outstanding as of December 31, 2023 | 657 | $ | 10.18 | ||||||||
| Granted | 628 | 9.54 | |||||||||
| Vested | (326) | 10.86 | |||||||||
| Forfeited or canceled | (128) | 10.02 | |||||||||
| Balance outstanding as of December 29, 2024 | 831 | $ | 9.59 | ||||||||
2021 Employee Stock Purchase Plan
In connection with SkyWater’s IPO, the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). On June 7, 2023, the stockholders of the Company approved an amendment to increase the number of shares available for issuance under the 2021 ESPP. A maximum of 1,464,000 shares of its common stock has been reserved for issuance under the 2021 ESPP, as amended. Under the 2021 ESPP, eligible employees may purchase common stock through payroll deductions at a discount not to exceed 15% of the lower of the fair market values of SkyWater’s common stock as of the beginning or end of each offering period, which may range from to 27 months. Payroll deductions are limited to 15% of the employee’s eligible compensation and a maximum of 2,500 shares of common stock may be purchased by an employee each offering period. Under the 2021 ESPP, 356, 326, and 188 shares were purchased during the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively. As of December 29, 2024 and December 31, 2023, $1,000 and $735, respectively, was withheld on behalf of employees for future purchases under the 2021 ESPP and recorded as accrued compensation. Equity-based compensation expense related to the 2021 ESPP was $1,087, $1,143, and $877 for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively. Actual forfeitures are recognized as they occur. Compensation cost related to the 2021 ESPP is recognized on a straight-line basis over each six-month offering period. As of December 29, 2024, total unrecognized compensation cost related to the 2021 ESPP was $204.
The fair value of the 2021 ESPP is estimated on the date of grant using Black-Scholes and the following assumptions. Expected volatility is based on an average of the historical, daily volatility of SkyWater and a peer group of similar companies over a period consistent with the expected life assumption ending on the grant date. Risk-free interest rates are based on yields available on the grant dates for U.S. Treasury Strips with maturities consistent with the expected life assumptions. The Company assumed no dividend yield in the valuation of the options granted as it has never declared or paid dividends on its common stock and has no current plans to introduce dividends as it intends to retain earnings for use in operations.
Fiscal Year Ended | |||||||||||||||||
| December 29, 2024 | December 31, 2023 | January 1, 2023 | |||||||||||||||
Expected life | 0.5 years | 0.5 years | 0.5 years | ||||||||||||||
Expected volatility | 75.1% | 75.1% | 73.0% | ||||||||||||||
Risk-free interest rate | 5.11% | 5.34% | 3.34% | ||||||||||||||
| Weighted average grant-date fair value per share | $3.63 | $3.57 | $4.45 | ||||||||||||||
Equity-Based Compensation Expense Allocation
Equity-based compensation expense was allocated in the consolidated statements of operations as follows:
Fiscal Year Ended | |||||||||||||||||
| December 29, 2024 | December 31, 2023 | January 1, 2023 | |||||||||||||||
| Cost of revenue | $ | 2,113 | $ | 1,555 | $ | 2,470 | |||||||||||
Research and development expense | 342 | 464 | 575 | ||||||||||||||
Selling, general and administrative expense | 5,713 | 4,841 | 5,171 | ||||||||||||||
| $ | 8,168 | $ | 6,860 | $ | 8,216 | ||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 14, 2025 | Showing above |
| 2023 | Mar 15, 2023 | |
| 2022 | Mar 10, 2022 | |
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.