NOTE 11. STOCK PLANS

Stock-Based Compensation

During the three months ended March 31, 2023 and 2022, the Company granted options to purchase an aggregate of 226,966 and 480,850 shares of its common stock that are subject to time-based vesting conditions, respectively.

The Company valued these stock options using the Black-Scholes Merton option pricing model. The following assumptions were used to compute the grant date fair values of the stock options granted during the three months ended March 31, 2023 and 2022:

Stock-based compensation capitalized for internal-use software was $134 and $33 for the three months ended March 31, 2023 and 2022, respectively.

Equity Award Activity Under Stock Plans

Performance Stock Units

On January 4, 2023, the Company entered into a consulting agreement (the “Steel Holdings Consulting Agreement”) with Steel Holdings, LLC, an affiliate of Chad Steelberg, our former Chief Executive Officer and current Chairman of the Company’s Board of Directors (the “Board”), as further described in Note 12. In connection with the Steel Holdings Consulting Agreement, on January 11, 2023 the Compensation Committee of the Board (the “Compensation Committee”) approved a grant of 118,460 performance stock units (the “Steel Holdings Consulting PSUs”) that vest upon the achievement of certain performance milestones. The Steel Holdings Consulting PSUs will expire 6 months after the Steel Holdings Consulting Agreement terminates.

On March 16, 2023, the Compensation Committee approved a grant of 170,402 target performance stock units to be granted to the Company’s named executive officers (the “Senior Executive PSUs”). The awards have a grant date of March 31, 2023 and will vest based on the achievement of revenue and non-GAAP net income targets (each equally weighted) for 2023, which achievement shall then be modified (up to a 20% increase or decrease) based on the Company’s relative total shareholder return over a three-year performance period (the “TSR Modifier”), as compared with the S&P Software and Services Select Industry Index. Based on the Company’s performance, the Company’s named executive officers may earn from 0% to 200% of the target number of shares of the Senior Executive PSUs. The Senior Executive PSUs, to the extent earned, will vest on the date the Board certifies the TSR Modifier for the three-year performance period ending December 31, 2025 and the number of Senior Executive PSUs that will vest as of such certification, all of which will occur within 90 days of the end of the performance period ending December 31, 2025. Compensation costs recognized on the Senior Executive PSUs are adjusted, as applicable, for performance above or below the target specified in the award.

Restricted Stock Units

As of March 31, 2023, total unrecognized compensation cost related to restricted stock units was $10,590, which is expected to be recognized over a weighted average period of 2.17 years.

Performance-Based Stock Options

The aggregate intrinsic value of the options exercised during the three months ended March 31, 2023 and 2022 was $5 and $221, respectively. No performance-based stock options were granted during the three months ended March 31, 2023 and 2022 and no performance-based stock options vested during the three months ended March 31, 2023.

Stock Options

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $4.21 and $11.36 per share, respectively. The aggregate intrinsic value of the stock options exercised during the three months ended March 31, 2023 and 2022 was $10 and $163, respectively. The total grant date fair value of stock options vested during the three months ended March 31, 2023 and 2022 was $1,584 and $1,085, respectively. At March 31, 2023, total unrecognized compensation expense related to stock options was $11,711 and is expected to be recognized over a weighted average period of 2.6 years.

The aggregate intrinsic values in the tables above represent the difference between the fair market value of the Company’s common stock and the average option exercise price of in-the-money options, multiplied by the number of such stock options.

Employee Stock Purchase Plan

During the three months ended March 31, 2023, a total of 87,895 shares of common stock were purchased under the ESPP. As of March 31, 2023 and December 31, 2022, accrued employee contributions for future purchases under the ESPP totaled $248 and $595, respectively.