NOTE 13: STOCK CAPITAL

a. Common stock rights:

Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.

b. Equity Incentive Plans:

The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan. The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries. As of March 31, 2024, a total of 23,709,926 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 13,676,076 shares are still available for future grants.

The Share Reserve will automatically increase on January 1^st of each year during the term of the 2015 Plan, commencing on January 1^st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31^st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1^st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31^st.

The Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company.

The market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period. The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of March 31, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

A summary of the activity in stock options and related information is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term in years		Aggregate intrinsic Value
Outstanding as of December 31, 2023		317,416		$	53.38		4.05	$	17,366
Exercised		(3,421	)		3.93		-		247
Outstanding as of March 31, 2024		313,995		$	53.92		3.85	$	11,378
Vested and expected to vest as of March 31, 2024		313,869		$	53.81		3.84	$	11,378
Exercisable as of March 31, 2024		309,120		$	49.86		3.80	$	11,378

The intrinsic value is the amount by which the closing price of the Company’s common stock on March 31, 2024 of $70.98 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

A summary of the activity in the RSUs and related information is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of December 31, 2023		1,860,286		$	182.52
Granted		242,099			70.54
Vested		(163,974	)		207.93
Forfeited		(91,612	)		221.97
Unvested as of March 31, 2024		1,846,799		$	163.63

A summary of the activity in the PSUs and related information is as follows:

	Number of PSUs			Weighted average grant date fair value
Unvested as of December 31, 2023		74,415		$	302.58
Granted		81,249			99.13
Vested		(7,859	)		298.93
Forfeited		(8,836	)		288.77
Unvested as of March 31, 2024		138,969		$	184.72

c. Employee Stock Purchase Plan ("ESPP"):

The Company adopted an ESPP effective upon the consummation of the IPO. As of March 31, 2024, a total of 4,638,023 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1^st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares. However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 15% of their salaries to purchase common stock up to an aggregate limit of $15 per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of March 31, 2024, 938,164 shares of common stock have been purchased under the ESPP.

As of March 31, 2024, 3,699,859 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

d. Stock-based compensation expenses:

The Company recognized stock-based compensation expenses related to all stock-based awards in the condensed consolidated statement of income (loss) for the three months ended March 31, 2024, and 2023, as follows:

	Three Months Ended March 31,
	2024		2023
Stock-based compensation expenses:
Cost of revenues	$	5,968	$	5,927
Research and development		17,139		17,209
Selling and marketing		7,911		8,079
General and administrative		6,588		8,020
Total stock-based compensation expenses	$	37,606	$	39,235

Stock-based compensation capitalized:
Inventory	$	804	$	405
Other long-term assets		478		430
Total stock-based compensation capitalized	$	1,282	$	835

The total tax benefit associated with share-based compensation for the three months ended March 31, 2024 and 2023 was $5,366 and $4,197, respectively. The tax benefit realized from share-based compensation for three months ended March 31, 2024 and 2023 was $1,341 and $2,842, respectively.

As of March 31, 2024, there were total unrecognized compensation expenses in the amount of $298,976 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized during the period from April 1, 2024 through February 29, 2028

e. Repurchase of Common Stock:

On November 1, 2023, the Company announced the approval by the Board of Directors of a share repurchase program which authorizes the repurchase of up to $300,000 of the Company’s common stock. Under the share repurchase program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the share repurchase program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. The program does not obligate the Company to acquire any amount of common stock, it may be suspended, extended, modified, discontinued or terminated at any time at the Company’s discretion without prior notice, and will expire on December 31, 2024.

During the three months ended March 31, 2024, the Company repurchased 505,896 shares of common stock from the open market at an average cost of $65.67 per share for a total of $33,222.