Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Stock Based Compensation

v3.22.2
Note 8 - Stock Based Compensation
6 Months Ended
Jun. 30, 2022
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 8 - Stock Based Compensation

 

Our board of directors adopted our 2021 Equity Incentive Plan (the “Plan”), to provide employees of the Company and its subsidiaries, certain consultants and advisors who perform services for the Company or its subsidiaries, and non-employee members of the board of directors of the Company with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, other stock-based awards, and cash awards to enable us to motivate, attract and retain the services of directors, officers and employees considered essential to the long term success of the Company. Under the terms of the Plan, the aggregate number of shares of awards will be no more than 2,275,727 shares. If and to the extent shares of awards granted under the Plan, expire or are canceled, forfeited, exchanged or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards are forfeited, terminated or otherwise not paid in full, the shares subject to such grants shall again be available for issuance or transfer under the Plan. The Plan has a term of ten years until August 12, 2031. As of  June 30, 2022, there were approximately 2,151,007 shares available for issuance under the Plan. 

 

Restricted Stock Units

 

During the six months ended June 30, 2022, the Company granted 16,796 RSUs to certain directors of the Company. Total outstanding RSUs as of June 30, 2022 are 180,424. 127,176 of these RSUs, were not issued pursuant to a formal plan, were granted prior to the IPO, and became fully vested upon the IPO. 66,445 RSUs were granted subsequent to the IPO and are pursuant to the Company’s 2021 Equity Incentive Plan (the “Plan”). On December 31, 2021, 4,631 RSUs vested. During the six months ended June 30, 2022, 10,798 RSUs vested and 8,566 RSUs were forfeited. RSUs are subject to restrictions on transfer and may be subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award. Each RSU represents the right to receive one share of common stock upon vesting. Each RSU is also entitled to receive a dividend equivalent payment equal to the dividend paid on one share of common stock upon vesting. Unearned dividend equivalents on unvested RSUs as of  June 30, 2022 and 2021 were $22,663 and $0, respectively. The amortization of compensation costs for the awards of RSUs are included in "Stock-Based Compensation" in the accompanying consolidated statements of operations and amount to approximately $0.6 million and $1.0 million for the six months ended June 30, 2022 and 2021, respectively. Included in the $0.6 million of stock-based compensation for the six months ended June 30, 2022, is approximately $0.2 million of accelerated expense related to the retirement and separation of certain officers. The remaining unrecognized compensation cost of approximately $0.7 million for RSU awards is expected to be recognized over a weighted average amortization period of 0.9 years as of June 30, 2022.

 

The following table sets forth our unvested restricted stock activity for the six months ended  June 30,:

 

   

2022

   

2021

 
   

Number of

   

Weighted Average

   

Number of

   

Weighted Average

 
   

Unvested

   

Grant Date Fair Value

   

Unvested

   

Grant Date Fair Value

 
   

Shares of RSUs

   

Per Share

   

Shares of RSUs

   

Per Share

 

Balance at January 1,

    45,018     $ 27.49       47,403     $ 20.99  

Granted

    16,796     $ 21.36       38,308     $ 21.15  

Forfeited

    (8,566 )   $ 27.49       -       -  

Vested

    (10,798 )   $ 27.49       (46,225 )   $ 21.15  

Balance at June 30,

    42,450     $ 27.49       39,486     $ 20.96  

 

Performance Stock Units

 

During the six months ended June 30, 2022, the Company did not grant any Performance Stock Units (“PSUs”) to officers or employees of the Company. Total outstanding PSUs as of June 30, 2022 and 2021 are 66,841 and 0, respectively. During the six months ended June 30, 2022, 10,901 PSUs were forfeited. PSUs vest subject to the achievement of relative total shareholder return as measured against a peer group of companies and absolute compounded annual growth in stock price during each performance period. The actual number of shares of common stock issued will range from 0 to 133,682 depending upon performance. The performance periods are August 13, 2021 through December 31, 2023 and January 1, 2022 through December 31, 2024, and 18,858 and 47,983 PSUs are scheduled to vest at the end of each performance period, respectively. PSUs are recorded at fair value which involved using a Monte Carlo simulation for the future stock prices of the Company and its corresponding peer group. A fair value of $24.15 and $24.00 was used for PSUs with performance periods ending December 31, 2023 and 2024, respectively.

 

PSUs are subject to restrictions on transfer and may be subject to a risk of forfeiture if the award recipient ceases to be an employee of the Company prior to vesting of the award. Each PSU is entitled to receive a dividend equivalent payment equal to the dividend paid on the number of shares of common stock issued per PSU vesting. Unearned dividend equivalents on unvested PSUs as of  June 30, 2022 and 2021 were $66,173 and $0, respectively. The amortization of compensation costs for the awards of PSUs are included in "Stock-Based Compensation" in the accompanying Consolidated Statements of Operations and amount to $0.3 million and $0 for the six months ended June 30, 2022 and 2021, respectively. Amortization of compensation costs for the awards of PSUs amount to $0.1 million and $0 for the three months ended June 30, 2022 and 2021, respectively. The remaining unrecognized compensation cost of approximately $1.3 million for PSU awards is expected to be recognized over a weighted average amortization period of 1.2 years as of June 30, 2022.

 

The following table sets forth our unvested performance stock activity for the six months ended   June 30,:

 

   

2022

   

2021

 
   

Number of Unvested Shares of PSUs

 

   

 

 

Weighted Average Grant

Date Fair Value Per Share

   

Number of Unvested Shares of PSUs

   

Weighted Average Grant

Date Fair Value Per Share

 

Balance at January 1,

    77,742     $ 24.04       -     $ -  

Forfeit

    (10,901 )   $ 24.03       -       -  

Balance at June 30,

    66,841     $ 24.04       -     $ -  

 

 

Stock Options

 

Prior to the completion of the IPO, the Company issued 791,790 nonqualified stock options (the “Options”) to purchase shares of the Company’s common stock, subject to the terms and conditions of the applicable Option Grant Agreements, with an exercise price per share of common stock equal to $24.00 and in such amounts as set forth in the Option Grant Agreements. The Options vested on August 31, 2020. The Options are exercisable upon the earliest of (i) the second anniversary of the Grant Date; (ii) termination of the grantee’s employment or service by the Company other than for cause, or by the grantee for “good reason”, the grantee’s death or disability or (iii) a change in control, as defined. As of June 30, 2022, 615,838 of the 791,790 Option Grants issued to the Company’s former employees and a director are exercisable. The options expire on July 15, 2027.

 

The following table summarizes stock option activity for the six months June 30,:
 
   

2022

   

2021

 
   

Number of

   

Weighted Average

   

Number of

   

Weighted Average

 
   

Shares

   

Exercise Price

   

Shares

   

Exercise Price

 

Non-Exercisable at January 1,

    175,952     $ 24.00       263,928     $ 24.00  

Granted

    -       -       -       -  

Exercisable

    -       -       (87,976 )     -  

Non-Exercisable at June 30,

    175,952     $ 24.00       175,952     $ 24.00