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Note 13 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
Equity [Text Block]

13. Stockholders’ Equity

As of December 31, 2025 and 2024, the Company has 5,000,000 preferred shares authorized with a par value of $0.0001 and no preferred shares issued and outstanding. As of December 31, 2025 and 2024, the Company has 500,000,000 common shares authorized and 26,520,417 and 26,529,402 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital is $523.2 million as of December 31, 2025 and $493.7 million as of December 31, 2024.

Common stock reserved for future issuance consists of the following as of December 31, 2025:

 

Stock options outstanding under 2019 Equity Incentive Plan

 

 

499,676

 

Restricted stock units outstanding under 2019 Equity Incentive Plan

 

 

296,285

 

Performance stock units outstanding under 2019 Equity Incentive Plan, at target

 

 

502,022

 

Shares authorized for future issuance under 2019 Equity Incentive Plan

 

 

4,211,864

 

Shares authorized for future issuance under 2019 Employee Stock Purchase Plan

 

 

1,581,244

 

Total

 

 

7,091,091

 

 

The Company does not maintain a treasury stock account and issues new shares to settle employee stock purchases, exercises of stock options, and vestings of other types of equity awards.

The below table summarizes the Company’s stock-based compensation expense for each period presented:

 

 

 

Year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

($ in thousands)

 

Stock-based compensation expense

 

$

21,014

 

 

$

16,685

 

 

$

14,913

 

 

Stock-based compensation expense is recognized on a straight-line basis over the vesting period of awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s consolidated statements of income and comprehensive income.

2019 Equity Incentive Plan

On April 16, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future.

A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029, by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors.

Stock Options

Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the stock’s fair market value on the grant date, determined by the closing price of the Company’s common stock on the grant date. Stock options vest over a period between two and four years with between 25% and 50% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued service to the Company. Stock options expire ten years after the grant date.

The following table summarizes stock option transactions for the year ended December 31, 2025:

 

 

 

Number of shares

 

 

Weighted-average exercise price

 

 

Weighted-average remaining contractual term (in years)

 

 

Aggregate intrinsic value ($ in thousands)

 

Outstanding at January 1, 2025

 

 

588,385

 

 

$

33.76

 

 

 

4.9

 

 

$

42,273

 

Options granted

 

 

—

 

 

 

—

 

 

 

 

 

 

 

Options exercised

 

 

(88,175

)

 

 

42.59

 

 

 

 

 

 

 

Options cancelled

 

 

(534

)

 

 

83.46

 

 

 

 

 

 

 

Outstanding at December 31, 2025

 

 

499,676

 

 

$

32.15

 

 

 

3.9

 

 

$

51,273

 

Vested and Exercisable at December 31, 2025

 

 

499,676

 

 

$

32.15

 

 

 

3.9

 

 

$

51,273

 

 

The total intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $11.8 million and $18.7 million, respectively.

Restricted Stock Units

Restricted stock units are valued on their grant date and generally vest either on the first anniversary of the grant date or over a three-year period with one third vesting on each anniversary date, subject to continued service with the Company. The fair value of RSUs is determined using the closing price of the Company's common stock on the grant date.

The following table summarizes RSU transactions for the year ended December 31, 2025:

 

 

 

Number of shares

 

 

Weighted-average grant date fair value

 

Outstanding at January 1, 2025

 

 

320,411

 

 

$

65.03

 

Granted

 

 

141,575

 

 

 

116.77

 

Released

 

 

(157,431

)

 

 

63.93

 

Forfeited

 

 

(8,270

)

 

 

86.71

 

Non-vested outstanding at December 31, 2025

 

 

296,285

 

 

$

89.73

 

 

As of December 31, 2025, the Company had approximately $18.0 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 1.5 years.

Performance Stock Units (“PSUs”)

The Company issues PSUs to employees with a combination of service, performance, and market conditions.

The majority of PSUs were issued via grants made to certain executives during 2021. These PSUs are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period of approximately five years from the date of grant. As of December 31, 2025, four stock price milestones have been achieved solely with respect to the PSU award granted to the Chief Executive Officer. Additionally, two stock price milestones have been achieved with respect to each of the PSU awards granted to four other executives. These PSUs have been earned, but will not vest until the fifth anniversary of the grant date, subject to continued service.

For other PSUs outstanding, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s Gross Written Premiums and Adjusted Return on Equity as set by the Compensation Committee. For PSU grants issued in years prior to 2023, the PSU’s performance period was the fiscal year of the grant. For PSU grants issued in 2023 and after, the PSU’s performance period is primarily a three-year period beginning with the grant date. At the end of the performance period, the actual results are measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are then subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock.

Effective starting with 2025 grants, PSUs issued to executives include a relative total shareholder return (“RTSR”) modifier. The RTSR modifier adjusts PSU payouts up or down based on the Company’s shareholder return relative to the S&P 1500 Property & Casualty Insurance Index (the “Index”) over a three-year measurement period. These PSUs were valued using a Monte Carlo simulation with key valuation inputs as follows:

 

 

 

2025 Awards

 

Term

 

2.9 years

 

Risk-free interest rate (1)

 

 

4.22

%

Volatility (2)

 

 

45.00

%

Weighted average fair value (3)

 

$

116.50

 

 

(1)
The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period.
(2)
Volatility is derived from historical stock prices as well as implied volatility when appropriate and available.
(3)
The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.

 

The following table summarizes PSU transactions for the year ended December 31, 2025:

 

 

 

Number of shares

 

 

Weighted-average grant date fair value

 

Outstanding at January 1, 2025

 

 

460,450

 

 

$

40.43

 

Granted

 

 

86,844

 

 

 

99.61

 

Vested

 

 

(41,400

)

 

 

50.35

 

Forfeited

 

 

(3,872

)

 

 

75.21

 

Non-vested outstanding at December 31, 2025

 

 

502,022

 

 

$

49.58

 

 

The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the executive stock grants and the 100% achievement of the predetermined company performance conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets and subject to recipient service requirements. As of December 31, 2025, the Company had approximately $8.8 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 0.9 years.

2021 Executive Stock Grants

During the year ended December 31, 2021, the Company granted 192,307 RSUs and 350,000 PSUs to various executives, including the Company’s CEO. The RSUs vest over a period of five years with one fifth vesting upon the first, second and third anniversary of the grants and the remainder vesting quarterly thereafter.

The PSUs are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period. The Company’s CEO must remain as an employee through December 31, 2025, or as an employee and/or director through the fifth anniversary of the grant date the PSUs to vest. Other executives must remain as employees through December 31, 2026 for the PSUs to vest. As of December 31, 2025, 143,750 PSU shares have become earned units and will vest upon completion of the requisite service period.

2019 Employee Stock Purchase Plan

On April 16, 2019, the Company’s 2019 Employee Stock Purchase Plan (“the 2019 ESPP”) became effective. A total of 240,000 shares of common stock are initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors.

Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 12,426 and 17,100 shares pursuant to the ESPP during the years ended December 31, 2025 and 2024, respectively.

Share repurchases

In July 2025, the Company’s Board of Directors approved the adoption of a share repurchase plan authorizing the repurchase of up to $150 million of outstanding shares of common stock through the period ending on July 31, 2027.

The Company repurchased 308,417 shares for $37.3 million at an average price of $120.85 per share under this program during the year ended December 31, 2025. Approximately $112.7 million remains available for future repurchases under this program. The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings. All repurchases shares are retired and beocme authorized but unissued shares.