Stock Compensation

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

Overview

We are currently authorized to grant and have available for grant the following number of shares under our stock plans as of December 31, 2022 and 2021:


	Authorized Shares	Available for Grant
Plan		2022	2021
1996 Discounted Employee Stock Purchase Plan, as amended	2,900,000	967,000	63,000
2020 Equity and Cash Incentive Plan	4,105,000	999,000	3,310,000
Total	7,005,000	1,966,000	3,373,000

During 2020 the Shareholders approved a new 2020 Equity and Cash Incentive Plan (“ECIP”) and funded it with 2.7 million of newly issuable shares. On August 11, 2020 4.1 million shares were registered under the 2020 ECIP, consisting of the newly issuable shares as well as 1.4 million of the shares that remained available for grant under the 2009 ECIP as of that date.

Stock Awards

In 2022 the Compensation Committee of our Board of Directors (the “Committee”) authorized awards from approved stock incentive plans of RSAs to non-employee directors and RSUs and PSUs to certain employees and Company officers, which, counting PSUs at target levels, together totaled 871,000 shares and had an aggregate grant date market value of $13.5 million. Two types of PSUs were granted in 2022, an annual grant with a one-year performance period (“Annual PSU”) and a special LTIP PSU grant (the “2022 LTIP PSU”) with a one-year performance period. If the highest performance threshold was met, the Annual PSU granted in 2022 represented the right to receive up to 150% of the target number of shares of common stock. The performance component of the Annual PSU granted in 2022 was based on attaining specified levels of revenue growth and specified levels of EBITDA, as defined in the PSU grant documents, for the 2022 calendar year. The Annual PSU granted in 2022 earned approximately 51% of the target number of shares and subsequently modified on February 13, 2023 to earn approximately 89% of the target number of shares. If the highest performance threshold was met, the Special 2022 LITP PSU grant represented a right to receive up to 200% of the target number of shares of common stock. The 2022 LTIP PSU grant earned approximately 140% of target number of shares.

During 2019, the Committee authorized, and we granted, an LTIP PSU (the "Original LTIP"), which has multiple performance periods over a five-year period. If the highest performance thresholds were met, the Original LTIP represents the right to receive up to 288%, and up to 192% for a certain key executive, of the target number of shares of common stock. The performance component of the Original LTIP was based on attaining specified levels of adjusted revenue growth and gross margin, as defined in the Original LTIP grant document, for the years 2019 through 2023. During 2020 we determined that the threshold performance under the first performance period (2019 through 2021) of the Original LTIP was unlikely to be achieved which resulted in a reversal of $1.9 million in expense in the fourth quarter of 2020. During 2022, the second performance period of the Original LTIP earned approximately 136% and 108% to a certain key executive of target number of shares of common stock.

In 2021 the Committee authorized awards from approved stock incentive plans of RSUs to certain employees, RSAs to non-employee Directors, and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 500,000 shares and had an aggregate grant date market value of $12.6 million. Two types of PSUs were granted in 2021, an Annual PSU and a special LTIP PSU (the "2021 LTIP PSU"), each with a one-year performance period. If the highest performance threshold was met, the Annual PSU granted in 2021 represented the right to receive up to 150% of the target number of shares of common stock. The performance component of the Annual PSU granted in 2021 was based on attaining specified levels of revenue growth and certain non-financial metrics, as defined in the PSU grant documents, for the 2021 calendar year. The Annual PSU granted in 2021 earned approximately 110% of the target number of shares. If the highest performance threshold was met, the 2021 LTIP PSU grant in 2021 represented a right to receive up to 200% of the target number of shares of common stock. The 2021 LTIP PSU grant earned approximately 118% of target number of shares.

In 2020 the Committee authorized awards from approved stock incentive plans of RSUs to certain employees, RSAs to non-employee Directors, and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 335,000 shares and had an aggregate grant date market value of $8.3 million. If the highest performance threshold was met, the PSU granted in 2020 represented the right to receive up to 150% of the target number of shares of common stock. The performance component of the PSU awards granted in 2020 was based on attaining specified levels of EBITDA, as defined in the PSU grant documents, for the 2020 calendar year. Our actual 2020 EBITDA performance was below the threshold required for any payouts under the 2020 PSU plan which resulted in a $1.1 million reversal of expense in the fourth quarter of 2020. In February 2021 the Committee used structured discretion to determine that the 2020 PSUs were earned and should be paid out at 100% of target resulting in a modification of the award which resulted in $1.3 million of compensation expense during the twelve months ended December 31, 2021 related to these performance awards. This modification resulted in a forfeiture and a subsequent grant of 70,000 PSU shares during the twelve months ended December 31, 2021.

A summary of stock grant activity for the years ended December 31, 2022, 2021, and 2020 for RSAs, RSUs, and PSUs, based on the target number of shares, was as follows:


RSAs	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2019	243,000	$	23.30
Granted	123,000	24.70
Vested	(108,000)	20.66
Unvested at December 31, 2020	258,000	25.08
Granted	140,000	25.68
Vested	(130,000)	22.40
Forfeited	(33,000)	27.39
Unvested at December 31, 2021	235,000	26.59
Granted	64,000	17.91
Vested	(89,000)	28.60
Unvested at December 31, 2022	210,000	23.09


RSUs	Shares	Weighted Average Remaining Contractual Term in years	Aggregate Intrinsic Value
Unvested at December 31, 2019	226,000	0.93	$	6,131,000
Granted	141,000
Vested	(118,000)
Forfeited	(37,000)
Unvested at December 31, 2020	212,000	1.02	5,015,000
Granted	144,000
Vested	(93,000)
Forfeited	(39,000)
Unvested at December 31, 2021	224,000	0.94	4,558,000
Granted	643,000
Vested	(100,000)
Forfeited	(33,000)
Unvested at December 31, 2022	734,000	2.02	8,895,000

Vested and expected to vest	734,000	2.02	$	8,895,000


PSUs	Shares	Weighted Average Remaining Contractual Term in years	Aggregate Intrinsic Value
Unvested at December 31, 2019	347,000	2.33	$	9,400,000
Granted	70,000
Vested	(55,000)
Forfeited	(31,000)
Unvested at December 31, 2020	331,000	1.64	7,805,000
Granted	215,000
Vested	(60,000)
Forfeited	(114,000)
Unvested at December 31, 2021	372,000	0.90	7,579,000
Granted	182,000
Vested	(117,000)
Forfeited	(97,000)
Unvested at December 31, 2022	340,000	0.67	4,121,000

Vested and expected to vest	340,000	0.67	$	4,121,000

During the years ended December 31, 2022, 2021, and 2020 the total fair value of $5.8 million, $7.3 million, and $6.7 million, respectively, in combined RSAs, RSUs, and PSUs vested.

Stock Options

The Compensation Committee of our Board of Directors authorized grants of stock options from approved stock incentive plans to certain Company officers and employees totaling 1,031,000, 226,000, and 212,000 shares in 2022, 2021, and 2020, respectively, with exercise prices equal to the stock prices on the respective grant dates.

A summary of our stock option activity for the years ended December 31, 2022, 2021, and 2020 was as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in years	Aggregate Intrinsic Value
Outstanding at December 31, 2019	1,129,000	$	16.14	3.67	$	12,763,000
Granted	212,000	26.24
Exercised	(88,000)	10.49
Forfeited	(12,000)	27.36
Outstanding at December 31, 2020	1,241,000	18.16		3.38	8,215,000
Granted	226,000	24.90
Exercised	(179,000)	12.02
Forfeited	(42,000)	26.00
Outstanding at December 31, 2021	1,246,000	20.00		3.20	4,039,000
Granted	1,031,000	13.29
Exercised	(151,000)	11.85
Forfeited	(3,000)	21.55
Outstanding at December 31, 2022	2,123,000	17.31		4.56	1,150,000

Vested and expected to vest	2,123,000	$	17.31	4.56	$	1,150,000
Exercisable at December 31, 2022	892,000	$	20.18	2.11	$	368,000

Other information concerning stock options for the years ended December 31 was as follows:


	2022		2021		2020
Weighted-average fair value of options granted	$	5.31	$	8.82	$	8.64
Intrinsic value of options exercised	1,120,000		2,716,000		1,267,000

Employees purchased common stock totaling 95,000, 87,000, and 83,000 shares in 2022, 2021, and 2020, respectively, through our ESPP.

Stock Compensation Expense

The following weighted-average assumptions were used to determine the fair value of options:


	2022				2021				2020
	Stock Options		ESPP Options		Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options	5.00 Years		0.50 Years		5.00 Years		0.50 Years		5.00 Years		0.50 Years
Expected stock price volatility	0.40		0.40		0.40		0.45		0.35		0.52
Risk-free interest rate	3.58	%	1.34	%	0.57	%	0.07	%	1.41	%	1.00	%

The following table summarizes stock compensation expense (in thousands):


	2022		2021		2020
RSA, RSU, and PSU expense	$	10,351	$	9,023	$	5,288
Stock option and ESPP option expense	2,591		2,254		2,216
Total stock compensation expense	$	12,942	$	11,277	$	7,504

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to our ESPP. These amounts were recorded as stock compensation expense and were subject to our normal allocation of expenses to inventory costs and deferred preservation costs. We capitalized $598,000, $566,000, and $592,000 in the years ended December 31, 2022, 2021, and 2020, respectively, of the stock compensation expense into our inventory costs and deferred preservation costs.

As of December 31, 2022 we had total unrecognized compensation expense of $11.3 million related to RSAs, RSUs, and PSUs and $5.4 million related to unvested stock options. As of December 31, 2022 this expense is expected to be recognized over a weighted-average period of 2.27 years for RSUs, 2.32 years for stock options, 0.66 years for RSAs, and 0.67 years for PSUs.