Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

In 2019, the Company’s stockholders approved the 2019 stock-based incentive plan (the “2019 Plan”), which provides for grants of stock options, SARs, restricted stock, performance shares, and performance units to non-employee directors, employees, and potentially consultants of the Company. Stock options may be either incentive stock options (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NQSOs”). The 2019 Plan replaces the 2016 Plan and stipulates that no further awards shall be made under prior plans. Therefore, future awards will only be issued from the 2019 Plan.

The 2019 Plan provides the Company flexibility to (i) attract and retain qualified non-employee directors, executives, other key employees, and potentially consultants with appropriate equity-based awards to; (ii) motivate high levels of performance; (iii) recognize employee and potentially consultants’ contributions to the Company’s success; and (iv) align the interests of the participants with those of the Company’s stockholders. The 2019 Plan initially had 4,400,000 shares that were available for grant to participants. The exercise price for shares under an ISO may not be less than 100% of fair market value on the date the award is granted under the Code. Similarly, under the terms of the 2019 Plan, the exercise price for SARs and NQSOs may not be less than 100% of fair market value on the date of grant. Performance units are awarded to participants at the market price of the Company’s common stock on the date of award (after the lapse of the restriction period and the attainment of the performance criteria). All options not exercised generally expire 10 years after the date of grant.

ISOs, SARs, and NQSOs have vesting periods of three to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units are granted with a restriction period of not less than one year from the grant date for performance-based awards and not more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recognized over the vesting period.

Under the 2019 Plan, 938,575 shares were available for future grants as of March 31, 2021.

With the exception of the shares underlying stock options and restricted stock awards, the Board of Directors may choose to settle the awards by paying the equivalent cash value or by delivering the appropriate number of shares.

The following is a summary of the Company’s stock option activity for the three months ended March 31, 2021:


	Number of Shares	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(Dollars in thousands)
Outstanding - January 1, 2021	851,580	$	15.25
Granted	—	—
Exercised	—	—
Expired	(16,000)	17.18
Forfeited	—	—
Outstanding - March 31, 2021	835,580	$	15.22	4.26	$	1,109
Options exercisable - March 31, 2021	797,580	$	15.12	4.20	$	1,109

The following is a summary of the Company’s restricted stock and performance unit activity for the three months ended March 31, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding (unvested) - January 1, 2021	1,718,838	$	10.73
Granted	255,514	15.92
Vested	(340,129)	12.53
Forfeited	(104,869)	14.13
Outstanding (unvested) - March 31, 2021	1,529,354	$	10.97

The total fair value of restricted stock and performance units vested for the three months ended March 31, 2021 and 2020 was $5.2 million and $2.0 million, respectively.

The Company maintains the Hope Employee Stock Purchase Plan (“ESPP”), which allows eligible employees to purchase the Company’s common shares through payroll deductions which build up between the offering date and the purchase date. At the purchase date, the Company uses the accumulated funds to purchase shares of the Company’s common stock on behalf of the participating employees at a 10% discount to the closing price of the Company’s common shares. The closing price is the lower of either the closing price on the first day of the offering period or the closing price on the purchase date. The dollar amount of common shares purchased under the ESPP must not exceed 20% of the participating employee’s base salary, subject to a cap of $25 thousand in stock value based on the grant date. The ESPP is considered compensatory under GAAP and compensation expense for the ESPP is recognized as part of the Company’s stock-based compensation expense. The compensation expense for the ESPP during the three months ended March 31, 2021 and 2020 was $221 thousand and $71 thousand, respectively.

The total amounts charged against income related to stock-based payment arrangements, including the ESPP, were $2.6 million and $2.0 million for the three months ended March 31, 2021 and 2020, respectively. The income tax benefit recognized was approximately $623 thousand and $397 thousand for the three months ended March 31, 2021 and 2020, respectively.

At March 31, 2021, the unrecognized compensation expense related to non-vested stock option grants was $52 thousand and is expected to be recognized over a weighted average vesting period of 0.42 years. Unrecognized compensation expense related to non-vested restricted stock and performance units was $10.7 million and is expected to be recognized over a weighted average vesting period of 1.76 years.