Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

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, stock appreciation rights (“SAR”), restricted stock, performance shares, and performance units to non-employee directors and employees 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 provides the Company flexibility to (i) attract and retain qualified non-employee directors, executives, and other key employees with appropriate equity-based awards; (ii) motivate high levels of performance; (iii) recognize employees’ 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. At June 30, 2023, there were no remaining shares available for future grants under the plan, however, the pool of available shares could be partially replenished for future grants to the extent there are forfeitures, expirations or otherwise terminations of existing equity awards without issuance of the shares underlying such awards. 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.

With the exception of the shares that are 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 six months ended June 30, 2023:


	Number of Shares	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(Dollars in thousands)
Outstanding - January 1, 2023	649,367	$	16.63
Granted	—	—
Exercised	—	—
Expired	(20,000)	17.18
Forfeited	—	—
Outstanding - June 30, 2023	629,367	$	16.61	2.40	$	—
Options exercisable - June 30, 2023	629,367	$	16.61	2.40	$	—

The following is a summary of the Company’s restricted stock and performance unit activity for the six months ended June 30, 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding (unvested) - January 1, 2023	1,760,373	$	13.89
Granted	1,504,513	10.10
Vested	(811,347)	12.41
Forfeited	(126,041)	10.99
Outstanding (unvested) - June 30, 2023	2,327,498	$	12.11

The total fair value of restricted stock and performance units vested during the six months ended June 30, 2023 and 2022, was $8.0 million and $9.4 million, respectively.

In July 2022, the Company discontinued the Hope Employee Stock Purchase Plan (“ESPP”), which allowed 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 used 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 was considered compensatory under GAAP and compensation expense for the ESPP is recognized as part of the Company’s stock-based compensation expense. No compensation expense was incurred for the ESPP during the three and six months ended June 30, 2023, due to the plan’s discontinuation. The compensation expense for the ESPP during the three and six months ended June 30, 2022, was $34 thousand and $234 thousand, respectively.

The total amounts charged against income related to stock-based payment arrangements, including the ESPP, were $3.4 million and $5.7 million for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2022, $3.5 million and $6.1 million, respectively, of stock-based payment arrangements were charged against income. The income tax benefit recognized was approximately $884 thousand and $1.5 million for the three and six months ended June 30, 2023, respectively, compared with $912 thousand and $1.6 million for the three and six months ended June 30, 2022, respectively.

Since all stock option grants were vested at June 30, 2023, there was no unrecognized compensation expense related to non-vested stock option grants. Unrecognized compensation expense related to non-vested restricted stock and performance units was $20.7 million, and is expected to be recognized over a weighted average vesting period of 1.91 years.