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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Note 10 – Stock-Based Compensation The Company recorded stock-based compensation expense of $2.2 million and $4.4 million for the three and six months ended June 30, 2023, respectively, and $4.0 million and $4.0 million for the three and six months ended June 30, 2022, respectively. A portion of the Company's stock-based awards are liability-classified. Accordingly, changes in the market value of DSG common stock may result in stock-based compensation expense or benefit in certain periods. A stock-based compensation liability of $5.5 million a s of June 30, 2023 and $3.3 million as of December 31, 2022 was included in Accrued expenses and other current liabilities in the Unaudited Condensed Consolidated Balance Sheet. Restricted Stock Awards For the six months ended June 30, 2023, the Company issued approximately 26,000 Restricted stock awards ("RSAs") that vest over five years from the grant date with a grant date fair value of $1.3 million. Upon vesting, the vested RSAs are exchanged for an equal number of shares of DSG common stock. The participants have no voting or dividend rights with the RSAs. The RSAs are valued at the closing price of DSG's common stock on the date of grant and the expense is recorded ratably over the vesting period. Stock Options For the six months ended June 30, 2023, the Company issued approximately 606,000 stock options to key employees that vest over five years from the grant date. The fair value was determined using a Black-Scholes valuation model with a grant date fair value of $8.3 million. Each stock option can be exchanged for one share of DSG common stock at the stated exercise price. Upon vesting, stock options are recognized as a component of equity. Unrecognized compensation related to stock options as of June 30, 2023 was $9.2 million, which is expected to be recognized over a weighted-average period of 2.4 years. Activity related to the Company’s stock options during 2023 was as follows:
| Number of Stock Options |  | Weighted Average Exercise Price
Outstanding on December 31, 2022 | 288,000 |  |  | $ | 77.59 |
Granted | 605,821 |  |  | 72.74 |
Outstanding on June 30, 2023 | 893,821 |  |  | 74.30 |
Exercisable on June 30, 2023 | 40,000 |  |  | 27.01 |
The weighted average fair value assumptions used in the Black-Scholes model for the stock options issued during 2023 were as follows:
Expected volatility | 45.23%
Risk-free rate of return | 3.6%
Expected term (in years) | 6.2 years
Expected annual dividend | $0
The expected volatility was based on the historic volatility of the Company's stock price commensurate with the expected life of the stock options. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience. The estimated annual dividend was based on the recent dividend payout trend.

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