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Note 12 - Equity-based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Text Block]

12. EQUITY-BASED COMPENSATION

The Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”) provides for grants of incentive stock options, non-qualified stock options, restricted stock awards, SARs, restricted stock units (“RSUs”), cash-based awards, performance-based awards, dividend equivalent units (“DEUs” and, together with restricted stock awards and RSUs, “Restricted Stock”) and other stock-based awards, including performance stock units and deferred stock units. Directors, officers, employees and consultants of the Company are eligible for grants under the 2015 Plan as part of the Company’s approach to long-term incentive compensation. At September 30, 2021, 87,863 shares were available for issuance under the 2015 Plan.

Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award, with forfeitures recognized as incurred. The Company’s equity-based compensation expense, included within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income, was as follows (in thousands):

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2021*		*2020*		*2021*		*2020*
Restricted Stock	$	4,656	$	3,072	$	12,629	$	8,257
SARs		772		795		2,205		2,257
Total	$	5,428	$	3,867	$	14,834	$	10,514

The Company recognized income tax benefits of $3.5 million and $1.7 million during the three months ended September 30, 2021 and 2020, respectively, and $7.9 million and $9.7 million during the nine months ended September 30, 2021 and 2020, respectively. The deferred tax asset related to all outstanding equity-based awards was $4.2 million as of September 30, 2021.

Restricted Stock. A summary of Restricted Stock activity during the nine months ended September 30, 2021 is as follows:

				*Weighted*
				*Average Grant*
	*Restricted*			*Date Fair Value*
	*Stock*			*Per Share*
Outstanding as of December 31, 2020		34,944		$	1,037.83
Granted		11,983		$	2,157.55
Forfeited		(1,328	)	$	1,404.28
Vested and issued		(11,241	)	$	866.89
Outstanding as of September 30, 2021		34,358		$	1,470.12

Vested and deferred as of September 30, 2021		5,978		$	756.32

At September 30, 2021, there was $28.8 million of unrecognized compensation expense related to Restricted Stock, which is expected to be recognized over a weighted average period of 1.3 years.

Stock Appreciation Rights. A summary of SARs activity during the nine months ended September 30, 2021 is as follows:

										*Weighted*
						*Weighted*				*Average*
				*Weighted*		*Average*		*Aggregate*		*Remaining*
	*Stock*			*Average*		*Grant*		*Intrinsic*		*Contractual*
	*Appreciation*			*Exercise*		*Date Fair*		*Value*		*Term*
	*Rights*			*Price*		*Value*		*(in thousands)*		*(in years)*
Outstanding as of December 31, 2020		58,365		$	866.54	$	204.29	$	79,446		7.3
Granted		3,500		$	2,041.73	$	548.01	$	-		9.5
Exercised		(13,779	)	$	597.19	$	133.96	$	18,948		-
Forfeited		(1,601	)	$	834.92	$	201.50
Outstanding as of September 30, 2021		46,485		$	1,035.95	$	251.11	$	37,042		7.2

Exercisable as of September 30, 2021		20,673		$	748.02	$	174.45	$	22,019		6.3

At September 30, 2021, there was $5.9 million of unrecognized compensation expense related to SARs, which is expected to be recognized over a weighted average period of 1.1 years.

The grant date fair value of the SARs is measured using the Black-Scholes valuation model. The weighted average inputs used in the model for grants awarded during the nine months ended September 30, 2021 were as follows:

	*Inputs*
Expected volatility		27.47	%
Risk-free interest rate		0.86	%
Expected term (in years)		6.25
Expected dividend yield		0.49	%