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Note 12 - Equity-based Compensation

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

12. EQUITY-BASED COMPENSATION

At the Company’s 2022 annual meeting of stockholders held on May 20, 2022, the Company’s stockholders approved the Cable One, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Plan”), which had been previously approved, subject to stockholder approval, by the Board on March 28, 2022. The 2022 Plan superseded and replaced the then existing Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan” and, together with the 2022 Plan, the "Incentive Compensation Plans"), provided, however, that any awards previously granted under the 2015 Plan will remain in effect pursuant to their respective terms. No further awards will be granted under the 2015 Plan. The 2015 Plan provided for, and the 2022 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 Incentive Compensation Plans as part of the Company’s long-term incentive compensation programs. At September 30, 2022, 471,018 shares were available for issuance under the 2022 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,*
		*2022*				*2021*				*2022*				*2021*
Restricted Stock		$	5,250			$	4,656			$	15,072			$	12,629
SARs			610				772				1,944				2,205
Total		$	5,860			$	5,428			$	17,016			$	14,834

The Company recognized excess tax benefits of $0.1 million and $3.5 million during the three months ended September 30, 2022 and 2021, respectively, and $0.7 million and $7.9 million during the nine months ended September 30, 2022 and 2021, respectively. The deferred tax asset related to all outstanding equity-based awards was $5.6 million as of September 30, 2022.

Restricted Stock. A summary of Restricted Stock activity during the nine months ended September 30, 2022 is as follows:

						*Weighted*
						*Average Grant*
		*Restricted*				*Date Fair Value*
		*Stock*				*Per Share*
Outstanding as of December 31, 2021			34,026			$	1,487.02
Granted			18,860			$	1,689.00
Forfeited			(1,493	)		$	1,874.00
Vested and issued			(7,707	)		$	1,196.92
Outstanding as of September 30, 2022			43,686			$	1,612.17

Vested and deferred as of September 30, 2022			6,930			$	889.11

At September 30, 2022, there was $30.9 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, 2022 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, 2021			45,740			$	1,075.34			$	263.62			$	32,897				7.1
Granted			-			$	-			$	-			$	-				-
Exercised			(2,500	)		$	707.16			$	164.67			$	1,504				-
Forfeited			(1,750	)		$	1,492.73			$	375.76
Expired			(375	)		$	1,851.23			$	469.52
Outstanding as of September 30, 2022			41,115			$	1,072.88			$	262.99			$	3,087				6.3

Exercisable as of September 30, 2022			26,990			$	856.22			$	204.49			$	2,958				5.7

At September 30, 2022, there was $3.6 million of unrecognized compensation expense related to SARs, which is expected to be recognized over a weighted average period of 0.9 years.