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STOCK COMPENSATION PLAN

12 Months Ended

Dec. 31, 2021

NOTE 14 — STOCK COMPENSATION PLAN

Equity Incentive Plan

On May 28, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 EIP”) was approved by stockholders of the Company. Under the 2019 EIP, the maximum number of shares of stock that may be delivered to participants in the form of restricted stock, restricted stock units and stock options, including ISO and non-qualified stock options, is 340,000, plus any awards that are forfeited under the 2009 Equity Incentive Plan (the “2009 Plan”) after the effective date of the 2019 EIP, which was May 28, 2019. Under the 2009 Plan, there are 468,382 shares that are subject to outstanding and/or unexercised awards that have been granted and, if forfeited after May 28, 2019, such shares will be available to be granted under the 2019 EIP. The 628,719 shares that were unauthorized and unissued under the 2009 Plan have expired and may not be granted (and such shares of stock did not roll over to the 2019 EIP).

Stock Options

Under the terms of the 2019 EIP, a stock option cannot have an exercise price that is less than 100% of the fair market value of the shares covered by the stock option on the date of grant. In the case of an ISO granted to a 10% stockholder, the exercise price shall not be less than 110% of the fair market value of the shares covered by the stock option on the date of grant. In no event shall the exercise period exceed ten years from the date of grant of the option, except, in the case of an ISO granted to a 10% stockholder, the exercise period shall not exceed five years from the date of grant. The 2019 EIP contains a double trigger change in control feature, providing for an acceleration of vesting upon an involuntary termination of employment simultaneous with or following a change in control.

The fair value of each stock option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities based on historical volatilities of the Company’s common stock are not significant. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

A summary of the status of the Company’s stock options and the changes during the year is presented below:


	2021
		Weighted
		Average
	Number of	Exercise
	Options	Price
Outstanding, beginning of year	231,000	$	$18.00
Granted	—		—
Exercised	—		—
Cancelled/forfeited	—		—
Outstanding, end of year	231,000	$	18.00
Options vested and exercisable at year-end	231,000	$	18.00

Aggregate intrinsic value of options outstanding at December 31, 2021		$	20,450,430

Weighted average remaining contractual life (years)			2.38

There was no unrecognized compensation cost related to stock options at December 31, 2021 or 2020.

There was no compensation cost related to stock options during the year ended December 31, 2021 or 2020.

The following table summarizes information about stock options outstanding at December 31, 2021:


	Options Outstanding
Range of Average	Number Outstanding at	Weighted Average		Weighted Average		Weighted average
Exercise Prices	December 31, 2021	Remaining Contractual Life		Exercise Price		intrinsic value
$10 – 30	231,000	2.38	$	18.00	$	88.53

Restricted Stock Awards and Restricted Stock Units

The Company issued restricted stock awards under the 2009 Plan and restricted stock units under the 2019 EIP (collectively, “restricted stock grants”) to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the restricted stock grant agreement. Restricted stock grants are subject to forfeiture if the holder is not employed by the Company on the vesting date.

In the first quarter of 2021, 78,582 restricted stock units were issued to certain key personnel. One-third of these shares vest each year for three years beginning on March 1, 2022. In the first quarter of 2020, 60,307 restricted stock units were issued to certain key personnel. These shares vest one-third each year for three years beginning December 15, 2020.

Total compensation cost that has been charged against income for restricted stock grants was $2.4 million and $1.5 million for years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was $3.3 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of 2.15 years.

On January 1, 2019, 38,900 restricted shares were granted to members of the Board of Directors in lieu of retainer fees for three years of service. One-third of these shares vest each year for three years from December 31, 2019. In the fourth quarter of 2020, 1,785 shares were granted to a new member of the Board of Directors, all of which vested in the fourth

quarter of 2021. Total expense for these awards was $410,000 and $400,000 for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was no unrecognized expense related to these grants.

The following table summarizes the changes in the Company’s restricted stock awards for the years ended December 31, 2021 and 2020:


	Year Ended December 31, 2021			Year Ended December 31, 2020
		Weighted Average			Weighted Average
	Number of Shares	Grant Date Fair Value		Number of Shares	Grant Date Fair Value

Outstanding, beginning of period	76,289	$	37.01	104,838	$	29.86
Granted	78,582		50.80	62,092		44.80
Forfeited	(10,200)		48.09	(31,781)		38.24
Vested	(53,672)		37.57	(58,860)		31.83
Outstanding at end of period	90,999	$	47.35	76,289	$	37.01

The total fair value of shares vested is $2.0 million and $2.1 for the years ended December 31, 2021 and 2020, respectively.

Performance-Based Stock Units

During the second quarter of 2021, the Company established a long-term incentive award program under the 2019 EIP. Under the program, 90,000 PRSUs were awarded. The weighted average service inception date fair value of award shares was $5.7 million. The PRSUs are earned ratably over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. 30,000 PSRUs were vested at the beginning of 2022. Total compensation cost that has been charged against income for the 2019 EIP was $1.9 million for the year ended December 31, 2021.

During the first quarter of 2018, the Company established a long-term incentive award program under the 2009 Plan. Under the program, 90,000 PRSUs were awarded. For each award, the PRSUs were eligible to be earned over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. These 90,000 PRSUs were earned at the end of the three-year period and vested in the first quarter of 2021. Total compensation cost that has been charged against income for the 2009 Plan was $1.4 million for the year ended December 31, 2020.