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STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

17 - STOCK-BASED COMPENSATION

2014 Management Incentive Plan

In 2014, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 966,806 shares of Common Stock were available for award under the MIP. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values. On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant could be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 238,066, 246,701, and 370,979 and had exercise prices, as adjusted for dividends declared during the fourth quarter of 2019 and the first quarter of 2020, of $240.89221 (the “$240.89 Warrants”), $267.11051 (the “$267.11 Warrants”) and $317.87359 (the “$317.87 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $240.89 Warrants, $6.63 for the $267.11 Warrants and $5.63 for the $317.87 Warrants. The aggregate fair value of these awards upon issuance was $54,436.

All warrants were fully vested and the related expense was fully amortized as of January 1, 2018. The warrants expired on August 7, 2020.

2015 Equity Incentive Plan

On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 400,000 shares of common stock (the “2015 Plan”). Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants. Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock.

On March 23, 2017, the Board of Directors approved an amendment and restatement of the 2015 Plan. This amendment and restatement increased the number of shares available for awards under the plan from 400,000 to 2,750,000, subject to shareholder approval; set the annual limit for awards to non-employee directors and other individuals as 500,000 and 1,000,000 shares, respectively; and modified the change in control definition. The Company’s shareholders approved the increase in the number of shares at the Company’s 2017 Annual Meeting of Shareholders on May 17, 2017.

On March 19, 2021, the Board of Directors approved an amendment and restatement of the 2015 Equity Incentive Plan (the “Amended 2015 Plan”). This amendment and restatement increased the number of shares available for awards under the plan from 2,750,000 to 4,750,000, subject to shareholder approval. The Company’s shareholders approved the increase in the number of shares at the Company’s 2021 Annual Meeting of Shareholders on May 13, 2021.

As of December 31, 2021, the Company has awarded restricted stock units, restricted stock and stock options under the Amended 2015 Plan.

Stock Options

On March 4, 2019, the Company issued options to purchase 240,540 of the Company’s shares of common stock to certain individuals with an exercise price of $8.065 per share, as adjusted for the special dividend declared on November 5, 2019. One third of the options become exercisable on each of the first three anniversaries of March 4, 2019, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant

using the Black-Scholes-Merton pricing formula, resulting in a value of $3.76 per share, or $904 in the aggregate. The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 55.23% (representing the Company’s historical volatility), a risk-free interest rate of 2.49%, a dividend yield of 0%, and expected life of 4.00 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).

On February 25, 2020, the Company issued options to purchase 344,568 of the Company’s shares of common stock to certain individuals with an exercise price of $7.06 per share. One third of the options become exercisable on each of the first three anniversaries of February 25, 2020, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Cox-Ross-Rubinstein pricing formula, resulting in a value of $2.01 per share, or $693 in the aggregate. The assumptions used in the Cox-Ross-Rubinstein option pricing formula are as follows: volatility of 53.91% (representing the Company’s historical volatility), a risk-free interest rate of 1.41%, a dividend yield of 7.13%, and expected life of 4 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).

On February 23, 2021, the Company issued options to purchase 118,552 of the Company’s shares of common stock to certain individuals with an exercise price of $9.91 per share. One third of the options become exercisable on each of the first three anniversaries of February 23, 2021, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Cox-Ross-Rubinstein pricing formula, resulting in a value of $4.33 per share, or $513 in the aggregate. The assumptions used in the Cox-Ross-Rubinstein option pricing formula are as follows: volatility of 60.91% (representing the Company’s historical volatility), a risk-free interest rate of 0.41%, a dividend yield of 0.98%, and expected life of 4 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).

For the years ended December 31, 2021, 2020 and 2019, the Company recognized amortization expense of the fair value of these options, which is included in General and administrative expenses, as follows:


	For the Years Ended December 31,
	2021		2020		2019
General and administrative expenses	$	635	$	787	$	850

Amortization of the unamortized stock-based compensation balance of $367 as of December 31, 2021 is expected to be $278, $81 and $8 during the years ended December 31, 2022, 2023 and 2024, respectively. The following table summarizes the stock option activity for the years ended December 31, 2021, 2020 and 2019:


	For the Years Ended December 31,
	2021					2020					2019
		Weighted		Weighted			Weighted		Weighted			Weighted		Weighted
	Number	Average		Average		Number	Average		Average		Number	Average		Average
	of	Exercise		Fair		of	Exercise		Fair		of	Exercise		Fair
	Options	Price		Value		Options	Price		Value		Options	Price		Value
Outstanding as of January 1	837,338	$	8.86	$	4.02	496,148	$	10.11	$	5.41	255,608	$	12.36		6.96
Granted	118,552		9.91		4.33	344,568		7.06		2.01	240,540		8.33		3.76
Exercised	(39,603)		8.37		3.46	—		—		—	—		—		—
Forfeited	—		—		—	(3,378)		8.07		3.76	—		—		—

Outstanding as of December 31	916,287	$	9.02	$	4.08	837,338	$	8.86	$	4.02	496,148	$	10.11	$	5.41

Exercisable as of December 31	488,969	$	9.88	$	5.04	293,792	$	10.78	$	6.01	173,869		11.41	$	6.68

The following table summarizes certain information about the options outstanding as of December 31, 2021:

Options Outstanding and Unvested,

Options Outstanding and Exercisable,

December 31, 2021

Weighted

Average

Weighted

Average

Weighted

Average

Exercise Price of

Average

Remaining

Average

Remaining

Outstanding

Number of

Exercise

Contractual

Number of

Exercise

Contractual

Options

Price

Life

Options

Price

Life

9.02

427,318

8.04

4.25

488,969

9.88

2.59

As of December 31, 2021 and 2020, a total of 916,287 and 837,338 stock options were outstanding, respectively.

Restricted Stock Units

The Company has issued restricted stock units (“RSUs”) to certain members of the Board of Directors and certain executives and employees of the Company, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. As of December 31, 2021 and 2020, 478,848 and 373,588 shares of the Company’s common stock were outstanding in respect of the RSUs, respectively. Such shares will only be issued in respect of vested RSUs issued to directors when the director’s service with the Company as a director terminates. Such shares of common stock will only be issued to executives and employees when their RSUs vest under the terms of their grant agreements and the Amended 2015 Plan described above.

The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors. The RSUs that have been issued to other individuals vest ratably on each of the three anniversaries of the determined vesting date. The table below summarizes the Company’s unvested RSUs for the years ended December 31, 2021, 2020 and 2019:


	For the Years Ended December 31,
	2021			2020			2019
		Weighted			Weighted			Weighted
	Number of	Average Grant		Number of	Average Grant		Number of	Average Grant
	RSUs	Date Price		RSUs	Date Price		RSUs	Date Price
Outstanding as of January 1	298,834	$	7.49	162,096	$	9.26	149,170	$	12.42
Granted	159,492		11.93	221,903		6.80	140,914		8.50
Vested	(151,439)		7.79	(83,675)		9.07	(127,988)		12.10
Forfeited	—		—	(1,490)		8.39	—		—

Outstanding as of December 31	306,887	$	9.65	298,834	$	7.49	162,096	$	9.26

The total fair value of the RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was $1,838, $550 and $1,235, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

The following table summarizes certain information of the RSUs unvested and vested as of December 31, 2021:


Unvested RSUs				Vested RSUs
December 31, 2021				December 31, 2021
			Weighted
	Weighted		Average		Weighted
	Average		Remaining		Average
Number of	Grant Date		Contractual	Number of	Grant Date
RSUs	Price		Life	RSUs	Price
306,887	$	9.65	1.36	657,337	$	10.32

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2021, unrecognized compensation cost of $1,059 related to RSUs will be recognized over a weighted-average period of 1.36 years.

For the years ended December 31, 2021, 2020 and 2019, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:


	For the Years Ended December 31,
	2021		2020		2019
General and administrative expenses	$	1,632	$	1,239	$	1,207