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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

13 – STOCK-BASED COMPENSATION

2015 Equity Incentive Plan

Stock Options

The following table summarizes the stock option activity for the nine months ended September 30, 2023:


				Weighted			Weighted
		Number		Average			Average
		of		Exercise			Fair
		Options		Price			Value
Outstanding as of January 1, 2023		415,227		$	7.91		$	2.78
Granted		—			—			—
Exercised		(47,037)			7.70			2.53
Forfeited		—			—			—

Outstanding as of September 30, 2023		368,190		$	7.93		$	2.82

Exercisable as of September 30, 2023		335,729		$	7.74		$	2.67

The following table summarizes certain information about the options outstanding as of September 30, 2023:

Options Outstanding and Unvested,

Options Outstanding and Exercisable,

September 30, 2023

September 30, 2023

Weighted

Weighted

Weighted

Average

Weighted

Average

Weighted

Average

Exercise Price of

Average

Remaining

Average

Remaining

Outstanding

Number of

Exercise

Contractual

Number of

Exercise

Contractual

Options

Options

Price

Life

Options

Price

Life

$

7.93

32,461

$

9.91

3.40

335,729

$

7.74

2.50

As of September 30, 2023 and December 31, 2022, a total of 368,190 and 415,227 stock options were outstanding, respectively.

The unamortized stock-based compensation balance of $19 as of September 30, 2023 is expected to be expensed $12 and $7 during the remainder of 2023 and during the year ending December 31, 2024, respectively.

For the three and nine months ended September 30, 2023 and 2022, the Company recognized amortization expense of the fair value of its stock options, which is included in General and administrative expenses, as follows:


		For the Three Months Ended						For the Nine Months Ended
		September 30,						September 30,
		2023			2022			2023			2022
General and administrative expenses		$	13		$	55		$	71		$	223

Restricted Stock Units

The Company has granted restricted stock units (“RSUs”) under the 2015 Plan 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 September 30, 2023 and December 31, 2022, 798,904 and 612,300 shares of the Company’s common stock were outstanding in respect of the RSUs, respectively. Such shares will only be issued in respect to 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.

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 in equal installments on each of the anniversaries of the determined vesting date, over the three or five year vesting periods, as applicable.

The table below summarizes the Company’s unvested RSUs for the nine months ended September 30, 2023:


				Weighted
		Number of		Average Grant
		RSUs		Date Price
Outstanding as of January 1, 2023		641,972		$	15.74
Granted		211,441			16.27
Vested		(230,842)			14.35
Forfeited		(49,322)			16.42

Outstanding as of September 30, 2023		573,249		$	16.43

The total fair value of the RSUs that vested during the nine months ended September 30, 2023 and 2022 was $4,075 and $3,837, 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 September 30, 2023:


Unvested RSUs							Vested RSUs
September 30, 2023							September 30, 2023
					Weighted
		Weighted			Average				Weighted
		Average			Remaining				Average
Number of		Grant Date			Contractual		Number of		Grant Date
RSUs		Price			Life		RSUs		Price
573,249		$	16.43		1.61		288,158		$	12.35

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2023, unrecognized compensation cost of $5,406 related to RSUs will be recognized over a weighted-average period of 1.61 years.

For the three and nine months ended September 30, 2023 and 2022, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:


		For the Three Months Ended						For the Nine Months Ended
		September 30,						September 30,
		2023			2022			2023			2022
General and administrative expenses		$	1,243		$	785		$	3,848		$	2,133

Performance-Based Restricted Stock Units

The Company has granted performance-based restricted stock units (“PRSUs”) under the 2015 Plan to certain employees of the Company, some of which are contingent upon the Company’s relative total shareholder return (“TSR”) and some of which are contingent upon the Company’s return on invested capital (”ROIC”) for a three-year performance period ending December 31, 2025.

The TSR is calculated based on the Company’s total shareholder return compared to that of certain peer companies specified in the award agreements over the performance period and is calculated based on the change in the average daily closing stock price over a 20 trading-day period from the beginning to the end of the performance period, including reinvested dividends. The total quantity of PRSUs eligible to vest under these awards range from zero to 200% of the target based on actual relative TSR performance during the performance period. The grant date fair value of the TSR awards was estimated using a Monte Carlo simulation model. Compensation for these awards, which are subject to market conditions, is being amortized over the service period.

The grant date fair value of the ROIC awards was estimated using the closing share price of the Company’s stock on the date of grant. The total quantity of PRSUs eligible to vest under these awards range from zero to 200% of the target based on actual ROIC performance during the performance period. As such ROIC awards are subject to performance conditions and compensation cost is recognized over the service period based on the amount of awards that the Company believes is probable that will vest. To the extent the Company’s estimate changes, the Company will recognize a cumulative catch up in subsequent reporting periods.

The PRSUs, if earned, will ordinarily vest during the first quarter of 2026 and the recipient will receive a share of common stock for each earned PRSU. If 100% of the target metric is achieved, the recipient will earn 100% of the target amount of the PRSUs originally granted, which would amount to 79,838 PRSUs. However, based on actual performance, the number of PRSUs earned will change based on the ranges described above. As of September 30, 2023, unrecognized compensation cost of $1,259 related to PRSUs will be recognized over a weighted-average period of 2.25 years.

Significant inputs used in the estimation of the fair value of these awards granted during the three and nine months ended September 30, 2023 are as follows:


Significant Input		September 30, 2023
Closing share price of our common stock		$14.36 to $16.30
Risk-free rate of return		3.81% to 4.38%
Expected volatility of our common stock		53.38% to 54.53%
Holding period discount		0%
Simulation term (in years)		2.54 to 2.72
Range of target		0% to 200%

For the three and nine months ended September 30, 2023 and 2022, the Company recognized nonvested stock amortization expense for the PRSUs, which is included in General and administrative expenses as follows:


		For the Three Months Ended						For the Nine Months Ended
		September 30,						September 30,
		2023			2022			2023			2022
General and administrative expenses		$	141		$	—		$	256		$	—