Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

) STOCK-BASED COMPENSATION

We account for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. We recognize stock-based compensation cost over the award’s requisite service period on a straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. We record forfeitures as they occur for all stock-based compensation.

The following table presents our total stock-based compensation expense:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Employee stock-based compensation expense
Pre-tax	$	667	$	79	$	1,037	$	388
Post-tax (1)	527		62		819		307
Director stock-based compensation expense
Pre-tax	113		29		171		55
Post-tax (1)	89		23		135		43

(1) The after tax amounts are determined using the 21% corporate federal tax rate.

We had approximately $3,744,000 of unrecognized stock compensation expense at June 30, 2024 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 2.2 years. We had approximately $478,000 of unrecognized director stock-based compensation expense at June 30, 2024 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.9 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of our common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents our obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, we issue the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the 2022 and 2021 awards.

We granted 471,746 and 45,000 shares of restricted common stock during the three months ended June 30, 2024 and 2023, respectively, which had a weighted-average grant date fair value of $7.18 and $5.25 per share, respectively. We granted 501,746 and 45,000 shares of restricted common stock during the six months ended June 30, 2024 and 2023, respectively, which had a weighted-average grant date fair value of $7.32 and $5.25, respectively. Additionally, during the three and six month periods ended June 30, 2023, the Company granted 262,933 shares of restricted common stock, with a fair value of $4.33, which are contingent upon stockholder approval of an increase in the number of shares of our common stock that may be issued pursuant to the 2020 Omnibus Incentive Plan. This increase was approved during our 2024 annual meeting of stockholders and the impact of the contingent grants are included in the granted shares described above and seen in the table below.

The following table presents certain information related to the activity of our non-vested restricted common stock grants:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023(1)	445,646	$	2.64
Granted	501,746	7.32
Less: Forfeited	856	3.59
Less: Vested	436,472	3.36
Outstanding as of June 30, 2024	593,819	$	6.13

(1) Contingent shares granted during 2023 have been excluded from the calculations above.

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:


	2024		2023
Expected annual dividend yield	—	%	—	%
Expected volatility	86.92	%	80.84	%
Risk-free interest rate	4.37	%	3.44	%
Expected term	6 years		6 years

The expected annual dividend yield for our options granted during 2024 and 2023 is based on no dividends being paid in future quarters. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

We granted 196,275 stock options for the three and six months ended June 30, 2024, which had a weighted average grant date fair value of $4.82 per share. Additionally, during the three and six months ended June 30, 2023, the Company granted 123,399 stock options, with a fair value of $3.08, which are contingent upon stockholder approval of an increase in the number of shares of our common stock that may be issued pursuant to the 2020 Omnibus Incentive Plan. This increase was approved during our 2024 annual meeting of stockholders and the impact of the contingent grants are included in the granted options described above and seen in the table below.

The following table presents certain information related to the activity of our non-vested stock option grants:


	Number of Stock Options	Weighted Average Exercise Prices		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (3)
Outstanding as of December 31, 2023(1)	1,028,760	$	3.83	7.80	$	6,151,000
Granted	196,275	4.82		—	—
Less: Forfeited	—	—		—	—
Less: Expired	—	—		—	—
Less: Exercised	35,000	1.70		—	—
Outstanding as of June 30, 2024	1,190,035	$	4.05	7.71	$	8,044,000

Vested as of June 30, 2024(2)	1,126,019	$	4.34	7.32	$	4,976,000
Exercisable as of June 30, 2024	750,768	$	4.34	7.32	$	4,976,000

(1) Contingent options granted during 2023 have been excluded from the calculations above.

(2) The vested shares are calculated based on all vested shares at June 30, 2024, inclusive of those that have since expired. The weighted average exercise prices, weighted-average remaining contractual term and aggregate intrinsic value is calculated based on only vested shares that are outstanding and exercisable at June 30, 2024.

(3) Presented in ones.