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Stock Based Compensation | 3 Months Ended
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Mar. 31, 2023
Stock Based Compensation |
Stock Based Compensation | 10. Stock Based Compensation The Company may grant qualified and non-qualified stock options, common stock and other stock-based awards under various plans to directors, officers, employees and other individuals. Stock options are granted at exercise prices of not less than the fair market value of the Company’s common stock on the date of grant. Additionally, the Company has an ESPP that allows employees to purchase Company shares at a purchase price equal to 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. Stock Options and Other Benefit Plans 2010 Plan Stock Options Stock options issued under the 2010 Plan generally vest monthly over three years for employees and one year for directors. Stock options held by employees who qualify for retirement age (defined as employees that are a minimum of 55 years of age and the sum of their age plus years of full-time employment with the Company exceeds 70 years) vest on the earlier of scheduled vest date or the date of retirement. Stock Option Inducement Awards On December 30, 2022, the Board appointed Owen Hughes as Executive Chairman of the Board and Interim CEO (principal executive officer) and Bradley Sitko as the Company’s Chief Investment Officer, effective as of January 1, 2023. Pursuant to the terms of their respective employment agreements, Mr. Hughes and Mr. Sitko were each granted two separate awards of non-qualified stock options on January 3, 2023 (collectively, the “Stock Option Inducement Awards”) when the Company’s stock price was $18.66 per share. The Stock Option Inducement Awards were granted to Mr. Hughes and Mr. Sitko outside the 2010 Plan as an inducement material to entering into their respective employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4) but are subject to the terms and conditions of the 2010 Plan. On January 3, 2023, the Company granted Mr. Hughes two separate non-qualified stock options to purchase: (i) 100,000 shares of the Company’s common stock at a fair market value exercise price of $18.66 per share that will vest in a series of four equal installments on March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 and (ii) 75,000 shares of the Company’s common stock at an above fair market value exercise price of $30.00 per share that will vest in a series of 36 successive equal monthly installments measured from January 1, 2023. On January 3, 2023, the Company granted Mr. Sitko two separate non-qualified stock options to purchase: (i) 300,000 shares of the Company’s common stock at a fair market value exercise price of $18.66 per share and (ii) 250,000 shares of the Company’s common stock at an above fair market value exercise price of $30.00 per share. Twenty-five percent of the shares subject to Mr. Sitko’s option grants will vest and become exercisable on January 3, 2024, and the balance of the shares will vest and become exercisable in a series of 36 successive equal monthly installments thereafter. Fair Value Assumptions ​ The fair value of the stock options granted under the 2010 Plan during the three months ended March 31, 2023 and 2022, was estimated based on the following weighted average assumptions: ​ ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended March 31, |
​ |  | 2023 |  | 2022 |
Dividend yield |  | n/a | ​ | 0 | %
Expected volatility |  | n/a | ​ | 70 | %
Risk-free interest rate |  | n/a | ​ | 1.89 | %
Expected term |  | n/a | ​ | 5.66 years | ​
​ No stock options were granted under the 2010 Plan during the three months ended March 31, 2023. The weighted-average grant-date fair value per share of the options granted under the 2010 Plan during the three months ended March 31, 2022 was $12.64. The fair value of the stock options granted to Mr. Hughes and Mr. Sitko at an exercise price of $18.66 per share during the three months ended March 31, 2023, was estimated based on the following weighted average assumptions: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended March 31, |
​ |  | 2023 |  | 2022(1) |
Dividend yield |  | 0 | % | n/a | ​
Expected volatility |  | 69 | % | n/a | ​
Risk-free interest rate |  | 3.92 | % | n/a | ​
Expected term |  | 5.79 years | ​ | n/a | ​
​
| (1) | No Stock Option Inducement Awards were granted during the three months ended March 31, 2022.
​ The weighted-average grant-date fair value per share of options granted to Mr. Hughes and Mr. Sitko at an exercise price of $18.66 per share during the three months ended March 31, 2023 was $11.91. The fair value of the stock options granted to Mr. Hughes and Mr. Sitko at an exercise price of $30.00 per share during the three months ended March 31, 2023 was estimated based on the following weighted average assumptions: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended March 31, |
​ |  | 2023 |  | 2022(1) |
Dividend yield |  | 0 | % | n/a | ​
Expected volatility |  | 91 | % | n/a | ​
Risk-free interest rate |  | 3.86 | % | n/a | ​
Expected term |  | 8.01 years | ​ | n/a | ​
​ (1) No Stock Option Inducement Awards were granted during the three months ended March 31, 2022. ​ The weighted-average grant-date fair value per share of options granted to Mr. Hughes and Mr. Sitko at an exercise price of $30.00 per share during the three months ended March 31, 2023 was $14.68. The activity for all stock options for the three months ended March 31, 2023, was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted |  | Weighted | ​ | ​
​ | ​ | ​ | ​ | Average | ​ | Average | ​ | Aggregate
​ | ​ | ​ | ​ | Exercise | ​ | Contractual | ​ | Intrinsic
​ | ​ | Number of | ​ | Price | ​ | Remaining Term | ​ | Value
​ | ​ | shares | ​ | Per Share | ​ | (in years) | ​ | (in thousands)
Outstanding at January 1, 2023 | ​ | ​ | 2,025,542 | ​ | $ | 20.24 |  | ​ | 6.10 | ​ | $ | 10,804
Granted |  | ​ | 725,000 | ​ |  | 23.74 |  | ​ |  |  | ​ |
Exercised |  | ​ | — | ​ |  | — |  | ​ |  |  | ​ |
Forfeited, expired or cancelled | ​ | ​ | (43,998) | ​ |  | 38.68 |  | ​ |  |  | ​ |
Outstanding at March 31, 2023 | ​ | ​ | 2,706,544 | ​ | $ | 20.88 |  | ​ | 6.84 | ​ | $ | 15,134
Exercisable at March 31, 2023 | ​ | ​ | 1,773,379 | ​ | $ | 19.37 |  | ​ | 5.42 | ​ | $ | 13,914
​ No stock options were exercised during the three months ended March 31, 2023. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 was $2.0 million. As of March 31, 2023, $11.6 million of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted average period of 2.96 years. Stock-based Compensation Expense All stock-based compensation expense is recorded in G&A expense. The following table shows total stock-based compensation expense for stock options issued under the 2010 Plan, the Stock Option Inducement Awards and ESPP in the condensed consolidated statements of operations and comprehensive loss (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended March 31,
​ |  | 2023 |  | 2022
Total stock-based compensation expense included in G&A | ​ | $ | 1,570 | ​ | $ | 978
​ Employee Retention Bonus ​ In October 2022, the Company approved the Amended Retention Plan which provides that each of its then current employees, excluding the CEO, will be eligible to receive a cash retention bonus if employed through each of two periods: (1) the three-month anniversary of November 1, 2022 (the “Initial Period”) and (2) the nine-month period immediately following the Initial Period. All other terms of the Amended Retention Plan remain consistent with the Retention Plan. The Company is accruing and recognizing the cost of the cash retention bonus as expense on a straight-line basis from November 1, 2022 through October 31, 2023. ​ The Company paid $0.2 million of cash retention bonuses accrued over the Initial Period in January 2023. Pursuant to the Amended Retention Plan, as of March 31, 2023, the Company expects to pay an additional $0.5 million in cash in 2023 related to the cash retention bonuses. The Company recognized $0.2 million for cash retention bonuses in operating expenses in the condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2023 and will recognize the remaining amount of $0.4 million for cash retention bonuses in operating expenses through October 31, 2023. The Company accrued cash retention bonuses in accrued and other liabilities in the condensed consolidated balance sheets were $0.1 million as of March 31, 2023 and December 31, 2022. ​ James R. Neal Departure and Continuity Incentive ​ James R. Neal retired as the Company’s CEO effective as of December 31, 2022 (the “Departure Date”) and resigned as a member of the Board and Chairman of the Board, effective as of January 1, 2023. Pursuant to Mr. Neal’s Amended and Restated Employment Agreement, dated December 15, 2021, by and between the Company and Mr. Neal, following the Departure Date, Mr. Neal is entitled to a cash payment of $1.2 million (the “Continuity Incentive”) which will be made in equal monthly installments starting in January 2023 through December 2023, less deductions and withholdings. The Company accrued the full $1.2 million Continuity Incentive in operating expenses in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2022. The unpaid accrued Continuity Incentive recorded in accrued and other liabilities in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 was $0.9 million and $1.2 million, respectively.

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