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Stock Based Compensation
 12 Months Ended
Dec. 31, 2023
Stock Based Compensation [Abstract]  
STOCK BASED COMPENSATION

NOTE 11 – STOCK BASED COMPENSATION

 

The Company sponsors two stock-based incentive compensation plans.

 

The first plan is known as the 2013 Incentive Plan (the “2013 Plan”) and was established by the Board of Directors of the Company in June 2013. The 2013 Plan, as amended, authorized the issuance of 3,000,000 shares of Company common stock. The amended plan was approved by shareholders. A total of 345,435 shares of common stock underlying options and 111,628 shares of common stock underlying restricted stock unit awards were outstanding at December 31, 2023. In connection with the adoption of a new plan in 2021, the Company froze the 2013 Plan. At December 31, 2023, there were no shares available for grant under the 2013 Plan.

 

In 2021, the Company adopted a new plan known as the 2021 Equity Incentive Plan (“2021 Plan”). The plan was established by the Board of Directors and approved by shareholders in August 2021. A total of 2,500,000 shares are authorized for issuance under the 2021 Plan. A total of 1,209,626 shares of common stock underlying options and 631,581 shares of common stock underlying restricted stock unit awards were outstanding at December 31, 2023. At December 31, 2023, 276,844 shares were available for grant under the 2021 Plan.

 

The 2021 Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based awards. Incentive stock options may only be granted to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, directors, officers, employees and consultants, who the Company’s Board or Compensation Committee determines. The exercise price of options granted under the 2021 Plan must be equal to at least 100% of the fair market value of our common stock as of the date of the grant of the option. Options granted under the 2021 Plan are exercisable as determined by the Compensation Committee and specified in the applicable award agreement. In no event will an option be exercisable after ten years from the date of grant.

 

Stock Options

 

The compensation cost that has been charged against income related to options for the years ended December 31, 2023 and 2022, was $5,925,416 and $4,956,619, respectively. No income tax benefit was recognized in the consolidated statements of income and no compensation was capitalized in any of the years presented. During the year ended December 31, 2023, we granted certain performance based options, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was no expense related to these options recorded during the period. The fair value of these instruments was calculated using the Black-Scholes option pricing model.

 

During 2022, the Company granted certain performance based stock options, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was no expense related to these options recorded during the period.

 

The Company had the following option activity during the year ended December 31, 2023 and 2022:

 

   Number of
Options		   Weighted
average
exercise price		   Weighted
average
remaining
contractual
life (years)		   Aggregate
intrinsic
value $		 
Outstanding at January 1, 2022   783,547   $34.17         
 
 
Granted   862,938   $25.43           
Exercised   (156,910)  $7.69           
Expired or forfeited   (182,705)  $37.13           
Outstanding at December 31, 2022   1,306,870   $31.14    2.7   $1,537,752 
Granted   426,703   $12.50           
Exercised   (24,668)  $7.34           
Expired or forfeited   (153,844)  $30.70           
Outstanding, December 31, 2023   1,555,061   $26.38    3.4   $1,046,481 
Exercisable, December 31, 2023   586,274   $33.10    2.6   $239,110 

 

The table below reflects information for the total options outstanding at December 31, 2023

 

Range of Exercise Prices  Number of
Options		   Weighted
average
remaining
contractual
life (years)		   Weighted
average
exercise
price		 
$4.20 to $10.00   108,044    4.3   $8.02 
$10.00 to $20.00   851,751    3.8   $14.35 
$20.00 to $40.00   247,284    2.7   $33.91 
$40.00 to $60.00   247,723    2.6   $48.30 
$60.00 to $96.70   100,259    2.7   $75.54 
Total   1,555,061    3.4   $26.38 

 

The table below reflects information for the vested options outstanding at December 31, 2023.

 

Range of Exercise Prices  Number of
Options		   Weighted
average
remaining
contractual
life (years)		   Weighted
average
exercise
price		 
$4.20 to $10.00   15,667    1.1   $7.54 
$10.00 to $20.00   222,707    2.9   $14.34 
$20.00 to $40.00   143,670    2.4   $31.79 
$40.00 to $60.00   138,776    2.5   $49.36 
$60.00 to $96.70   65,454    2.7   $75.80 
Total   586,274    2.6   $33.58 

 

A summary of the status of the Company’s non-vested options as of December 31, 2023, and changes during the year ended December 31, 2023, is presented below.

 

Nonvested Options  Options   Weighted
average
exercise
price		 
Nonvested at January 1, 2022   1,056,187   $30.51 
Granted   426,703   $12.50 
Vested   (381,992)  $31.61 
Forfeited   (132,111)  $52.07 
Nonvested at December 31, 2023   968,787   $22.03 

 

There is $8,956,198 of expense remaining to be recognized over a period of approximately 1.77 years related to options outstanding at December 31, 2023.

 

Restricted Stock Units

 

The Company had the following restricted stock unit (“RSU”) activity during the years ended December 31, 2023 and 2022:

 

   Number of
RSUs		   Weighted
average
grant date
fair value		   Weighted
average
remaining
contractual
life (years)		 
Outstanding at January 1, 2022   399,738   $52.99      
Granted   467,043   $25.69      
Forfeited   (39,346)  $44.06      
Shares issued   (29,945)  $59.41      
Withheld and cancelled   (8,416)  $68.69      
Outstanding at December 31, 2022   789,074   $36.95    2.0 
Granted   383,406   $12.30      
Forfeited   (244,923)  $58.18      
Vested and issued   (141,859)  $31.38      
Withheld and cancelled   (42,489)  $32.47      
Outstanding at December 31, 2023   743,209   $18.62    1.7 

 

The Company granted restricted stock units of 383,406 and 467,043 units in 2023 and 2022, respectively, and valued at $4,714,564 and $11,996,111, respectively. These restricted stock units vest over a period of 1 year to 5 years. The Company recognized expense of $7,791,917 and $10,789,203 in 2023 and 2022, respectively, related to these restricted stock units. A total of $11,106,405 remains to be recognized at December 31, 2023 over a period of 1.95 years.

 

In the year ended December 31, 2023, certain participants utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding tax. Of the shares issued to participants during the year ended December 31, 2023 and 2022, respectively, 42,489 and 31,243 shares, valued at $458,892 and $100,290, were surrendered and subsequently cancelled.

 

During 2022, the Company granted certain performance based restricted stock units, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was no expense related to these restricted stock units recorded during the period.

 

Non-employee Directors Compensation

 

The director’s compensation program calls for the grant of restricted stock units with a one year vesting period. The Company granted 26,470 restricted stock units to its non-employee directors, valued at $750,130 in 2022. These restricted stock units vested in 2023. There were 50,305 restricted stock units, valued at $750,050 granted to the non-employee directors in 2023 that will vest in 2024, 12 months from the grant dates.

 

Equity Award Modification

 

On April 16, 2023, the Compensation Committee approved a grant to the CEO of 86,685 restricted stock units and 161,698 stock options with a grant date fair value of $2.5 million to vest over a three-year period. Concurrently, the CEO forfeited his October 2021 grant of 182,398 market-based restricted stock units. The forfeiture and accompanying grant are considered an equity modification according to ASC 718, Compensation-Stock Compensation. The additional compensation value created by the termination and issuance of new equity awarded, as measured using a Monte Carlo simulation, was approximately $1.9 million in total. Under ASC 718 this results in a non-cash expense in current and future periods to be recognized over a three-year period. These expense values are reflected and included in the option and restricted stock expense values discussed above.