Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Restricted Stock/Units

On June 18, 2014, at our annual meeting of shareholders, our shareholders approved a proposed amendment to the 2009 Restricted Stock/Unit Plan (the "2009 Plan") to add additional 500,000 shares of common stock to the Plan, thereby authorizing the issuance of up to 800,000 shares of common stock under the Plan. The 2009 Plan expired on June 16, 2019. At December 31, 2019 we had 123,092 shares outstanding under the 2009 Plan that will vest over the next two years.

On June 20, 2019, at our annual meeting of shareholders, our shareholders approved a new proposed Equity Incentive Plan for restricted shares/units and stock options. The Equity Incentive Plan allows issuance up to 500,000 share of common stock. As to December 31, 2019, only restricted shares/units had been granted.

In accordance with the Company's employment agreement with Stephen Taylor, the Company's Chief Executive Officer, the Compensation Committee reviewed his performance in determining the issuance of restricted common stock. Based on this review which included consideration of the Company's 2018 performance, Mr. Taylor, was awarded 131,674 restricted shares/units on March 29, 2019, which vest over three years, in equal installments beginning March 29, 2020. On March 29, 2019, the Compensation Committee awarded 20,000 restricted shares/units to each G. Larry Lawrence, our former CFO, and James Hazlett, our Vice President of Technical Services. The restricted shares/units to Messrs. Hazlett and G.L. Lawrence vest over three years, in equal installments, beginning March 29, 2020. We also awarded and issued 23,136 shares of restricted common stock/units to our Board of Directors as partial payment for 2019 directors' fees. The restricted stock/units issued to our directors vests over one year, in quarterly installments, beginning March 31, 2020.

On November 15, 2019, our former CFO, G. Larry Lawrence, retired from the Company. At time of retirement, the Board of Directors approved the accelerated vesting of all unvested shares held by Mr. Lawrence. In accordance with ASC 718, the Company considered the Board’s approval of accelerated vesting as a modification to all of the unvested shares held by Mr. Lawrence on the date of his retirement. The grant-date fair value of Mr. Lawrence’s restricted shares/units ranged from $17.29 to $24.55 per share. The closing price of the Company's stock was $11.18 on November 15, 2019, the modification date. Due to the price on date of modification being less than the original grant value, the Company recorded less compensation expense related to the accelerated vesting than would have been recognized over the vesting period if Mr. Lawrence had not retired. Total compensation expensed booked related to the Mr. Lawrence’s accelerated shares was $189,000.

Compensation expense related to the restricted shares/units was approximately $2.5 million, $2.2 million and $3.7 million for the years ended December 31, 2019, 2018, and 2017, respectively. As of December 31, 2019, there was a total of approximately $3.3 million of unrecognized compensation expense related to the nonvested portion of these restricted shares/units. This expense is expected to be recognized over the next three years and a quarter. As of December 31, 2019, 328,173 shares were still available for issuance under the Equity Incentive Plan.

A summary of all restricted stock/units activity as of December 31, 2017, 2018 and 2019 and changes during the years then ended are presented below.


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2016	139,451	$	21.34	9.13	$	4,483
Granted	126,432	27.06		—	3,421
Vested	(81,494)	21.20		—	2,361
Canceled/Forfeited	—	—		—	—
Outstanding, December 31, 2017	184,389	$	25.32	8.83	$	4,831
Granted	140,988	24.55		—	3,461
Vested	(110,747)	23.97		—	2,806
Canceled/Forfeited	—	—		—	—
Outstanding, December 31, 2018	214,630	$	25.51	8.85	$	3,529
Granted	199,810	17.16		—	3,433
Vested	(134,674)	24.26		—	2,807
Canceled/Forfeited	—	—		—	—
Outstanding, December 31, 2019	279,766	$	20.15	8.77	$	3,430

Stock Option Plan

Our Stock Option Plan which is stockholder approved, permits the granting of stock options to its employees for up to 1.0 million shares of common stock under the Stock Option Plan. We believe that such awards align the interests of our employees with our stockholders. Option awards are generally granted with an exercise price equal to the market price of our stock at the date of grant; those option awards generally vest based on three years of continuous service and have ten-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control of the Company (as defined in the Stock Option Plan). The last date that grants can be made under the Stock Option Plan is February 28, 2026. As of December 31, 2019, 337,503 shares were still available for issue under the Stock Option Plan.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of options granted is based on the vesting period and historical exercise and post-vesting employment termination behavior for similar grants. We use historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes.


Weighted average Black -Scholes fair value assumption during the year ended December 31, are as follows:	2017
Risk free rate	2.12	%
Expected life	6 years
Expected volatility	39.59	%
Expected dividend yield	—

There were no stock option grants made in 2019 or 2018.

A summary of all option activity as of December 31, 2017, 2018 and 2019 and changes during the years then ended are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2016	350,186	$	19.45	4.25	$	4,453
Granted	32,750	28.15		—	—
Exercised	(55,666)	20.12		—	446

Outstanding, December 31, 2017	327,270	$	20.21	4.28	$	2,255

Granted	—	—		—	—
Exercised	(38,250)	17.19		—	216
Canceled/Forfeited	(5,534)	24.02		—	—
Outstanding, December 31, 2018	283,686	$	20.46	3.58	$	434
Granted	—	—		—	—
Exercised	(56,352)	8.97		—	474
Canceled/Forfeited	(8,000)	21.60		—	—
Expired	(11,000)	17.74		—	—
Outstanding, December 31, 2019	208,334	$	23.67	3.66	$	—
Exercisable, December 31, 2019	197,901	$	23.43	3.48	$	—

The weighted average grant date fair value of options granted during 2017 was $11.93. We had no grants in 2019 and in 2018. The total intrinsic value, or the difference between the exercise price and the market price on the date of exercise, of options exercised during the years ended December 31, 2019, 2018, and 2017 was approximately $474,000, $216,000, and $446,000, respectively. Cash received from stock options exercised during the years ended December 31, 2019, 2018, and 2017 was approximately $506,000, $680,000, and $1.1 million, respectively.

The following table summarizes information about our stock options outstanding at December 31, 2019:


Range of Exercise Prices	Options Outstanding												Options Exercisable
		Shares		Weighted Average Remaining Contractual Life (years)			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price

$0.01-15.70	8,500		2.07		$	14.89		8,500		$	14.89
$15.71-17.81	26,000		0.74		17.40			26,000		17.40
$17.82-20.48	50,500		1.34		19.43			50,500		19.43
$20.49-33.36	123,334		5.34		27.33			112,901		27.26
	208,334		3.66		$	23.67		197,901		$	23.43

The summary of the status of our unvested stock options as of December 31, 2019 and changes during the year then ended is presented below.


Unvested stock options:	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2018	20,865	$	11.93
Granted	—	—
Vested	(10,432)	11.93
Canceled/Forfeited	—	—
Unvested at December 31, 2019	10,433	$	11.93

We recognized stock compensation expense from stock options vesting of $124,000, $159,000, and $363,000 for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was approximately $16,000 of total unamortized compensation cost related to unvested stock options. We expect to recognize such cost in 2020.