Stock-Based and Other Long-Term Incentive Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based and Other Long-Term Incentive Compensation

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, 2020 we had 34,899 shares outstanding under the 2009 Plan that will vest over the next one year.

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 of December 31, 2020, we had 223,202 shares outstanding under the Equity Incentive Plan that will vest over the next three years.

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 2019 performance, Mr. Taylor, was awarded 94,133 restricted shares/units on April 28, 2020, which vest over three years, in equal installments beginning April 28, 2021. On April 28, 2020, the Compensation Committee awarded 10,000 restricted shares/units to James Hazlett, our Vice President of Technical Services. The restricted shares/units to Mr. Hazlett vest over three years, in equal installments, beginning April 28, 2021. We also awarded and issued 4,432 shares of restricted common stock/units to each of our four independent Board members as partial payment for 2020 directors' fees. The restricted stock/units issued to our directors vests in one year from the date of grant.

Compensation expense related to the restricted shares/units was approximately $2.2 million and $2.5 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, there was a total of approximately $1.8 million of unrecognized compensation expense related to the unvested portion of these restricted shares/units. This expense is expected to be recognized over the next three years. As of December 31, 2020, 200,141 shares were still available for issuance under the Equity Incentive Plan.

A summary of all restricted stock/units activity as of December 31, 2019 and 2020 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, 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
Granted	123,185	5.68		—	700
Vested	(144,850)	20.82		—	946
Canceled/Forfeited	—	—		—	—
Outstanding, December 31, 2020	258,101	$	12.87	8.61	$	2,447

Other Long-Term Incentive Compensation

On April 28, 2020, based on its review of Mr. Taylor's 2019 performance, the Compensation Committee also issued a long-term incentive award of $1.1 million to Mr. Taylor that vests in equal, annual tranches over three years. At the time of vesting, each tranche will be payable in cash or common stock at the discretion of the Compensation Committee. In addition, on April 28, 2020, we issued a $50,000 award to each of our four independent members of our Board of Directors as partial payment for their services in 2020. These awards vest one year from the date of grant and are payable in cash upon vesting. The Company accounts for these other long-term incentive awards to Mr. Taylor and our independent Board members as liabilities under accrued liabilities on our condensed consolidated balance sheet. The vesting of these awards is subject to acceleration upon certain events, such as (i) death or disability of the recipient, (ii) certain circumstances in connection with a change of control of the Company, (iii) for executive officers, termination without cause (as defined in the agreement), and (iv) for executive officers, resignation for good reason (as defined). Total compensation expense related to these other long-term incentive awards was approximately $0.4 million for the year ended December 31, 2020. As of December 31, 2020 there was a total of $0.8 million of unrecognized compensation expense related to these other long-term incentive awards which is expected to be recognized over the next 2.25 years.

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, 2020, 384,503 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:	2020
Risk free rate		0.48	%
Expected life		6.59
Expected volatility		42.33	%
Expected dividend yield		—	%

There were no stock option grants made in 2019.

A summary of all option activity as of December 31, 2019 and 2020 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, 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	$	—
Granted	5,000	4.91		—	—
Exercised	—	—		—	—
Canceled/Forfeited	(12,000)	20.20		—	23,750
Expired	(40,000)	19.11		—	—
Outstanding, December 31, 2020	161,334	$	24.48	3.48	$	—
Exercisable, December 31, 2020	161,334	$	24.48	3.48	$	—

The weighted average grant date fair value of options granted during 2020 was $2.07. We had no grants in 2019. 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 was approximately $474,000. There were no option exercises in 2020. Cash received from stock options exercised during the years ended December 31, 2019 was approximately $506,000.

The following table summarizes information about our stock options outstanding at December 31, 2020:


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

$0.01-18.00	24,500	0.41	$	16.80	24,500	$	16.80
$18.01-22.00	20,500	2.22	18.75		20,500	18.75
$22.01-26.00	42,167	4.28	22.90		42,167	22.90
$26.01-30.00	30,000	6.13	28.15		30,000	28.15
$30.01-34.00	44,167	3.22	30.41		44,167	30.41
	161,334	3.48	$	24.48	161,334	$	24.48

The summary of the status of our unvested stock options as of December 31, 2020 and changes during the year then ended is presented below.


Unvested stock options:	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2019	10,433	$	11.93
Granted	5,000	2.07
Vested	(10,433)	11.93
Canceled/Forfeited	(5,000)	2.07
Unvested at December 31, 2020	—	$	—

We recognized stock compensation expense from stock options vesting of $19,366 and $124,000 for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, there was no unamortized compensation cost related to unvested stock options.