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Stock-Based and Other Long-Term Incentive Compensation | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based and Other Long-Term Incentive Compensation | Stock-Based and Other Long-Term Incentive Compensation 1998 Stock Option Plan After consideration of the activity described in the table below, a total of 405,919 shares remained available for grant under the 1998 Stock Option Plan (the “Stock Option Plan”) as of September 30, 2024. The last date that grants can be made under the Stock Option Plan is February 28, 2026. A summary of all option activity during the nine months ended September 30, 2024 is presented below:
| Number of Shares Underlying Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2023 | 129,751 |  |  | $ | 20.59 |  |  | 4.10 |  | $ | 274 |
Granted | 46,000 |  |  | $ | 22.95 |  |  |  |  | $ | — |
Exercised | (6,667) |  |  | $ | 10.58 |  |  |  |  | $ | 80 |
Canceled / Forfeited | (7,167) |  |  | $ | 23.27 |  |  |  |  | $ | 3 |
Expired | (29,667) |  |  | $ | 30.41 |  |  |  |  | $ | — |
Outstanding, September 30, 2024 | 132,250 |  |  | $ | 19.56 |  |  | 6.15 |  | $ | 368 |
Exercisable, September 30, 2024 | 69,417 |  |  | $ | 19.86 |  |  | 3.56 |  | $ | 208 |
The following table summarizes information about our stock options outstanding as of September 30, 2024:
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 | 44,333 |  |  | 7.55 |  | $ | 10.80 |  |  | 25,333 |  |  | $ | 10.90 |
$18.01-$26.00 | 70,167 |  |  | 6.23 |  | $ | 22.93 |  |  | 26,334 |  |  | $ | 22.88 |
$26.01-$30.00 | 17,750 |  |  | 2.38 |  | $ | 28.15 |  |  | 17,750 |  |  | $ | 28.15 |
| 132,250 |  |  | 6.15 |  | $ | 19.56 |  |  | 69,417 |  |  | $ | 19.86 |
The following table summarizes changes in our unvested stock options during the nine months ended September 30, 2024:
Unvested Stock Options: | Shares |  | Weighted Average Grant Date Fair Value Per Share
Unvested, December 31, 2023 | 24,335 |  |  | $ | 5.45 |
Granted | 46,000 |  |  | $ | 12.37 |
Vested | (5,502) |  |  | $ | 5.97 |
Canceled/Forfeited | (2,000) |  |  | $ | 12.46 |
Unvested, September 30, 2024 | 62,833 |  |  | $ | 10.25 |
As of September 30, 2024, there was $0.4 million of unrecognized compensation cost related to unvested options. For each of the three and nine months ended September 30, 2024 and 2023, there was approximately $0.1 million of compensation expense for stock options, respectively. 2019 Equity Incentive Plan The 2019 Equity Incentive Plan, as amended (the “Equity Incentive Plan”), as approved by our shareholders, provides for up to 1,150,000 shares of common stock for issuance in the form of awards. After consideration of the activity described in detail below, a total of 278,113 shares remained available for grant under the Equity Incentive Plan as of September 30, 2024. The following summarizes grants of certain awards made under our Equity Incentive Plan during 2024: • On January 29, 2024, the Compensation Committee awarded Justin Jacobs, our Chief Executive Officer (“CEO”), 31,382 time-vested restricted stock units (“RSUs”) and two performance share unit (“PSUs”) awards, one for 6,494 shares representing a signing bonus and another for 31,382 shares representing an award for 2024 (pro-rated). The RSU awards vest over three years in equal tranches beginning on the one-year anniversary of the grant date. •On March 4, 2024, the Compensation Committee awarded Brian Tucker, our Chief Operating Officer (“COO”), 11,293 time-vested RSUs and 11,293 PSUs. The RSU awards vest over three years in equal tranches beginning on the one-year anniversary of the grant date. •On March 14, 2024, the Compensation Committee awarded Mr. Hazlett, our Chief Technical Officer, 21,984 time-vested RSUs. These RSUs were to vest over three years in equal tranches beginning on the one-year anniversary of the grant date. In connection with Mr. Hazlett’s recent retirement on August 1, 2024, we adjusted the vesting terms of the RSUs to correspond with the term of his post-retirement consulting agreement. •On May 7, 2024 and July 9, 2024 the Compensation Committee awarded certain non-executive employees a combined total of 10,616 time-vested RSUs. These RSUs vest over three years in equal tranches beginning on the one-year anniversary of the grant date. •On June 13, 2024, the Compensation Committee awarded each of our four independent Board members a total 5,620 RSUs, or a total of 22,480 RSUs. One half of these awards, or 11,240 in total, will vest one year from the date of grant and will be settled in shares of common stock. The other 11,240 awards will vest one year from the date of grant and can be settled, at the discretion of the recipients, in cash or shares of common stock. •On September 13, 2024, the Compensation Committee awarded Stephen Taylor, our current Chairman of the Board, a total of 4,195 RSUs for his current Board service, of which 2,098 will vest one year from the date of grant and will be settled in shares of common stock and 2,097 awards will vest one year from the date of grant and can be settled, at the discretion of Mr. Taylor, in cash or shares of common stock. Performance Share Units In connection with the PSUs granted to our CEO and COO as set forth above, potential payout for the PSU award is based upon performance for a three-year period ending December 31, 2026 measured against relative total shareholder return (“TSR”) compared to a peer group of 16 companies as established by the Compensation Committee. The PSU award payout ranges from zero (if the Company ranks below the 31.25 percentile) and up to 200% (if the Company ranks first) based upon our relative TSR performance ranking (subject to certain caps based on absolute TSR). With respect to vesting, the PSUs have both a service condition and a market condition. Due to the presence of the TSR measurement for the common equity of 17 companies, including NGS common stock, which is deemed a “market condition”, the grant-date fair value of the PSUs must be determined using a binomial pricing model. The grant date fair values of $19.59 per unit and $22.48 per unit for the PSUs awarded to the CEO and COO, respectively, were derived by using a Monte Carlo simulation model. The ranges for the assumptions used in the model for the PSUs are presented as follows: (i) expected volatility - 43.4% to 43.8%, (ii) dividend yield - 0% and (iii) risk-free interest rates - 4.09% to 4.39%. The compensation expense associated with the PSUs, similar to stock options, will be recognized over the vesting term of three years whether or not the settlement results in the payout of shares. Cash Settled RSUs The 2024 grant of RSUs to the independent Board members and Mr. Taylor that can be settled in cash represent liability-classified awards. Compensation expense associated with these awards is based upon the fair value of NGS common stock at each reporting period relative to that portion of the service period that has passed. Accordingly, the compensation expense is variable in nature. Time-Vested RSUs A summary of all time-vested RSU activity during the nine months ended September 30, 2024 is 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, 2023 | 133,898 |  |  | $ | 10.66 |  |  | 1.57 |  | $ | 1,813 |
Granted | 88,613 |  |  | $ | 17.67 |  |  |  |  | $ | 1,565 |
Vested | (69,824) |  |  | $ | 10.24 |  |  |  |  | $ | 1,522 |
Canceled/Forfeited | (23,399) |  |  | $ | 11.07 |  |  |  |  | $ | 217 |
Outstanding, September 30, 2024 | 129,288 |  |  | $ | 15.68 |  |  | 4.96 |  | $ | 2,471 |
Total compensation expense related to these and previously granted awards under the Equity Incentive Plan was $0.5 million and $0.2 million for the three months ended September 30, 2024, and 2023, respectively, and $0.9 million and $1.8 million for the nine months ended September 30, 2024 and 2023, respectively.

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