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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation The Company’s Omnibus Equity Incentive Plan permits the granting of options and other stock-based awards (including restricted stock units (“RSUs”), deferred restricted stock units (“DRSUs”) performance-based restricted stock units (“PSUs”) and deferred share units (“DSUs”)). As of December 31, 2023, the aggregate number of shares authorized under the plan since its initial adoption was 15.0 million. Shares issued upon vesting or exercise are new share issuances. Upon the vesting or payment of stock awards, an employee may elect receipt of the full share amount and either pay the resulting taxes or have the Company withhold shares to cover the tax obligation. At December 31, 2023, 9.5 million common stock shares were available for future issuance. Stock-based compensation expense was $4.4 million, $2.3 million and $16.6 million in 2023, 2022 and 2021, respectively. A majority of the expense, $4.0 million in 2023, $2.1 million in 2022 and $14.6 million in 2021, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of goods sold. Stock-based compensation expense for 2021 included $14.7 million, recorded in the second quarter of 2021, due to the Change in Control accelerated vesting provisions of certain of the Company’s awards. For the purpose of these grants, a Change in Control occurred when Brookfield and any affiliates thereof ceased to own stock of the Company that constituted at least thirty percent (30%) or thirty-five percent (35%), as applicable, of the total fair market value or total voting power of the stock of the Company. Out of the $14.7 million recorded with the Change in Control, $0.9 million accelerated at the 35% ownership level and the remaining $13.8 million accelerated at the 30% ownership level. The Company derives a tax deduction measured by the excess of the market value over the grant price at the date stock-based compensation awards are exercised or vest. The Company recognized tax expense of $0.2 million in 2023 and tax benefits of less than $0.1 million and $1.8 million in 2022 and 2021, respectively, relating to the issuance of common stock for the exercise/vesting of equity awards. Stock Options. Non-qualified stock options may be granted to our employees and directors. Stock options granted in 2023 vest over a three-year period, with one-third of the award vesting on the anniversary date of the grant in each of the next three years. Stock options granted prior to 2023 vest over a five-year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the five years following the grant date. All stock options expire 10 years from the date of grant. Stock option exercises are satisfied through the issuance of common shares. Compensation expense for stock options is based on the fair value of the stock option on the date of the grant. We calculate the fair value of stock options using the Black-Scholes option-pricing model. The weighted average assumptions used in our Black-Scholes option pricing model for options granted in 2023, 2022 and 2021 were as follows:
|  | 2023 | 2022 |  | 2021
Dividend yield |  | 0.71% - 0.83% | 0.40% - 0.56% |  | 0.32% - 0.35%
Expected volatility |  | 58.16 | % | 58.14 | % |  | 61.62 | %
Risk-free interest rate |  | 3.60% - 4.10% | 1.93% - 2.89% |  | 1.1% - 1.21%
Expected term in years |  | 6.0 years | 6.5 years |  | 6.5 years
Dividend Yield. Our dividend yield estimate is based on our expected dividends and the stock price on the grant date. Expected Volatility. We estimate the volatility of our common stock at the date of grant based on the historical volatility of the Company’s stock. The volatility factor we use is based on our historical closing prices since our stock has been publicly traded. Risk-Free Interest Rate. We base the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. Expected Term In Years. The expected life of awards granted represents the time period that the awards are expected to be outstanding. We determined the expected term of the grants using the “simplified” method as described by the SEC, since we do not have a history of stock option awards to provide a reliable basis for estimating such term. The following table summarizes activity related to stock options during 2023:
|  | Number of Options |  | Weighted- Average Exercise Price Per Share |  | Aggregate Intrinsic Value (thousands) |  | Weighted Average Remaining Term (Years)
Outstanding at December 31, 2022 |  | 1,890,167 |  |  | $ | 12.30 |  |  |  |  |
Granted |  | 519,482 |  |  | 5.51 |  |  |  |  |
Exercised |  | — |  |  | — |  |  |  |  |
Forfeited or expired |  | (382,038) |  |  | 8.56 |  |  |  |  |
Outstanding at December 31, 2023 |  | 2,027,611 |  |  | $ | 11.27 |  |  | $ | — |  |  | 6.5 years
Vested and Expected to vest as of December 31, 2023 |  | 2,027,611 |  |  | $ | 11.27 |  |  | $ | — |  |  | 6.5 years
Exercisable at December 31, 2023 |  | 1,444,617 |  |  | $ | 12.84 |  |  | $ | — |  |  | 5.7 years
Outstanding options have exercise prices ranging from $4.83 per share to $20.00 per share. A summary of the status and changes of stock options and the related average price per share follows:
|  | Number of Options |  | Weighted- Average Grant Date Fair Value
Outstanding unvested as of December 31, 2022 |  | 429,503 |  |  | $ | 5.42 |
Granted |  | 519,482 |  |  | 3.01 |
Vested |  | (122,221) |  |  | 5.73 |
Forfeited |  | (243,770) |  |  | 3.42 |
Outstanding unvested as of December 31, 2023 |  | 582,994 |  |  | $ | 4.04 |
We recognized stock-based compensation expense of $0.8 million, $0.6 million and $5.9 million in 2023, 2022 and 2021, respectively, relating to stock options. As of December 31, 2023, there was $1.8 million of total unrecognized compensation cost related to unvested stock options, which is expected to be amortized over a weighted average period of 2.7 years. The total fair value of options vested was $0.7 million in 2023, $0.3 million in 2022 and $6.6 million in 2021. There were 25,000 and 39,700 options exercised during 2022 and 2021, respectively. No options were exercised during 2023. Cash received from option exercises during 2022 and 2021 was $0.2 million and $0.4 million, respectively. RSUs - Employees. RSUs constitute an agreement to deliver shares of common stock to the participant at the end of a vesting period. Compensation expense for RSUs is based on the closing price of our common stock on the date of grant, less forfeitures or cancellations of awards throughout the vesting period. RSUs granted in 2023 vest over a three-year period, with one-third of the award vesting on the anniversary date of the grant in each of the next three years. RSUs granted prior to 2023 vest over a five-year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the five years following the grant date. A summary of the status and changes of shares subject to RSU awards for employees and the related average price per share follows:
|  | Number of Shares |  | Weighted- Average Grant Date Fair Value
Outstanding unvested as of December 31, 2022 |  | 477,317 |  |  | $ | 9.72 |
Granted |  | 669,593 |  |  | 5.58 |
Cancelled |  | (164,956) |  |  | 6.54 |
Vested |  | (96,589) |  |  | 9.76 |
Outstanding unvested as of December 31, 2023 |  | 885,365 |  |  | $ | 7.18 |
During 2023, 2022 and 2021, we recognized stock-based compensation expense of $1.7 million, $0.7 million and $10.0 million, respectively, relating to RSU awards for employees. The total fair value of RSU awards vested during 2023, 2022 and 2021 was $0.9 million, less than $0.1 million and $10.8 million, respectively. As of December 31, 2023, $4.8 million of expense with respect to non-vested RSUs has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 2.7 years. PSUs. Beginning in 2023, executive officers and selected other employees receive PSU awards. Payouts, in the form of unrestricted common stock, vary between 0% and 200% based on the degree to which the Company’s total shareholder return relative to a peer group’s performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods with measurement periods after 12-, 24-, and 36-months. No payout will occur unless threshold performance is achieved. The following table summarizes the activity related to PSUs during 2023:
|  | Number of Shares |  | Weighted- Average Grant Date Fair Value
Outstanding as of December 31, 2022 |  | — |  |  | $ | — |
Granted |  | 544,801 |  |  | 7.30 |
Vested |  | — |  |  | — |
Forfeited |  | (196,786) |  |  | 7.43 |
Outstanding as of December 31, 2023 |  | 348,015 |  |  | $ | 7.23 |
The fair value of grants of PSUs is determined using a Monte Carlo valuation. Total compensation expense for PSUs in 2023 was $0.7 million. As of December 31, 2023, there was $1.8 million of unrecognized compensation cost related to PSUs. RSUs and DRSUs - Non-Employee Directors. Beginning in 2023, non-employee directors receive annual grants of service-based RSUs that are expected to vest six months after the date of grant, subject generally to a non-employee director’s continued service on the Company’s Board of Directors. Compensation expense for RSUs and DRSUs is based on the closing price of our common stock on the date of grant, less forfeitures or cancellations of awards throughout the vesting period. Non-employee directors have the option to elect to defer receipt of their vested RSUs and instead be granted service-based DRSUs that are equivalent in value to the RSUs. DRSUs will be paid out either as soon as practicable following the date of termination of the director’s service as a director (but in any event no later than the last day of the calendar year in which such termination occurs) in a single lump sum or in substantially equal 20% installments on the first five annual anniversaries of the date of termination of service as a director. The following table summarizes RSU and DRSU activity during 2023 for our non-employee directors:
|  | Number of Shares |  | Weighted- Average Grant Date Fair Value
Outstanding as of December 31, 2022 |  | — |  |  | $ | — |
Granted |  | 154,894 |  |  | 4.24 |
Vested and delivered |  | (23,971) |  |  | 4.18 |
Outstanding vested and deferred as of December 31, 2023 |  | 130,923 |  |  | $ | 4.25 |
The Company recognized $0.6 million of expense related to these awards in 2023. DSUs. DSUs are primarily granted to our non-employee directors in lieu of cash retainers and vest immediately upon grant. All whole DSUs will be settled in shares of our common stock after the Director's termination of service on the Board and any fractional shares will be settled in cash. The following table summarizes DSU activity during 2023:
|  | Number of Shares |  | Weighted- Average Grant Date Fair Value
Outstanding as of December 31, 2022 |  | 362,640 |  |  | $ | 8.80 |
Granted |  | 152,509 |  |  | 3.59 |
Distributed |  | (137,609) |  |  | 9.34 |
Outstanding vested and deferred as of December 31, 2023 |  | 377,540 |  |  | $ | 6.52 |
During 2023, 2022 and 2021, we recognized stock-based compensation expense of $0.6 million, $1.0 million and $0.7 million, respectively, relating to DSU awards. The total fair value of DSU awards vested was $0.5 million in 2023 and $1.0 million in both 2022 and 2021.

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