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Share Based Compensation Plan

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

16	SHARE-BASED COMPENSATION PLAN

The Company’s Share-Based Compensation Plan (the “Plan”), dated January 1, 2010 was most recently approved by Shareholders on June 14, 2018. The Plan provides that the number of Common Shares reserved for issuance upon the exercise or redemption of awards granted under the Plan is a rolling maximum of ten percent (

%) of the outstanding Common Shares at any point in time. Approximately 2,074,000 shares remain available for issuance at December 31, 2019.

Stock options have been granted with an exercise price equal to the fair market value of the common stock on the date of grants and have a

ten-year

contractual term. The stock options vest ratably over a

year period. Compensation expense is recognized on a straight-line basis.

The fair market value of stock options is estimated using the Black-Scholes-Merton valuation model and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatilities of the weekly closing price of the Company’s common stock; the expected term of options granted is based historical exercises and forfeitures; the risk-free interest rate is based on

Canadian Treasury

bonds issued with similar life terms to the expected life of the grant; and the expected dividend yield is based on the current annual dividend amount divided by the stock price on the date of grant. Forfeitures are recorded when incurred.

The following key assumptions were used in the valuation model to value stock option grants for each respective period:


	2019			2018			2017
Expected volatility		60.7	%		55.5	%		50.8	%
Dividend		$nil			$nil			$nil
Risk-free interest rate		1.86	%		2.30	%		1.43	%
Expected life		5.7 years			5.9 years			6.0 years
Fair value		CA$9.7259			CA$3.2541			CA$3.1869

Stock option transactions under the Company’s plan for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2017		2,116,065			CA$1.19		6.24
Granted during 2017		320,000			CA$4.04		9.71
Exercised during 2017		(91,667	)		CA$0.90		4.09
Forfeited/expired during 2017		(6,666	)		CA$1.48
Outstanding at December 31, 2017		2,337,732			CA$1.59		5.89	$	14,125
Exercisable at December 31, 2017		1,752,739			CA$1.20		4.86	$	11,295
Granted during 2018		203,000			CA$5.79		9.44
Exercised during 2018		(365,733	)		CA$0.98		2.68
Forfeited during 2018		(10,000	)		CA$1.48
Outstanding at December 31, 2018		2,164,999			CA$2.10		5.69	$	5,553
Exercisable at December 31, 2018		1,648,670			CA$1.43		4.74	$	5,012
Granted		510,000			CA$16.32		9.19
Exercised		(212,332	)		CA$1.29		4.85
Forfeited		(10,001	)		CA$2.20

Outstanding at December 31, 2019		2,452,666			CA$5.12		5.60	$	11,435

Exercisable at December 31, 2019		1,707,337			CA$1.78		4.18	$	10,736

The weighted-average grant-date fair value of options granted during the years 2019, 2018 and 2017 was $9.58, $3.22 and $2.09, respectively. The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017, was $1,999, $2,162 and $219, respectively.

A summary of the status of the Company’s

non-vested

stock options, and the changes during the year ended December 31, 2019, is presented below:

Number of
Options

Weighted
Average Grant
Date Fair
Value

Aggregate
Intrinsic Value

Non-vested

at January 1, 2019

516,329

CA$2.27

Granted

510,000

CA$9.58

Vested

(270,999

)

CA$1.89

Forfeited

(10,001

)

CA$1.06

Non-vested

at December 31, 2019

745,329

CA$7.43

CA$699

As of December 31, 2019, there was $855 of total unrecognized compensation cost related to

non-vested share-based

compensation arrangements granted under the stock option plan; that cost is expected to be recognized over a period of 8.98 years.

The Company has

also

issued performance-based restricted share units to Village Farms employees involved with future developments of the Company. Once a performance target is met and the share units are deemed earned and vested, compensation expense is recognized, based on the fair value of the share units on the grant date.

Performance-based restricted share unit activity for the years ended December 31, 2019, 2018 and 2017 is as follows


	Number of Performance-based Restricted Share Units			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017		—
Issued		885,000			CA$2.20
Issued		21,000			CA$6.00
Exercised		(768,000	)		CA$2.20
Forfeited/expired		(10,000	)		CA$2.20
Outstanding at December 31, 2017		128,000			CA$2.82
Earned but unissued at December 31, 2017		—			—
Issued		979,000			CA$5.79
Exercised		(50,334	)		CA$3.06
Forfeited		—			—
Outstanding at December 31, 2018		1,056,666			CA$5.56
Earned but unissued at December 31, 2018		175,333			CA$5.08
Issued		355,000			CA$14.94
Exercised		(442,666	)		CA$7.82
Forfeited/expired		(230,000	)		CA$12.90
Outstanding at December 31, 2019		739,000			CA$6.58
Earned but unis s ued at December 31, 2019		30,000			CA$12.87

A summary of the status of the Company’s

non-vested

performance-based restricted share units, and the changes during the year ended December 31, 2019, is presented below:


	Number of Performance-based Restricted Share Units			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2019		881,333			CA$5.63
Granted		355,000			CA$14.94
Vested		(297,333	)		CA$7.54
Forfeited		(230,000	)		CA$12.90

Non-vested at December 31, 2019		709,000			CA$10.21

Total

share-based

compensation expense for the years ended December 31, 2019, 2018 and 2017 of $4,714, $1,454 and $1,519, respectively, was recorded in selling, general and administrative expenses and the corresponding amount credited to additional paid in capital.