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Note 15 - Share-based Payments

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

15. Share-based Payments:

Stock options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatility of the Company's common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant.

Details of stock option transactions for the three months ended September 30, 2022 and September 30, 2021 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

		*Three Months Ended September 30, 2022*								*Three Months Ended September 30, 2021*
		*Number of shares*				*Weighted average exercise price per share*				*Number of shares*				*Weighted average exercise price per share*

Outstanding, beginning of period			1,070,045				59.88				991,097			$	61.81
Granted			24,500				43.80				26,675				76.93
Exercised			(14,142	)			20.53				(46,803	)			46.47
Forfeited			(4,414	)			66.32				(14,087	)			68.95
Expired			(21,312	)			57.96				(648	)			56.40
Outstanding, end of period			1,054,677				60.04				956,234				62.88
Options exercisable, end of period			533,395			$	61.51				470,317			$	54.87

Details of stock option transactions for the nine months ended September 30, 2022 and September 30, 2021 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

		*Nine Months Ended September 30, 2022*								*Nine Months Ended September 30, 2021*
		*Number of shares*				*Weighted average exercise price per share*				*Number of shares*				*Weighted average exercise price per share*

Outstanding, beginning of period			904,151			$	64.36				845,020			$	55.31
Granted			242,980				43.09				265,725				79.18
Exercised			(26,709	)			37.53				(120,828	)			45.36
Forfeited			(35,808	)			72.22				(31,649	)			64.54
Expired			(29,937	)			58.25				(2,034	)			60.17
Outstanding, end of period			1,054,677				60.04				956,234				62.88
Options exercisable, end of period			533,395			$	61.51				470,317			$	54.87

As of September 30, 2022, the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

		*Options outstanding*																*Options exercisable*
Exercise price		*Number outstanding*				*Weighted average exercise price per share*				*Weighted average remaining contractual life (years)*				*Aggregate intrinsic value*				*Number exercisable*				*Weighted average exercise price per share*				*Weighted average remaining contractual life (years)*				*Aggregate intrinsic value*

$21.10 - $21.10			13,750				21.10				0.3				224				13,750				21.10				0.3				224
$40.04 - $48.00			245,230				42.39				6.4				-				7,000				47.29				2.3				-
$51.82 - $59.98			199,883				55.72				2.0				-				194,333				55.72				1.9				-
$60.01 - $68.41			321,827				62.06				3.8				-				225,394				62.66				3.6				-
$70.13 - $79.51			257,487				78.41				5.5				-				89,168				77.75				5.1				-
$80.61 - $82.07			16,500				81.27				6.0				-				3,750				82.07				6.1				-
			1,054,677			$	60.04				4.5			$	224				533,395			$	61.51				3.1			$	224

Total unrecognized compensation cost relating to unvested stock options at September 30, 2022, prior to the consideration of expected forfeitures, is approximately $13.8 million and is expected to be recognized over a weighted average period of 2.5 years.

The Company recorded stock-based compensation of $1.6 million for the three months ended September 30, 2022, and $1.1 million for the three months ended September 30, 2021, respectively.

The Company recorded stock-based compensation of $4.4 million for the nine months ended September 30, 2022, and $3.4 million for the nine months ended September 30, 2021, respectively.

The Company has not capitalized any stock-based compensation expense as part of the cost of an asset.