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SHARE-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Stock Options The Company has issued non-qualified and incentive stock options to employees and non-employee directors. The fair values of these options were estimated on the grant dates using the Black-Scholes option pricing model, which required estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of September 30, 2024 generally vested over a period of 3 years and expire 10 years from the date of grant. The exercise price of these options is $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term was calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk-free interest rate was based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponded to the expected term of the option. The expected volatility was based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield was computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the nine months ended September 30, 2024 and 2023, the Company did not grant stock options. The following table is a summary of our stock option activity (in thousands, except per share data):
| Nine months ended September 30,
| 2024 |  | 2023
| Awards |  | Weighted-Average Exercise Price |  | Awards |  | Weighted-Average Exercise Price
Outstanding at beginning of period | 25 |  |  | $ | 62.20 |  |  | 33 |  |  | $ | 54.98 |
Exercised | (1) |  |  | 27.68 |  |  | (4) |  |  | 27.18 |
Forfeited | (2) |  | 26.52 |  |  | — |  |  | — |
Outstanding at end of the period | 22 |  |  | $ | 66.68 |  |  | 29 |  |  | $ | 58.65 |
Exercisable at end of the period | 22 |  |  | $ | 66.68 |  |  | 29 |  |  | $ | 58.65 |
As of September 30, 2024, the weighted-average remaining contractual life for both the outstanding stock options and exercisable stock options was 3.4 years with an aggregate intrinsic value of $0. There was no unrecognized compensation on the awards for the period ended September 30, 2024. For the nine months ended September 30, 2024 and 2023, the Company received $36 thousand and $105 thousand in cash proceeds from the exercise of stock options, respectively. The total intrinsic value for stock options exercised during the nine months ended September 30, 2024 and 2023 was $15 thousand and $328 thousand, respectively. Restricted Stock The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to 3 years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes our restricted stock activity (in thousands, except per share data):
| Nine months ended September 30,
| 2024 |  | 2023
| Shares |  | Weighted-Average Grant Date Fair Value |  | Shares |  | Weighted-Average Grant Date Fair Value
Outstanding at beginning of period | 114 |  |  | $ | 127.87 |  |  | 60 |  |  | $ | 188.11 |
Granted | 210 |  |  | 32.23 |  |  | 86 |  |  | 97.96 |
Vested | (35) |  |  | 138.46 |  |  | (25) |  |  | 169.46 |
Forfeited | (7) |  |  | 50.98 |  |  | (5) |  |  | 142.11 |
Outstanding at end of the period | 282 |  |  | $ | 57.24 |  |  | 116 |  |  | $ | 127.57 |
The Company withheld approximatel y 11 thousand share s and 10 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the nine months ended September 30, 2024 and 2023, respectively. The total fair value of restricted stock awards vested during the nine months ended September 30, 2024 and 2023 was $1.3 million and $2.6 million, respectively. Market and Performance-based Share Awards The Company has issued market and performance-based share awards in 2022 and 2023 and performance-based share awards in 2020, 2021, and 2024 to certain key executives who were granted deferred shares and may earn between 0% and 250% of the target number depending upon both the Company’s total stockholder return (“TSR”), for those with market conditions, and the Company’s performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s TSR are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period. In the event that management determines that the Company will not reach the previously estimated achievement of the predetermined performance goals established in the grant agreement, any previously recognized expense is reversed in the period in which such a determination is made. Management determined that the market and performance-based share awards granted in March of 2022 and performance-based share awards granted in October of 2021 would not reach the previously estimated achievement of the predetermined performance goals resulting in a reversal of previously recorded share-based compensation expense of $1.4 million and $0.1 million, respectively, for the nine months ended September 30, 2023. Management also determined that the market and performance-based share awards granted in March of 2023 would not reach the previously estimated achievement of the predetermined performance goals resulting in a reversal of previously recorded share-based compensation expense of $1.4 million for the three and nine months ended September 30, 2024. The Company withheld 8 thousand shares and 22 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of performance-based share awards for the nine months ended September 30, 2024 and 2023, respectively. The total fair value of performance-based share awards issued during the nine months ended September 30, 2024 and 2023 was $1.3 million and $5.7 million, respectively. Share-based compensation expense for all types of awards granted is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The total expense during the three months ended September 30, 2024 and 2023 was as follows (in thousands):
| Three months ended September 30,
| 2024 |  | 2023
| Shares |  | Share-Based Compensation Expense (Reversal) |  | Shares |  | Share-Based Compensation Expense
Options and restricted stock | 304 |  |  | $ | 1,626 |  |  | 145 |  |  | $ | 1,558 |
Performance-based share awards granted in 2024 | 117 |  |  | 375 |  |  | — |  |  | — |
Market and performance-based share awards granted in 2023 | 47 |  |  | (1,395) |  |  | 47 |  |  | 487 |
Market and performance-based share awards granted in 2022 | 24 |  |  | — |  |  | 24 |  |  | — |
Performance-based share awards granted in 2021 | 1 |  |  | — |  |  | 14 |  |  | 620 |
Performance-based share awards granted in 2020 | — |  |  | — |  |  | 28 |  |  | 10 |
Total share-based compensation | 493 |  |  | $ | 606 |  |  | 258 |  |  | $ | 2,675 |
The total expense during the nine months ended September 30, 2024 and 2023 was as follows (in thousands):
| Nine months ended September 30,
| 2024 |  | 2023
| Shares |  | Share-Based Compensation Expense (Reversal) |  | Shares |  | Share-Based Compensation Expense
Options and restricted stock | 304 |  |  | $ | 4,943 |  |  | 145 |  |  | $ | 4,426 |
Performance-based share awards granted in 2024 | 117 |  |  | 823 |  |  | — |  |  | — |
Market and performance-based share awards granted in 2023 | 47 |  |  | (431) |  |  | 47 |  |  | 1,048 |
Market and performance-based share awards granted in 2022 | 24 |  |  | — |  |  | 24 |  |  | (1,388) |
Performance-based share awards granted in 2021 | 1 |  |  | (104) |  |  | 14 |  |  | 1,600 |
Performance-based share awards granted in 2020 | — |  |  | — |  |  | 28 |  |  | 109 |
Total share-based compensation | 493 |  |  | $ | 5,231 |  |  | 258 |  |  | $ | 5,795 |
The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Operations for stock awards was $0.2 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively, and the income tax expense of $0.2 million and income tax benefit of $0.4 million for the nine months ended September 30, 2024 and 2023, respectively. There was $8.9 million of total unrecognized compensation expense related to restricted stock awards as of September 30, 2024, which is expected to be recognized over a weighted-average period of 1.82 years. There was $4.2 million of unrecognized compensation expense related to the 71 thousand market and performance-based shares and 118 thousand performance-based shares presented in the table above as of September 30, 2024, which is expected to be recognized over a weighted-average period of 1.72 years.

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