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Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

16. Stock-Based Compensation

The Company’s compensation program comprises three main elements: base salary, an annual short-term incentive plan (“STIP”) cash award, and long-term equity-based incentive compensation (“LTIP”) in the form of PSUs, RSUs, stock options, and DSUs.

The Gold Resource Corporation 2016 Equity Incentive Plan (the “Incentive Plan”) allows for the issuance of up to 5 million shares of common stock in the form of incentive and non-qualified stock options, stock appreciation rights, RSUs, stock grants, stock units, performance shares, PSUs, and performance cash. Additionally, pursuant to the terms of the Incentive Plan, any award outstanding under the prior plan that is terminated, expired, forfeited, or canceled for any reason, will be available for grant under the Incentive Plan.

The Company’s STIP provides for annual cash payable upon achievement of specified performance metrics for its management team. As of December 31, 2022, we accrued $1.0 million payable in cash related to the STIP program. As of December 31, 2021, we accrued $0.7 million related to the program.

Stock-Based Compensation Expense

Stock-based compensation expense for stock options, RSUs, PSUs, and DSUs is as follows:


	For the year ended December 31,
	2022			2021

	(in thousands)
Stock options	$	646		$	549
Restricted stock units		631			120
Performance stock units		332			-
Deferred stock units		346			206
Total	$	1,955		$	875

The estimated unrecognized stock-based compensation expense from unvested options and RSUs, as of December 31, 2022, was approximately $0.5 million and $0.9 million, respectively, and is expected to be recognized over the remaining vesting periods of up to three years. As DSUs are vested immediately at grant, the full amount of fair value is recognized as expense at the time of grant. In addition, a mark-to-market adjustment due to fluctuation of share price is recognized at the end of each period related to the DSUs. The fair value of the PSUs is recognized over their vesting period of three years, and similarly to the DSUs, a mark-to-market adjustment due to fluctuation of the share price, as well as due to changes in the performance, is recognized at the end of each period related to the proportionate number of units based on passage of time.

Stock Options

A summary of stock option activity under the Incentive Plan for the years ended December 31, 2022 and 2021 is presented below:


		Shares		Weighted Average Exercise Price (per share)			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (thousands)
Outstanding as of December 31, 2020		4,173,168		$	6.83		3.58		$	1,324
Granted		600,000			3.22		-
Exercised		(253,335)			1.31		-
Expired		(2,035,966)			9.14		-
Forfeited		(29,167)			5.89		-
Outstanding as of December 31, 2021		2,454,700		$	4.62		4.58		$	109
Granted		320,816			2.41		-
Exercised		(355,000)			1.31		-
Expired		(945,200)			7.78		-
Forfeited		-					-
Outstanding as of December 31, 2022		1,475,316		$	2.90		7.38		$	18

Vested and exercisable as of December 31, 2022		894,769		$	2.85		6.70		$	18

During the years ended December 31, 2022 and 2021, stock options of 320,816 and 600,000, respectively, were granted. The weighted-average fair value of options per share granted during the years ended December 31, 2022 and 2021 was $1.06 and $1.65, respectively. The total intrinsic value of options exercised during the years ended December 31, 2022 and 2021, was $0.1 million and $0.1 million, respectively. The total fair value of options vested during the years ended December 31, 2022 and 2021 was $1.0 million and $0.3 million, respectively.

Stock options of 355,000 were exercised during the year ended December 31, 2022. These exercises were settled in cash. 253,335 options were exercised during the year ended December 31, 2021, at a weighted average exercise price of $1.31 per share. For these exercises, 237,719 shares of the Company’s common stock were issued. For the remaining 15,616 options, no common shares were issued because of cashless exercise.

The following table summarizes information about stock options outstanding at December 31, 2022:


		Outstanding							Exercisable
Range of Exercise Prices		Number of Options		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price (per share)			Number of Options		Weighted Average Exercise Price (per share)
$0.00 - $2.50		540,816		7.51		$	2.19		326,937		$	2.05
$2.51 -$5.00		898,000		7.54		$	3.20		531,332		$	3.11
$5.01 - $7.50		36,500		1.57		$	6.18		36,500		$	6.18
		1,475,316		7.38		$	2.90		894,769		$	2.85

The assumptions used to determine the value of stock-based awards under the Black-Scholes method are summarized below:


		For the year ended December 31,
		2022			2021
Risk-free interest rate		2.13	%		0.55	%
Dividend yield		1.66	%		0.26	%
Expected volatility		56.39	%		64.71	%
Expected life in years		5			6

Restricted Stock Units

A summary of RSU activity under the Incentive Plan for the years ended December 31, 2022 and 2021 is presented below:


		Shares		Aggregate Intrinsic Value (thousands)			Weighted Average Remaining Contractual Term (in years)
Nonvested as of December 31, 2020		349,865		$	1,017		4.87
Granted		2,614					-
Vested		(75,262)					-
Forfeited		(171,418)					-
Nonvested as of December 31, 2021		105,799		$	165		1.07
Granted		611,681					-
Vested and redeemed		(80,169)					-
Vested but not redeemed (deferred)		(39,298)
Forfeited		(22,465)					-
Nonvested as of December 31, 2022		575,548		$	881		1.04

RSUs of 611,681 and 2,614, respectively, were granted during the years ended December 31, 2022 and 2021. The weighted-average fair value per share of RSUs granted during the years ended December 31, 2022 and 2021 was $1.97 and $2.56, respectively. The grant date fair value of RSUs is determined by the 20-day volume weighted average price of the Company’s common shares at grant date. The total intrinsic value of RSUs vested during the years ended December 31, 2022 and 2021 was $0.3 million and $0.1 million, respectively.

Performance Stock Units

Starting in 2022, the Company’s Board of Directors approved granting performance share units to the Company’s management team. PSUs cliff vest in three years based on the relative total shareholder return of a predetermined peer group and are expected to be settled in cash. These awards contain a cash settlement feature and are therefore classified as

liability and are marked to fair value each reporting period. As of December 31, 2022, the non-current liability balance related to PSUs was $0.3 million.

PSUs of 695,041 were granted during the year ended December 31, 2022, with weighted-average fair value of $1.99 per unit. The grant date fair value of PSUs is determined by the 20-day volume weighted average price of the Company’s common shares at grant date. No PSUs were granted before 2022, and no PSUs were vested, redeemed, or forfeited during the year.

Deferred Stock Units

Effective January 1, 2021, the Company’s Board of Directors, on the recommendation of the Compensation Committee, implemented a program to issue deferred stock units to members of the Company’s Board of Directors. Additionally, members of the Board may elect, at the beginning of each year, that portion of their board fees be paid in DSUs rather than in cash. DSUs are qualifying instruments under the terms of the Company’s Incentive Plan, and therefore, do not require additional shareholder approval. The vesting and settlement terms of the DSUs are determined by the Compensation Committee at the time the DSUs are awarded.

DSUs are vested immediately at grant and are redeemable in cash or shares—at the discretion of the Company—at the earlier of 10 years or upon the eligible directors’ termination and expected to be paid in cash. Termination is deemed to occur on the earliest of (1) the date of voluntary resignation or retirement of the director from the Board; (2) the date of death of the director; or (3) the date of removal of the director from the Board whether by shareholder resolution, failure to achieve re-election, or otherwise; and on which date the director is not a director or employee of the Company or any of its affiliates. These awards contain a cash settlement feature and are therefore classified as a liability and are marked to fair value each reporting period. As of December 31, 2022 and 2021, respectively, the Company has $0.6 million and $0.2 million of other non-current liability related to the DSUs, based on the fair value of the Company’s stock price.

DSUs of 214,357 and 130,000 were granted to the Board of Directors during the years ended December 31, 2022 and 2021, respectively. Additionally, DSUs of 14,382 and 1,960 were granted to the Board of Directors in lieu of board fees at their request during the years ended December 31, 2022 and 2021, respectively. The weighted-average grant date fair value per share of DSUs granted during the years ended December 31, 2022 and 2021 was $2.93 and $3.21, respectively. The grant date fair value of DSUs is determined by the 20-day volume weighted average price of the Company’s common shares at grant date. No DSUs were granted before 2021, and no DSUs were redeemed or forfeited during the year.