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Stock Based Compensation

9 Months Ended

Sep. 30, 2021

Note 7 - Stock Based Compensation

Employee Stock Incentive Plan

In December 2019, our Board approved the 2019 HireQuest, Inc. Equity Incentive Plan (the “2019 Plan”). Subject to adjustment in accordance with the terms of the 2019 Plan, no more than 1,500,000 shares of common stock are available in the aggregate for the grant of awards under the 2019 Plan. No more than 1,000,000 shares may be issued in the aggregate pursuant to the exercise of incentive stock options. In addition, no more than 250,000 shares may be issued in the aggregate to any employee or consultant, and no more than 50,000 shares may be issued in the aggregate to any non-employee director in any twelve-month period. Shares of common stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. The 2019 Plan was approved by our shareholders in June 2020 and became effective as of that date.

In September 2019, our Board approved a share purchase match program to encourage ownership and further align the interests of key employees and directors with those of our shareholders. Under this program, we will match 20% of any shares of our common stock purchased on the open market by or granted in lieu of cash compensation to key employees and directors up to $25,000 in aggregate value per individual within any calendar year. These shares vest on the second anniversary of the date on which the matched shares were purchased if the individual is still employed by the Company and certain other vesting criteria are met. During the first nine months of 2021, we issued approximately 5,000 shares valued at approximately $73,000 under this program. During 2020, we issued approximately 20,000 shares valued at approximately $118,000 under this program.

Thus far in 2021, we have issued 45,929 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $913,000 to members of our Board of Directors for their services in lieu of cash compensation. Of these, 43,274 shares vested equally over the following three months. The remaining 2,655 shares were issued pursuant to our share purchase match program.

Also in 2021, we issued 50,000 shares of restricted common stock to key employees pursuant to the 2019 Plan valued at approximately $919,000 for services, and to encourage retention. These shares vest over four years, with 50% vesting on their second anniversary, and 6.25% vesting each quarter thereafter for the next eight quarters. Also in 2021, we issued 2,280 shares of restricted common stock to certain employees and board members pursuant to our share purchase match program valued at approximately $34,000.

In 2020, we issued 81,943 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $539,000 to members of our Board of Directors for their services in lieu of cash compensation. Of these, 61,868 shares vested equally over the following three months. The remaining 20,075 shares were issued pursuant to our share purchase match program.

Also in 2020, we issued 25,000 shares of restricted common stock to an employee pursuant to the 2019 Plan valued at approximately $179,000 for services, and to encourage retention. These shares vest over four years, with 50% vesting on September 11, 2021, and 6.25% vesting each quarter thereafter for the next eight quarters. Also in 2020, we issued 1,742 shares of restricted common stock to certain employees pursuant to our share purchase match program valued at approximately $12,000.

The following table summarizes our restricted stock outstanding at December 31, 2020, and changes during the nine months ended September 30, 2021.

	Shares			Weighted average grant date price
Non-vested, December 31, 2020		267,507			7.21
Granted		98,209			19.00
Vested		(154,227	)		10.64
Non-vested, September 30, 2021		211,489			10.26

Stock options that were outstanding at Command Center were deemed to be issued on the date of the Merger. Outstanding awards continue to remain in effect according to the terms of the Command Center 2008 Plan, the Command Center 2016 Plan, and the corresponding award documents. There were approximately 17,000 and 15,000 stock options vested at September 30, 2021 and December 31, 2020, respectively.

The following table summarizes our stock options outstanding at December 31, 2020, and changes during the nine months ended September 30, 2021:

	Number of shares underlying options		Weighted average exercise price per share		Weighted average grant date fair value
Outstanding, December 31, 2020		17,082	$	6.10	$	3.36
Granted		-		-		-
Outstanding, September 30, 2021		17,082		6.10		3.36

The following table summarizes our non-vested stock options outstanding at December 31, 2020, and changes during the nine months ended September 30, 2021:

	Number of shares underlying options			Weighted average exercise price per share		Weighted average grant date fair value
Non-vested, December 31, 2020		2,188		$	5.50	$	3.05
Vested		(2,188	)		5.50		3.05
Non-vested, September 30, 2021		-			-		-

The following table summarizes information about our outstanding stock options, and reflects the intrinsic value recalculated based on the closing price of our common stock of $19.33 at September 30, 2021:

		Number of shares underlying options				Weighted average exercise price per share				Weighted average remaining contractual life (years)				Aggregate intrinsic value
Outstanding and exercisable			17,082			$	6.10				4.92			$	226,079

At September 30, 2021, there was unrecognized stock-based compensation expense totaling approximately $1.3 million relating to non-vested restricted stock grants that will be recognized over the next 3.9 years.