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Shared-Based Compensation | 9 Months Ended
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Sep. 30, 2022
Share-based Payment Arrangement [Abstract] |
Shared-Based Compensation | Share-Based Compensation The following table lists the components of share-based compensation expense by type of award, which is recognized in the “Selling, general, and administrative expense” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Stock options | $ | 37 |  |  | $ | 59 |  |  | $ | 124 |  |  | $ | 207 |
Restricted stock | 471 |  |  | 521 |  |  | 3,233 |  |  | 1,660 |
Performance share units | 483 |  |  | 351 |  |  | 1,189 |  |  | 1,050 |
Change in estimate of share-based award vesting (1) | (684) |  |  | — |  |  | (684) |  |  | (337) |
Share-based compensation expense | $ | 307 |  |  | $ | 931 |  |  | $ | 3,862 |  |  | $ | 2,580 |
_______________________________ (1)Amounts reflect the decrease in share-based compensation expense based on the change in estimate of the probability of vesting of share-based awards. Stock Options The following table presents stock option activity for the nine months ended September 30, 2022.
| Number of Options (in thousands) |  | Weighted- Average Exercise Price (per share) |  | Weighted- Average Remaining Contractual Term |  | Aggregate Intrinsic Value |
Outstanding at January 1, 2022 | 621 |  |  | $ | 12.24 |  |  |  |  |  |
Expired | (79) |  |  | 9.71 |  |  |  |  |  |
Outstanding at September 30, 2022 | 542 |  |  | $ | 12.61 |  |  | 3.6 years |  | $ | — |  | (1)
Exercisable at September 30, 2022 | 515 |  |  | $ | 12.77 |  |  | 3.4 years |  | $ | — |  | (1)
_______________________________ (1)The aggregate intrinsic value is the sum of intrinsic values for each exercisable individual option grant. The intrinsic value is the amount by which the closing market price of our stock at September 30, 2022 was greater than the exercise price of any individual option grant. Restricted Stock During the nine months ended September 30, 2022, we granted 897 thousand shares of restricted stock to non-executive directors, officers and certain other key employees under the NN, Inc. 2019 Omnibus Incentive Plan (“2019 Omnibus Plan”). The shares of restricted stock granted during the nine months ended September 30, 2022, vest pro-rata generally over three years for employees and over one year for non-executive directors. We determined the fair value of the shares awarded by using the closing price of our common stock as of the date of grant. The weighted average grant date fair value of restricted stock granted in the nine months ended September 30, 2022, was $3.31 per share. Total grant date fair value of restricted stock that vested in the nine months ended September 30, 2022, was $2.1 million. The following table presents the status of unvested restricted stock awards as of September 30, 2022 and changes during the nine months then ended.
| Nonvested Restricted Shares (in thousands) |  | Weighted Average Grant-Date Fair Value (per share)
Unvested at January 1, 2022 | 469 |  |  | $ | 7.28 |
Granted | 897 |  |  | 3.31 |
Vested | (291) |  |  | 7.05 |
Forfeited | (11) |  |  | 4.37 |
Unvested at September 30, 2022 | 1,064 |  |  | $ | 4.02 |
Performance Share Units Performance Share Units (“PSUs”) are a form of long-term incentive compensation awarded to executive officers and certain other key employees designed to directly align the interests of employees to the interests of our stockholders, and to create long-term stockholder value. Some PSUs are based on total shareholder return (“TSR Awards”), and other PSUs are based on return on invested capital (“ROIC Awards”). TSR Awards granted in 2022 were made pursuant to the 2019 Omnibus Plan and a Performance Share Unit Agreement (the “2019 Omnibus Agreement”). ROIC Awards granted in 2022 were made pursuant to the NN, Inc. 2022 Omnibus Incentive Plan and a Performance Share Unit Agreement. The TSR Awards vest, if at all, upon our achieving a specified relative total shareholder return, which will be measured against the total shareholder return of a specified index during specified performance periods as defined in the 2019 Omnibus Agreement. The ROIC Awards vest, if at all, upon our achieving a specified average return on invested capital during the performance periods. Each performance period generally begins on January 1 of the year of grant and ends 3 years later on December 31. We recognize compensation expense over the performance period in which the performance and market conditions are measured. If the PSUs do not vest at the end of the performance periods, then the PSUs will expire automatically. Upon vesting, the PSUs will be settled by the issuance of shares of our common stock, subject to the award recipient’s continued employment. The actual number of shares of common stock to be issued to each award recipient at the end of the performance periods will be interpolated between a threshold and maximum payout amount based on actual performance results. No dividends will be paid on outstanding PSUs during the performance period; however, dividend equivalents will be paid based on dividends declared and the number of shares of common stock that are ultimately earned at the end of the performance periods. The following table presents the goals with respect to PSUs granted in 2022.
|  | Threshold Performance (25% of Shares) |  | Target Performance (100% of Shares) |  | Maximum Performance (150% of Shares)
TSR Awards |  | 25th Percentile |  | 55th Percentile |  | 75th Percentile
|  | Threshold Performance (50% of Shares) |  | Target Performance (100% of Shares) |  | Maximum Performance (150% of Shares)
ROIC Awards |  | 6.4% |  | 8.6% |  | 10.0%
We estimate the grant date fair value of TSR Awards using the Monte Carlo simulation model, as the total shareholder return metric is considered a market condition under ASC Topic 718, Compensation – stock compensation. The grant date fair value of ROIC Awards is based on the closing price of a share of our common stock on the date of grant. The following table presents the status of unvested PSUs as of September 30, 2022 and changes during the nine months then ended.
| Nonvested TSR Awards |  | Nonvested ROIC Awards
| Shares (in thousands) |  | Weighted Average Grant-Date Fair Value (per share) |  | Shares (in thousands) |  | Weighted Average Grant-Date Fair Value (per share)
Nonvested at January 1, 2022 | 194 |  |  | $ | 9.59 |  |  | 228 |  |  | $ | 8.14 |
Granted | 382 |  |  | 2.53 |  |  | 408 |  |  | 2.62 |
Nonvested at September 30, 2022 | 576 |  |  | $ | 4.90 |  |  | 636 |  |  | $ | 4.60 |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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