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Note 13 - Stock-based Compensation Plan | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
( 13 ) | STOCK-BASED COMPENSATION PLAN
As of December 31, 2020, we have unvested restricted stock awards and stock options outstanding which were granted under the inTEST Corporation Third Amended and Restated 2014 Stock Plan (the "2014 Stock Plan"). The 2014 Stock Plan was originally approved at our annual meeting of stockholders held on June 25, 2014 and permitted the granting of stock options, restricted stock, stock appreciation rights or restricted stock units for up to 500,000 shares of our common stock to directors, officers, other key employees and consultants. On June 27, 2018, our stockholders approved the amendment and restatement of the 2014 Stock Plan to increase the number of shares of common stock that may be delivered pursuant to awards granted under the 2014 Stock Plan from 500,000 to 1,000,000 shares. On June 19, 2019, our stockholders approved the amendment and restatement of the 2014 Stock Plan to increase the number of shares of common stock that may be delivered pursuant to awards granted under the 2014 Stock Plan from 1,000,000 to 2,000,000 shares. As of December 31, 2020, there were 1,067,979 aggregate shares available to grant under the 2014 Plan. Our unvested restricted stock awards and stock options are accounted for based on their grant date fair value. As of December 31, 2020, total compensation expense to be recognized in future periods is $1,353. The weighted average period over which this expense is expected to be recognized is 2.6 years. The following table summarizes the compensation expense we recorded during 2020 and 2019, related to unvested shares of restricted stock and stock options:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Cost of revenues |  | $ | - |  |  | $ | - |
Selling expense |  |  | 12 |  |  |  | 8 |
Engineering and product development expense |  |  | 42 |  |  |  | 35 |
General and administrative expense |  |  | 617 |  |  |  | 841 |
|  | $ | 671 |  |  | $ | 884 |
There was no compensation expense capitalized in 2020 or 2019. Stock Options We record compensation expense for stock options based on the fair market value of the options as of the grant date. No option may be granted with an exercise period in excess of ten years from the date of grant. Generally, stock options will be granted with an exercise price equal to the fair market value of our stock on the date of grant and will vest over four years. The fair value for stock options granted during 2020 and 2019 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
|  | 2020 |  |  | 2019 |
Risk-free interest rate |  |  | 0.46 | % |  |  | 2.35 | %
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
Expected common stock market price volatility factor |  |  | .44 |  |  |  | .42 |
Weighted average expected life of stock options (years) |  |  | 6.25 |  |  |  | 6.25 |
The per share weighted average fair value of stock options issued during 2020 and 2019 was $1.48 and $2.75, respectively. The following table summarizes the activity related to stock options for the two years ended December 31, 2020:
|  | Number of Shares |  |  | Weighted Average Exercise Price |
Options outstanding, January 1, 2019 |  |  | 264,400 |  |  |  | 7.54 |
Granted |  |  | 249,460 |  |  |  | 6.25 |
Exercised |  |  | - |  |  |  | - |
Canceled |  |  | (7,050 | ) |  |  | 8.45 |
Options outstanding, December 31, 2019 (87,900 exercisable) |  |  | 506,810 |  |  |  | 6.89 |
Granted |  |  | 113,980 |  |  |  | 3.49 |
Exercised |  |  | - |  |  |  | - |
Canceled |  |  | (182,590 | ) |  |  | 6.31 |
Options outstanding, December 31, 2020 (204,630 exercisable) |  |  | 438,200 |  |  |  | 6.25 |
Restricted Stock Awards We record compensation expense for restricted stock awards based on the quoted market price of our stock at the grant date and amortize the expense over the vesting period. Restricted stock awards generally vest over four years for employees and over one year for our independent directors ( 25% at each of March 31, June 30, September 30, and December 31 of the year in which they were granted). On August 24, 2020, our new President and CEO received two restricted stock awards totaling 141,610 shares valued at $650 as of the date of grant, which was also his hire date. Of the total shares awarded, 66,448 shares vest over 4 years ( 25% at each anniversary) and 75,162 vest on the third anniversary of the grant date at a vesting percentage that could range from 0% to 150% of the number of shares awarded on August 24, 2020. The final vesting percentage will be based on the achievement of certain performance metrics, including net revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of December 31, 2020, we have estimated that these shares will vest at 100% of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the three year vesting period. Our estimate of the final expected vesting percentage will be reassessed and adjusted, as needed, at the end of each reporting period. The following table summarizes the activity related to unvested restricted stock awards for the two years ended December 31, 2020:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested shares outstanding, January 1, 2019 |  |  | 114,750 |  |  |  | 6.92 |
Granted |  |  | 132,580 |  |  |  | 6.31 |
Vested |  |  | (69,974 | ) |  |  | 6.60 |
Forfeited |  |  | (12,325 | ) |  |  | 7.14 |
Unvested shares outstanding, December 31, 2019 |  |  | 165,031 |  |  |  | 6.55 |
Granted |  |  | 229,110 |  |  |  | 4.24 |
Vested |  |  | (89,861 | ) |  |  | 5.32 |
Forfeited |  |  | (67,125 | ) |  |  | 6.03 |
Unvested shares outstanding, December 31, 2020 |  |  | 237,155 |  |  |  | 4.93 |
The total fair value of the restricted stock awards that vested during the years ended December 31, 2020 and 2019 was $357 and $426, respectively, as of the vesting dates of these awards.

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