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Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2024
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-Based Compensation |
7. | Stock-Based Compensation
In 2008, the Company adopted a Stock Incentive Plan. This Stock Incentive Plan was amended and restated effective as of May 14, 2024 (as amended from time to time, the “Plan”) and provides that up to 5,400,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), shall be allocated for issuance to directors, officers, employees and consultants of the Company. Grants under the Plan may be made in the form of stock options, stock appreciation rights, performance share awards, restricted stock awards shares or stock awards. During the three months ended September 30, 2024, the Company granted 10,518 restricted share units and zero stock options under the Plan. During the three months ended September 30, 2023, the Company granted no shares under the Plan. During the nine months ended September 30, 2024, the Company granted 40,130 restricted share units and 525,000 stock options at an average strike price of $8.41 under the Plan. During the nine months ended September 30, 2023, the Company granted 19,924 restricted share units and 125,000 stock options at an average strike price of $11.24 under the Plan. As of September 30, 2024 there were 372,000 shares of Common Stock available for grants under the Plan. Stock-based compensation expense for the three months ended September 30, 2024 and 2023 was $542,000 and $824,000, respectively, and for the nine months ended September 30, 2024 and 2023 was $1.6 million and $2.5 million, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2024, the Company issued 17,281 and 87,924 shares, respectively, related to the grant of restricted share units and the exercise of stock options. During the three and nine months ended September 30, 2023, the Company issued zero and 17,804 shares, respectively, related to the grant of restricted share units and the exercise of stock options. In October 2018, the Board of Directors of the Company approved the Mastech Digital, Inc. 2019 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Employee Stock Purchase Plan is intended to meet the requirements of Section 423 of the Code and was approved by the Company’s shareholders to be qualified. On May 15, 2019, the Company’s shareholders approved the Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan, 600,000 shares of Common Stock (subject to adjustment upon certain changes in the Company’s capitalization) are available for purchase by eligible employees who become participants in the Employee Stock Purchase Plan. The purchase price per share is 85% of the lesser of (i) the fair market value per share of Common Stock on the first day of the offering period, or (ii) the fair market value per share of Common Stock on the last day of the offering period. The Company’s eligible full-time employees are able to contribute up to 15% of their base compensation into the Employee Stock Purchase Plan, subject to an annual limit of $25,000 per person. Employees are able to purchase Company Common Stock at a 15% discount to the lower of the fair market value of the Company’s Common Stock on the initial or final trading dates of each six-month offering period. Offering periods begin on January 1 and July 1 of each year. The Company uses the Black-Scholes option pricing model to determine the fair value of Employee Stock Purchase Plan share-based payments. The fair value of the six-month “look-back” option in the Company’s Employee Stock Purchase Plan is estimated by adding the fair value of 15% of one share of stock to 85% of the fair value of an option on one share of stock. The Company utilized U.S. Treasury yields as of the grant date for its risk-free interest rate assumption, matching the Treasury yield terms to the six-month offering period. The Company utilized historical company data to develop its dividend yield and expected volatility assumptions. During the three months ended September 30, 2024 and 2023, there were no shares issued under the Employee Stock Purchase Plan. During the nine months ended September 30, 2024 and 2023, there were 21,329 shares and 17,890 shares issued under the Employee Stock Purchase Plan at a share price of $6.38 and $8.40, respectively. Stock-based compensation expense related to the Employee Stock Purchase Plan for the three months ended September 30, 2024 and 2023 totaled $11,000 and $10,000, respectively. Stock-based compensation expense related to the Employee Stock Purchase Plan for the nine months ended September 30, 2024 and 2023 totaled $65,000 and $78,000, respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024 and 2023. As of September 30, 2024, there were 445,590 shares available for purchases under the Employee Stock Purchase Plan.

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