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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2025
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 and further amended on May 14, 2025 (as amended from time to time, the “Plan”). The Plan provides that up to 6,200,000 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 or stock awards. On December 10, 2024, the Board approved and adopted the 2024 Inducement Stock Incentive Plan and reserved 1,500,000 shares of Common Stock for issuance of awards under the 2024 Inducement Stock Incentive Plan. The 2024 Inducement Stock Incentive Plan was approved and adopted without shareholder approval pursuant to NYSE American Guide Rule 711 and provides for grants of non-qualified stock options, restricted stock awards, stock awards, performance share awards and other stock-based awards (each, an “Inducement Award”). The 2024 Inducement Stock Incentive Plan is exclusively for the grant of equity awards to individuals who were not previously employed or directors of the company as an inducement to joint employment with the company. During the three months ended March 31, 2025, the Company granted 22,140 restricted share units and no stock options under the Plan, and 702,358 stock options at a strike price of $15.41 under the 2024 Inducement Stock Incentive Plan. During the three months ended March 31, 2024, the Company granted 29,612 restricted share units and 385,000 stock options at a strike price of $8.34 under the Plan. As of March 31, 2025, there were 430,000 shares available for grant under the Plan and 798,000 shares available for grant under the 2024 Inducement Stock Incentive Plan. Effective May 14, 2025, the 2024 Inducement Stock Incentive Plan was terminated, which means that no further grants can be made under the 2024 Inducement Stock Incentive Plan but existing outstanding awards granted pursuant to this plan continue to be governed by the plan’s terms. Stock-based compensation expense for the three months ended March 31, 2025 and 2024 was $895,000 and $550,000, respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2025 and 2024, the Company issued 17,921 and 19,924 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 March 31, 2025 and 2024, there were no shares issued under the Employee Stock Purchase Plan. As of March 31, 2025, there were 432,059 shares available for purchases under the Employee Stock Purchase Plan.

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