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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

12. STOCK-BASED COMPENSATION

 

Stock-Based Compensation

 

On May 11, 2011, the board of directors of the Company adopted the Pioneer Power Solutions, Inc. 2011 Long-Term Incentive Plan (the “2011 Plan”) which was subsequently approved by stockholders of the Company on May 31, 2011. The 2011 Plan replaced and superseded the 2009 Plan. The Company’s outside directors and employees, including the Company’s principal executive officer, principal financial officer and other named executive officers, and certain contractors were all eligible to participate in the 2011 Plan. The 2011 Plan allowed for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which were granted singly, in combination, or in tandem, and upon such terms as determined by the Board or a committee of the Board that was designated to administer the Plan. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that were available to be delivered pursuant to awards under the 2011 Plan was 700,000 shares. As of December 31, 2023, there were no shares available for future grants under the Company’s 2011 Long-Term Incentive Plan. The Company’s 2011 Long-Term Incentive Plan expired during the second quarter of 2021.

 

On October 13, 2021, the Company’s board of directors adopted the 2021 Long-Term Incentive Plan (the “2021 Plan”), subject to stockholder approval, which was obtained on November 11, 2021. The 2021 Plan supplemented the 2011 Plan, which expired on May 11, 2021, and which replaced and superseded the 2009 Plan, as noted above. The Company’s outside directors and its employees, including the principal executive officer, principal financial officer and other named executive officers, and certain contractors are all eligible to participate in the 2021 Plan. The 2021 Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and upon such terms as are determined by the Board or a committee of the board that is designated to administer the 2021 Plan. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan is 900,000 shares plus any increase by any Prior Plan Awards (as defined in the 2021 Plan) eligible for reuse, of which one hundred percent (100%) may be delivered pursuant to incentive stock options. As of December 31, 2023, there were 347,500 shares available for future grants under the Company’s 2021 Plan. The 2021 Plan was initially administered by the Company’s board of directors, but it has been administered by the compensation committee following the creation of such committee in the first quarter of 2022.

 

The fair value of the stock options granted was measured using the Black-Scholes valuation model with the following assumptions:

SCHEDULE OF STOCK OPTION GRANTED MEASURED USING BLACK SCHOLES VALUATION 

   Year Ended December 31, 
   2023   2022 
Expected term (years)  5.0 - 6.0   5.5 
Risk-free interest rate  3.5% - 4.4%   2.9% 
Expected volatility  110.0% - 112.1%   31.1% 
Expected dividends  0.0%  0.0% 

 

A summary of stock option activity for the year ended December 31, 2023 is presented below:

 

   Stock
options		   Weighted average
exercise price		   Weighted
average remaining
contractual term		   Aggregate
intrinsic value		 
Outstanding as of January 1, 2023   670,667   $5.45           
Granted   97,500    5.80           
Exercised   (15,000)   3.31           
Forfeited/Expired   (47,000)   6.16           
Outstanding as of December 31, 2023   706,167   $5.49    5.50   $1,262 
Exercisable as of December 31, 2023   611,167   $5.45    4.90   $1,147 

 

A summary of the weighted-average grant-date fair value of options, total intrinsic value of options exercised, and cash receipts from options exercised is shown below:

 

   2023   2022 
   Year Ended December 31, 
   2023   2022 
Weighted-average fair value of options granted (per share)  $0.97   $1.09 
Intrinsic value gain (loss) of options exercised   52    (6)
Cash receipts from exercise of options   50    17 

 

The following table presents information related to stock options as of December 31, 2023:

 

 Options outstanding    Options exercisable 
      Outstanding    Weighted average    Exercisable 
      number of    remaining life    number of 
 Exercise price    options    in years    options 
$1.68    50,000    6.2    50,000 
$3.17    27,000    8.4    27,000 
$3.31    221,667    7.4    221,667 
$3.68    5,000    2.2    5,000 
$5.25    70,000    0.0    - 
$5.60    6,000    4.3    6,000 
$6.10    10,000    0.0    - 
$7.25    5,000    0.0    - 
$7.30    236,000    3.2    236,000 
$7.49    2,500    9.5    2,500 
$7.61    2,500    0.0    - 
$8.27    5,000    0.0    - 
$8.50    2,500    0.0    - 
$8.98    6,000    1.2    6,000 
$10.21    57,000    0.2    57,000 
      706,167         611,167 

 

A summary of restricted stock unit (“RSU”) activity during the year ended December 31, 2023 is as follows:

 

       Weighted-average   Weighted-average 
       grant-date   grant-date 
   Number of units   fair value per share   fair value 
Unvested restricted stock units as of January 1, 2023   250,000   $4.35   $1,087 
Units granted   100,000    5.75    575 
Units vested   (225,000)   4.97    (1,119)
Units forfeited   -    -    - 
Unvested restricted stock units as of December 31, 2023   125,000   $4.35   $543 

 

During the year ended December 31, 2023, the Company issued 10,000 shares of its common stock for consulting services with a fair value of $65.

 

During the year ended December 31, 2023, the Company issued 100,000 shares of common stock to its Chief Executive Officer (“CEO”) in connection with the vesting of 100,000 RSUs on May 11, 2023. The fair value of the RSUs on the date of grant was $575, which was recognized immediately.

 

During the year ended December 31, 2023, the Company issued 250,000 shares of common stock to its Chief Financial Officer (“CFO”) in connection with the vesting of 125,000 RSUs on May 1, 2022, and 125,000 RSUs on May 1, 2023.

 

During the year ended December 31, 2023, the CEO and CFO each individually agreed to surrender shares of common stock to the Company, totaling an aggregate of 117,082 shares with a fair value of $720 in connection with income and payroll tax obligations paid by the Company in connection with the vesting of the above mentioned RSUs. The shares were cancelled and retired by the Company.

 

Stock based compensation expense recorded for the years ended December 31, 2023 and 2022 was approximately $1,471 and $1,002, respectively. At December 31, 2023, there was $413 of stock-based compensation expense remaining to be recognized in the consolidated statements of operations over a weighted average remaining period of 1.1 years.