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STOCK-BASED COMPENSATION PLANS | 12 Months Ended
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Dec. 31, 2023
STOCK-BASED COMPENSATION PLANS |
STOCK-BASED COMPENSATION PLANS | (9) STOCK-BASED COMPENSATION PLANS Zynex, Inc. 2017 Stock Incentive Plan In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,500,000 shares reserved for issuance. Awards permitted under the 2017 Stock Plan include stock options and restricted stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. The 2017 Stock Plan mandates a maximum award term of 10 years and stipulates that stock options be granted with prices not less than fair market value on the date of grant. Stock option awards generally vest over four years. Restricted stock awards typically vest quarterly over three years for grants issued to members of our Board of Directors and quarterly or annually over two to four years for grants issued to employees. For stock option awards, all awards granted under the 2017 Stock Plan are stock-settled with common stock issued upon exercise. For restricted stock awards, shares are issued to the recipient upon grant with a restrictive legend and are not included in the calculation of outstanding shares until vesting occurs. At December 31, 2023, there were 3.4 million shares available for future grants under the 2017 Stock Plan. Zynex, Inc. 2005 Stock Option Plan The 2005 Stock Option Plan (the “2005 Stock Plan”) expired as of December 31, 2014. Vesting provisions of the expired plan were to be determined by the Board of Directors. All stock options under the 2005 Stock Plan expire no later than ten years from the date of grant. Options granted in 2015, 2016, and through May 2017 prior to the approval of the 2017 Stock Incentive Plan were approved and certified by the Board of Directors on September 6, 2017 under the existing 2005 Stock Plan. ​ As of December 31, 2023, the Company had the following stock options outstanding and exercisable: ​
​ | ​ | ​ | ​ | ​
​ |  | ​ |  | ​
​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding Number of Options | ​ | Exercisable Number of Options
​ | ​ | (in thousands) | ​ | (in thousands)
Plan Category |  |  |  |
2005 Stock Option Plan |  | 2 | ​ | 2
2017 Stock Option Plan |  | 347 | ​ | 347
Total |  | 349 | ​ | 349
​ The Company received $0.1 million cash proceeds related to option exercises during the year ended December 31, 2023. The Company received cash proceeds of $0.1 million related to option exercises during the year ended December 31, 2022. During the year ended December 31, 2023, no stock option awards were granted under the 2017 Stock Plan. During the year ended December 31, 2022, 0.2 million stock option awards were granted under the 2017 Stock Plan. The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions during the year ended December 31, 2022. ​
​ | ​ | ​ | ​
Weighted average expected term |  | 3 years | ​
Weighted average volatility |  | 73 | %
Weighted average risk-free interest rate |  | 2.81 | %
Dividend yield |  | 0 | %
​ The weighted average expected term of stock options represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The weighted average expected volatility is based on the historical price volatility of the Company’s common stock. The weighted average risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. Forfeitures are accounted for as they occur. The following table summarizes stock-based compensation expenses recorded in the condensed consolidated statements of income (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | For the Years Ended December 31,
​ |  | 2023 |  | 2022
Cost of Revenue | ​ | $ | 34 | ​ | $ | 47
Sales and marketing expense | ​ |  | 253 | ​ |  | 191
General, and administrative | ​ | ​ | 2,009 | ​ | ​ | 2,104
Total stock-based compensation expense | ​ | $ | 2,296 | ​ | $ | 2,342
​ The excess tax benefit associated with our stock-based compensation plans for the years ended December 31, 2023 and 2022 was minimal in both periods. A combined summary of stock option activity for all plans for the years ended December 31, 2023 and 2022 is presented below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted- | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted- | ​ | Average | ​ | Aggregate
​ | ​ | Number of | ​ | Average | ​ | Remaining | ​ | Intrinsic
​ | ​ | Shares | ​ | Exercise | ​ | Contractual | ​ | Value
​ |  | (in thousands) |  | Price |  | Term (Years) |  | (in thousands)
Outstanding at December 31, 2021 |  | 765 | ​ | $ | 1.36 | ​ | 4.68 |  | ​ | 5,896
Granted |  | 200 | ​ | $ | 6.23 | ​ | ​ |  | ​ | ​
Exercised |  | (157) | ​ | $ | 0.66 | ​ | ​ |  | ​ | ​
Forfeited |  | (15) | ​ | $ | 4.18 | ​ | ​ |  | ​ | ​
Outstanding at December 31, 2022 |  | 793 | ​ | $ | 2.67 | ​ | 5.03 | ​ | $ | 8,908
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Granted |  | — | ​ | $ | — | ​ | ​ | ​ |  | ​
Forfeited | ​ | (206) | ​ | $ | 6.30 | ​ | ​ | ​ | ​ | ​
Exercised |  | (238) | ​ | $ | 0.79 | ​ | ​ | ​ |  | ​
Outstanding at December 31, 2023 |  | 349 | ​ | $ | 1.82 | ​ | 4.12 | ​ | $ | 3,163
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Exercisable at December 31, 2023 |  | 349 | ​ | $ | 1.82 | ​ | 4.12 | ​ | $ | 3,163
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Outstanding |  | Weighted average |  |  | ​ |  |  |  | Remaining |  |  | ​
​ | ​ | Number of | ​ | Remaining | ​ | ​ | ​ | ​ | Exercisable | ​ | Exercisable | ​ | Weighted Average
​ | ​ | Options | ​ | Contractual | ​ | Weighted Average | ​ | Number of | ​ | Contractual | ​ | Exercisable
Range | ​ | (in thousands) | ​ | Life (years) | ​ | Strike Price | ​ | Options (in thousands) | ​ | Life (years) | ​ | Strike Price
$0 to $2.00 |  | 145 | ​ | 3.43 | ​ | ​ | 0.43 | ​ | 145 | ​ | 3.43 | ​ | ​ | 0.43
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
$2.01 to $4.00 |  | 198 | ​ | 4.59 | ​ | ​ | 2.66 | ​ | 198 | ​ | 4.59 | ​ | ​ | 2.66
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
$4.01 to $10.00 |  | 6 | ​ | 5.72 | ​ | ​ | 8.13 | ​ | 6 | ​ | 5.72 | ​ | ​ | 8.13
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 349 |  | 4.12 | ​ | $ | 1.82 |  | 349 |  | 4.12 | ​ | $ | 1.82
​ A summary of our unvested stock options as of December 31, 2023 and 2022 and related activity is presented below: ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | Non-vested |  |  | ​
​ | ​ | Shares | ​ | Weighted
​ | ​ | Under | ​ | Average
​ | ​ | Option | ​ | Grant Date
​ | ​ | (in thousands) | ​ | Fair Value
Non-vested at December 31, 2021 |  | 95 | ​ | $ | 3.85
Granted |  | 200 | ​ |  | 6.23
Vested |  | (49) | ​ |  | 4.12
Forfeited |  | (9) | ​ |  | 5.49
Non-vested at December 31, 2022 |  | 237 | ​ | $ | 5.90
Granted |  | — | ​ |  | —
Vested |  | (31) | ​ |  | 3.18
Forfeited |  | (206) | ​ |  | 6.30
Non-vested at December 31, 2023 |  | — | ​ | $ | —
​ A summary of restricted stock award activity under the 2017 Stock Plan for the years ended December 2023 and 2022 are presented below: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Number of | ​ | ​
​ | ​ | Shares |  | Weighted Average
​ |  | (in thousands) |  | Grant Date Fair Value
Outstanding at December 31, 2021 |  | 454 | ​ | $ | 13.69
Granted |  | 194 | ​ | ​ | 8.52
Forfeited |  | (165) | ​ | ​ | 12.90
Vested |  | (52) | ​ | ​ | 10.60
Outstanding at December 31, 2022 | ​ | 431 | ​ | $ | 11.92
Granted | ​ | 286 | ​ | ​ | 9.54
Forfeited | ​ | (13) | ​ | ​ | 11.13
Vested | ​ | (202) | ​ | ​ | 11.56
Outstanding at December 31, 2023 |  | 502 | ​ | $ | 10.73
​ The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. The vesting on the Restricted Stock Awards typically occurs quarterly over three years for the Board of Directors and quarterly or annually over two to four years for employees. As of December 31, 2023, there was approximately $4.4 million of total unrecognized compensation costs related to unvested stock options and restricted stock. These costs are expected to be recognized over a weighted average period of 2.3 years. The total intrinsic value of stock option exercises for the years ended December 31, 2023 and 2022 was $1.9 million and $1.1 million, respectively. The total fair value of restricted stock awards vested during the years ended December 31, 2023 and 2022 was $2.1 million and $1.4 million, respectively.

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