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Note 11 - Stock Compensation Plans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

11. Stock Compensation Plans

The Company’s 2010 Stock Incentive Plan (the “2010 Plan”) was initially adopted in May 2010. The 2010 Plan provided for the issuance of stock options, restricted stock and unrestricted stock with respect to an aggregate of 2,000,000 shares of the Company’s common stock to employees, consultants and outside directors of the Company. On May 17, 2011, the 2010 Plan was amended to provide for the issuance of RSUs and on February 2, 2012, the 2010 Plan was amended to provide for the issuance of stock-settled stock appreciation rights ("SSARs"). Effective April 25, 2012 and May 23, 2017, the 2010 Plan was amended to increase the maximum number of shares of common stock available for issuance to an aggregate of 4,500,000 shares and 8,500,000 shares, respectively. The vesting period for awards granted under the 2010 Plan is determined by the Compensation Committee of the Board of Directors. The Compensation Committee also determines the expiration date of each equity award; however, stock options may not be exercisable more than ten years after the date of grant as the maximum term of equity awards issued under the 2010 Plan is ten years.

For the years ended December 31, 2022, 2021 and 2020, the Company recorded stock-based compensation expense, including stock options and RSUs, of approximately $1.8 million, $1.3 million and $1.4 million, respectively.

Stock Options

Stock option awards provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee, at the time of grant, and must have an exercise price equal to or in excess of the fair market value of the Company’s common stock at the date of grant.

The fair value of options granted is estimated at the date of grant. Expected volatility has been estimated using a combination of the historical volatility of the Company's common stock and the historical volatility of a group of comparable companies’ common stock, both using historical periods equivalent to the options’ expected lives. The expected dividend yield assumption reflects that the Company does not have a recurring dividend program. The risk-free interest rate assumption is based upon observed interest rates for securities with maturities approximating the options’ expected lives. The expected life was estimated based on historical experience and expectation of employee exercise behavior in the future giving consideration to the contractual terms of the award.

A summary of the Company’s stock option activity is as follows:

						*Weighted*				*Weighted*
						*Average*				*Average*				*Aggregate*
		*Number of*				*Exercise*				*Remaining Life*				*Intrinsic*
		*Options*				*Price*				*(in years)*				*Value*
Outstanding at January 1, 2022 ⁽¹⁾			159,623			$	5.55
Granted			50,000				9.27
Exercised			—				—
Canceled/Expired			—				—
Outstanding at December 31, 2022			209,623			$	6.44				7.82			$	289,359
Vested at December 31, 2022			209,623			$	6.44				7.82			$	289,359
Exercisable at December 31, 2022			209,623			$	6.44				7.82			$	289,359

⁽¹⁾ Balances as of January 1, 2022 differ from those as of December 31, 2021 presented in the Company's 2021 Form 10-K due to the special dividend paid during 2022. In connection with the dividend, the number of options and the weighted average exercise price were adjusted pursuant to the terms of the Company's 2010 Plan.

As of December 31, 2022, there is no remaining unrecognized stock-based compensation cost related to stock options expected to be recognized. The total fair value of stock options which vested during the years ended December 31, 2022 and 2021 was approximately $375,000 and $258,000, respectively.

There were no stock options exercised during the years ended December 31, 2022 and December 31, 2021. The total intrinsic value of stock options exercised was approximately $87,000 for the year ended December 31, 2020. The intrinsic value represents the amount by which the market price of the underlying stock exceeds the exercise price of an option.

Restricted Stock Units

RSUs awarded to employees vest on schedules of between one year and three years, and RSUs awarded to directors of the Company vest over a one-year period. A summary of the Company’s RSU activity is as follows:

						*Weighted*
						*Average*
		*Number of*				*Grant-Date*
		*RSUs*				*Fair Value*
Outstanding at January 1, 2022 ⁽¹⁾			329,333			$	6.95
Granted ⁽²⁾			190,138				9.40
Vested and released			(187,188	)			6.58
Canceled/Expired			(36,578	)			8.57
Outstanding at December 31, 2022 ⁽³⁾			295,705			$	8.56

⁽¹⁾includes 54,792 awards which were settled in cash in June 2022.

⁽²⁾includes 35,088 awards which were expected to be settled in cash.

⁽³⁾includes 30,702 awards which are expected to be settled in cash.

As of December 31, 2022, $1.2 million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over the weighted-average remaining requisite service period of 0.7 years. The weighted average fair value at the date of grant for restricted stock awards granted during the years ended December 31, 2022, 2021 and 2020 was $9.40, $6.95 and $5.95 per share, respectively. Based on the grant date, the total fair value of restricted stock and restricted stock units vested and released during the years ended December 31, 2022, 2021 and 2020 was approximately $1.2 million, $0.9 million and $1.0 million, respectively.