Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

The Board of Directors adopted the Rockwell Medical, Inc., 2007 Long Term Incentive Plan (“2007 LTIP”) on April 11, 2007. The 2007 LTIP expired on April 11, 2017 and no equity awards were granted under the 2007 LTIP following its expiration. There were 11,500,000 shares of common stock reserved for issuance under the 2007 LTIP. The Board of Directors adopted the 2018 Long-Term Incentive Plan (“2018 LTIP”) on January 29, 2018 as a replacement for the 2007 LTIP. Initially there were 3,300,000 shares of common stock reserved for issuance under the 2018 LTIP. On May 18, 2020, at the 2020 Annual Meeting, the Company’s stockholders approved the amendment and restatement of the Rockwell Medical, Inc. 2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 2,900,000 shares bringing common stock reserve for issuance up to 6,200,000 under the 2018 LTIP. The Compensation Committee of the Board of Directors (the “Committee”) is responsible for the administration of the 2007 LTIP and 2018 LTIP, including the grant of stock based awards and other financial incentives including performance based incentives to employees, non‑employee directors and consultants.

The Company's standard stock option agreement under the 2007 LTIP and 2018 LTIP allows for the payment of the exercise price of vested stock options either through cash remittance in exchange for newly issued shares, or through non‑cash exchange of previously issued shares held by the recipient for at least six months in exchange for our newly issued shares. The 2007 LTIP and 2018 LTIP also allow for the retention of shares in payment of the exercise price and income tax withholding. The latter method results in no cash being received by the Company, but also results in a lower number of total shares being outstanding subsequently as a direct result of this exchange of shares. Shares returned to the Company in this manner would be retired.

The Company recognized total stock-based compensation expense during the years ended December 31, 2021 and 2020 as follows (table in thousands):


	Year Ended December 31,
	2021		2020
Service based awards:
Restricted stock units	$	344	$	372
Stock option awards	1,354		1,491
	$	1,697	$	1,863
Performance based awards:

Restricted stock awards	$	(390)	$	—
Restricted stock units	—		(1,148)
Stock option awards	(364)		(240)
	(754)		(1,388)
Total	$	943	$	475

Restricted Stock Awards

A summary of the Company’s restricted stock awards during the years ended December 31, 2021 and 2020 is as follows:


	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2020	146,800	$	5.70

Unvested at December 31, 2020	146,800	5.70
Forfeited	(68,500)	5.70

Unvested at December 31, 2021	78,300	$	5.70

The fair value of restricted stock awards are measured based on their fair value on the date of grant and amortized over the vesting period of 20 months. As of December 31, 2021, unvested restricted stock awards of 78,300 were related to performance based awards. The forfeited performance-based restricted stock awards of 68,500 was due to the termination of the Company's former Chief Science Officer on January 19, 2021. These forfeited awards reduced stock-based compensation expense by $0.4 million. Stock-based compensation expense of nil was recognized for both the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there is no unrecognized stock-based compensation expense related to restricted stock awards.

Service Based Restricted Stock Units

A summary of the Company’s service based restricted stock units during the year ended December 31, 2021 and 2020 is as follows:


	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2020	463,786	$	4.26
Granted	208,993	2.00
Forfeited	(159,724)	4.26
Vested	(247,561)	4.30
Unvested at December 31, 2020	265,494	2.60
Granted	310,050	0.90
Forfeited	(11,799)	4.81
Vested	(241,563)	2.27
Unvested at December 31, 2021	322,182	$	1.17

The fair value of service based restricted stock units are measured based on their fair value on the date of grant and amortized over the vesting period. The vesting periods range from 1-3 years. Stock-based compensation expense of 0.3 million and $0.4 million was recognized during the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the unrecognized stock-based compensation expense was $0.1 million over the next 12 months.

Performance Based Restricted Stock Units

As of December 31, 2021, there were no outstanding performance-based restricted stock units

A summary of the Company’s performance based restricted stock units during the year ended December 31, 2020 is as follows:


	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2020	988,958	$	4.48
Forfeited	(988,958)	4.48
Unvested at December 31, 2020	—	$	—

Stock-based compensation expense recognized for performance based restricted stock units was nil and $(1.1) million for the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was no unrecognized stock-based compensation expense related to performance-based restricted stock units.

Service Based Stock Options

The fair value of the service based stock options granted for the years ended December 31, 2021 and 2020 were based on the following assumptions:


	December 31,
	2021	2020
Exercise price	$0.54 - $0.54	$0.92 - $2.90
Expected stock price volatility	75.0% - 77.7%	68.2% - 75.8%
Risk-free interest rate	0.47% - 1.30%	31.00% - 1.70%
Term (years)	5.5 - 6.0	5.5 - 6.0

A summary of the Company’s service based stock option activity for the years ended December 31, 2021 and 2020 is as follows:


	Shares Underlying Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in $1,000's)
Outstanding at January 1, 2020	8,210,024	$	7.06	5.1	$	—
Granted	2,288,386	1.94		9.0	—

Expired	(4,249,596)	(8.07)
Forfeited	(530,858)	(3.88)		—
Outstanding at December 31, 2020	5,717,956	$	4.55	6.6	$	—
Granted	1,947,162	0.88		—	—

Expired	(1,408,709)	(7.00)		—
Forfeited	(441,903)	(2.22)		—
Outstanding at December 31, 2021	5,814,506	$	2.91	7.5	$	—

Exercisable at December 31, 2021	2,612,079	$	4.81	5.7	$	—

The aggregate intrinsic value in the table above is calculated as the difference between the closing price of our common stock and the exercise price of the stock options that had strike prices below the closing price.

During the year ended December 31, 2021 and 2020, the service based stock options granted consisted of 1,947,162 and 2,288,386 options granted to employees, respectively. As of December 31, 2021, 2,612,079 vested options were exercisable at a weighted average price of $4.81 per share.

During the year ended December 31, 2021 and 2020, stock-based compensation expense of $1.4 million and $1.5 million was recognized, respectively. As of December 31, 2021, total stock-based compensation expense related to 3,202,427 unvested options not yet recognized totaled approximately $1.3 million over the next 3.1 years.

Performance Based Stock Options

A summary of the performance based stock options granted for the year ended December 31, 2021, is as follows:


	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2020	388,125	$	4.70
Granted	750,000	2.20
Forfeited	(388,125)	(4.70)
Outstanding at December 31, 2020	750,000	$	2.20
Cancelled	(750,000)	2.20

Outstanding at December 31, 2021	—	$	—

Exercisable at December 31, 2021	—	$	—

Stock-based compensation expense recognized for performance-based stock options was $(0.4) million and $(0.2) million for the year ended December 31, 2021 and 2020. As of December 31, 2021, there were no performance based stock options outstanding. The canceled unvested performance-based stock options of 750,000 is due to management determining that the performance goal will not be achieved.