STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2021

6. STOCK-BASED COMPENSATION

Equity Incentive Plan

The 2019 Equity Incentive Plan (“Plan”) was approved by the Company’s Board of Directors on January 16, 2019 and by its shareholders on March 6, 2019. The purpose of the Plan is to: (i) attract and retain the best available personnel for positions of substantial responsibility, (ii) provide additional incentive to employees, directors and consultants, and (iii) promote the success of the Company’s business. This Plan permits the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, and other stock-based awards. The maximum aggregate number of shares of common stock that may be issued pursuant to all awards under the Plan is 2,300,000. The maximum aggregate number of shares that may be issued under the Plan may be increased annually by up to 3% of the total issued and outstanding common shares of the Company at the beginning of each fiscal year.

The fair value of each option award under the Plan is estimated on the date of grant using a closed form option valuation (“Black-Scholes”) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer company averages. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes in to account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on U.S. Treasury yield curve in effect at the time of the grant.

Options

A summary of activity in the Plan is presented in the table below:

	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Three Months Ended March 31, 2021
Outstanding at beginning of year:		1,554,894		$	14.77			$	12,360
Granted		214,452			19.46				699
Exercised		(1,357	)		16.00				(9	)
Forfeited		—			—				—
Expired		—			—				—

Balance, March 31, 2021		1,767,989		$	15.34		6.23	$	13,050

Exercisable at end of period		1,109,247		$	13.11		5.41	$	10,656

Vested at end of period		1,109,247		$	13.11		5.41	$	10,656

A summary of assumptions used to calculate the fair values of the awards granted during the periods noted is presented below:

	Three Months Ended March 31,
	2021			2020
Expected volatility	41.20% to 41.32%				27.46	%
Expected dividend yield		1.00	%		0.70	%
Expected term (years)	6.1 to 6.2 years			6.0 to 6.2 years
Risk-free interest rate	0.52% to 0.83%				1.44	%
Weighted average grant date fair value	$	7.07		$	5.68

The total intrinsic value of options exercised during the three months ended March 31, 2021 and March 31, 2020 was $9 thousand and $4 thousand, respectively.

Restricted Stock Units

A summary of activity in the Plan is presented in the table below:

	Number of Shares			Weighted-Average Grant Date Fair Value
Three Months Ended March 31, 2021
Outstanding at beginning of year:		62,476		$	19.47
Granted		6,370			19.62
Vested		(24,805	)		19.70
Forfeited		—			—

Balance, March 31, 2021		44,041		$	19.36

Restricted stock units granted under the Plan typically vest over four years, but vesting periods may vary. Compensation expense for these grants will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date.

The total unrecognized compensation cost for the awards outstanding under the Plan at March 31, 2021 was $4.0 million and will be recognized over a weighted average remaining period of 1.78 years. The total fair value of restricted stock units vested during each of the three months ended March 31, 2021 and March 31, 2020 was $489 thousand.