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Stock-Based Compensation and Equity
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation and Equity STOCK-BASED COMPENSATION AND EQUITY
The Company's stock-based compensation awards are in the form of restricted stock and performance share awards granted pursuant to the Company's 2012 Restricted Stock Plan for Non-Employee Directors, Amended and Restated 2014 Incentive Plan and 2019 Incentive Plan, as amended (the "Plans"). Stock-based compensation cost is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employee’s or non-employee director’s requisite service period. As of December 31, 2021, there was a total of 334,629 shares of common stock reserved under the Plans for issuance under future share-based payment arrangements.
The following table details total stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019, included in the consolidated statements of operations:
(In thousands)202120202019
Costs of sales$990 $1,474 $2,040 
Operating expenses4,467 5,531 7,782 
Pre-tax stock-based compensation expense5,457 7,005 9,822 
Less: income tax effect(1,146)(1,471)(2,063)
Net (after tax) stock-based compensation expense$4,311 $5,534 $7,759 
As of December 31, 2021, there was $7.0 million of unrecognized compensation cost related to unvested or unearned, as applicable, stock-based compensation arrangements granted under the Plans, which is expected to be recognized over a weighted-average period of 1.9 years.
Restricted Stock
The Company grants restricted stock to executive officers, certain key employees and non-employee directors under the 2019 Incentive Plan with the fair value of the awards representing the fair value of the common stock on the date the restricted stock is granted. Shares of restricted stock generally vest in equal annual installments over the applicable vesting period, which ranges from one to three years. The Company records expenses for these grants on a straight-line basis over the applicable vesting periods. Shares of restricted stock have also been issued pursuant to the settlement of performance share awards with one-year performance periods, for which the Company records expenses in the manner described in the "Performance Share Awards" section below. Although no such one-year performance share awards were granted during 2021, shares issued pursuant to past one-year performance share awards are still subject to vesting.
A summary of restricted stock activity (including shares of restricted stock issued pursuant to the settlement of performance share awards) under the Plans during the years ended December 31, 2021, 2020 and 2019 is as follows:
Shares
Weighted-Average
Grant-Date
Fair Value
Unvested stock outstanding at January 1, 2019475,132 $32.00 
Granted133,936 30.89 
Performance share awards converted to restricted stock138,566 29.80 
Vested(221,775)33.48 
Unvested stock outstanding at December 31, 2019
525,859 $30.51 
Granted136,771 26.16 
Performance share awards converted to restricted stock19,678 30.15 
Vested(268,067)30.80 
Forfeited(1,274)26.16 
Unvested stock outstanding at December 31, 2020
412,967 $28.87 
Granted153,700 31.22 
Vested(245,455)29.16 
Forfeited(6,329)29.10 
Unvested stock outstanding at December 31, 2021
314,883 $29.79 
Performance Share Awards
The Company grants performance share awards to executive officers and certain key employees under the Amended and Restated 2014 Incentive Plan prior to 2019 and under the 2019 Incentive Plan beginning in 2019. The number of shares of common stock earned and issuable under each award is determined at the end of each one-year or three-year performance period, based on the Company's achievement of performance goals predetermined by the Compensation Committee of the Board of Directors at the time of grant. The three-year performance share awards include a modifier to the total number of shares earned based on the Company's total shareholder return ("TSR") compared to an industry index. If certain levels of the performance objective are met, the award results in the issuance of shares of restricted stock or common stock corresponding to such level. One-year performance share awards are then subject to time-based vesting pursuant to which the shares of restricted stock vest in equal annual installments over the applicable vesting period, which is generally three years. Three-year performance share awards result in the issuance of shares of common stock that are not subject to time-based vesting at the conclusion of the three-year performance period if earned.
In the event that the Company's financial performance meets the predetermined targets for the performance objectives of the one-year or three-year performance share awards, the Company will issue each award recipient the number of shares of restricted stock or common stock, as applicable, equal to the target award specified in the individual's underlying performance share award agreement. In the event the financial results of the Company exceed the predetermined targets, additional shares up to the maximum award may be issued. In the event the financial results of the Company fall below the predetermined targets, a reduced number of shares may be issued. If the financial results of the Company fall below the threshold performance levels, no shares will be issued. The total number of shares issued for the three-year performance share award may be increased, decreased, or unchanged based on the TSR modifier described above.
The recipients of performance share awards do not receive dividends or possess voting rights during the performance period and, accordingly, the fair value of the one-year performance share awards is the quoted market value of CPSI's common stock on the grant date less the present value of the expected dividends not received during the relevant period. The TSR modifier applicable to the three-year performance share awards is considered a market condition and therefore is reflected in the grant date fair value of the award. A Monte Carlo simulation has been used to account for this market condition in the grant date fair value of the award.
Expense of one-year performance share awards is recognized using the accelerated attribution (graded vesting) method over the period beginning on the date the Company determines that it is probable that the performance criteria will be achieved and ending on the last day of the vesting period for the restricted stock issued in satisfaction of such awards. Expense of three-year performance share awards is recognized using ratable straight-line amortization over the three-year
performance period. In the event the Company determines it is no longer probable that the minimum performance level will be achieved, all previously recognized compensation expense related to the applicable awards is reversed in the period such a determination is made.
A summary of performance share award activity under the Plans for the years ended December 31, 2021, 2020 and 2019, is as follows, based on the target award amounts set forth in the performance share award agreements:
Shares
Weighted-Average
Grant-Date
Fair Value
Performance share awards outstanding at January 1, 2019184,776 $30.15 
Granted110,310 30.95 
Forfeited or unearned44,189 29.77 
Performance share awards converted to restricted stock(138,566)29.80 
Performance share awards outstanding at December 31, 2019
200,709 $30.75 
Granted107,298 26.96 
Forfeited or unearned(35,477)30.15 
Performance share awards converted to restricted stock(19,678)30.15 
Performance share awards outstanding at December 31, 2020
252,852 $29.27 
Granted93,444 31.26 
Forfeited or unearned(20,373)29.92 
Vested and issued(75,971)30.50 
Performance share awards outstanding at December 31, 2021
249,952 $29.59 
Stock Repurchases
On September 4, 2020, our Board of Directors approved a stock repurchase program under which we may repurchase up to $30.0 million of our common stock through September 3, 2022. During 2021, we repurchased 41,965 shares. The approximate dollar value of shares that may yet be repurchased under the stock repurchase program was $28.1 million as of December 31, 2021. Any future stock repurchase transactions may be made through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Any repurchase activity will depend on many factors, such as the availability of shares of our common stock, general market conditions, the trading price of our common stock, alternative uses for capital, the Company's financial performance, compliance with the terms of our Amended and Restated Credit Agreement and other factors. Concurrent with the authorization of this stock repurchase program, the Board of Directors opted to indefinitely suspend all quarterly dividends.