Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

We account for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. We recognize stock-based compensation cost over the award’s requisite service period on a straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. We record forfeitures as they occur for all stock-based compensation.

The following table presents our total stock-based compensation expense:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Employee stock-based compensation expense
Pre-tax (1)	$	108	$	536	$	582	$	1,482
Post-tax (2)	86		424		460		1,171
Director stock-based compensation expense
Pre-tax (1)	99		178		406		810
Post-tax (2)	78		141		321		640

(1) This table does not include withholding of vested shares for tax liabilities, which totaled $86,000 for both the three and nine months ended September 30, 2020.

(2) The after tax amounts are determined using the 21% corporate federal tax rate.

We had approximately $2,086,000 of unrecognized stock compensation expense at September 30, 2020 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 2.2 years. We had approximately $234,000 of unrecognized director stock-based compensation expense at September 30, 2020 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.6 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of our common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents our obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, we issue the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the 2018, 2019, and 2020 awards.

We granted 37,318 and 384,572 shares of restricted common stock during the three and nine month periods ended September 30, 2020, respectively, which had a weighted-average grant date fair value of $7.31 and $9.35 per share, respectively. We granted 843 and 133,421 shares of restricted common stock during the three and nine month periods ended September 30, 2019, respectively, which had a weighted-average grant date fair value of $12.82 and $16.26 per share, respectively. During the nine month period ended September 30, 2019, we granted 45,000 shares of restricted common stock which were contingent upon stockholder approval of our 2020 Omnibus Incentive Plan, which was approved at our 2020 annual meeting of stockholders. Following this approval, the contingent shares were issued and fully vested during the nine month period ended September 30, 2020.

The following table presents certain information related to the activity of our non-vested common stock grants:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2019	214,495	$	17.49
Granted (1)	384,572	9.35
Less: Forfeited	232,323	12.61
Less: Vested (1)	109,267	16.63
Outstanding as of September 30, 2020	257,477	$	10.10

(1) Contingent shares granted during 2019, but issued and fully vested during May 2020, have been included in the calculations in the table above.

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:


	2020
Expected annual dividend yield	1.70	%
Expected volatility	41.59	%
Risk-free interest rate	2.35	%
Expected term	6 Years

Expected annual dividend yield is based on the current quarterly dividend of $0.06 per share and the stock price on the grant date. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

The following table presents certain information related to the activity of our non-vested stock option grants:


	Number of Stock Options	Weighted Average Exercise Prices		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2019	207,069	$	18.69	9.00	$	—
Granted	221,541	8.77		—	—
Less: Forfeited	234,472	12.76		—	—
Less: Expired	32,098	18.87		—	—
Less: Exercised	—	—		—	—
Outstanding as of September 30, 2020	162,040	$	13.67	8.03	$	—

Vested as of September 30, 2020	73,956	$	18.81	2.69	$	—
Exercisable as of September 30, 2020	41,858	$	18.77	4.76	$	—