Note 13 - Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE 13 — STOCK-BASED COMPENSATION

During 2021, the Company’s compensation committee approved an employee incentive plan which supersedes the 2015 Long-Term Incentive Plan, authorizes restricted time and performance awards and stock options to key employees under the Company’s 2021 Long-Term Incentive Plan. The Company's stock-based compensation program is a long-term retention program that provides for the grant of options, restricted stock, RSUs and performance-based restricted stock or units in order to attract, retain and provide incentives for directors, officers and employees. The maximum number of shares reserved for the grant of awards under the plan is 4.7 million, with approximately 3.8 million shares available as of December 31, 2021. The Company typically settles stock-based awards with newly issued shares.

Restricted Stock and Restricted Stock Units

Restricted stock is shares of stock granted to an employee, non-employee director or other service providers for which sale is prohibited for a specified period of time. Restricted stock typically vests ratably over a one or three-year period following the date of grant. RSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain vesting conditions are met. RSUs typically vest ratably over a three-year period following the date of grant. The Company does not deliver the shares associated with the RSUs to the employee, non-employee director or other service providers until the vesting conditions are met. The number of shares or units granted are determined based upon the closing price of the Company's common stock on the date of the award.

Performance Stock Units

PSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain performance and vesting conditions are met. PSUs generally vest three years following the date of grant based on the attainment of performance- or market-based goals, all of which are subject to a service condition. The Company does not deliver the shares associated with the PSUs to the employee, non-employee director or other service providers until the performance and vesting conditions are met. 

For 2020 and 2019, the PSUs granted may be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards, if earned, will vest after a three-year performance period and may be earned at a level ranging from 0%-200% of the number of PSUs granted, depending on performance. The number of units were determined based upon the closing price of the Company's common stock on the date of the award. The Company assessed the applicable metrics related to the PSU grants, determined the blended probability of achieving the performance metrics and valued the awards based on the fair value at the date of grant with the amount of stock compensation expense determined based on the number of PSU’s expected to vest. 

Market Stock Units

MSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain performance and vesting conditions are met. The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and a determined closing price. Each MSU represents the right to receive one share of Company stock multiplied by a performance multiplier or, at the option of the Company, an amount of cash. The number of shares that will eventually be earned and vest may be more or less then the number of MSUs that are awarded, depending on the Company's common stock price. Awards, if earned, will vest after a determined performance period and may be earned at a level ranging from 0%-150% of the number of MSUs granted, depending on performance. The number of units granted were determined based upon the closing price of the Company's common stock on the date of the award.

The Company assessed the applicable metrics related to the MSU grants, estimating the fair value of employee MSU awards and the amount of stock compensation expense using the Monte-Carlo pricing model.

Stock Options

Stock options represent a right to buy a number of shares by the employee, non-employee director or other service providers at a future date, for a pre-set price, or exercise price, for a fixed period of time. Stock options generally vest over one to four years, with a term of ten years. Stock compensation expense related to options are recorded based on the fair value of stock option grants, amortized on a straight-line basis over the employee’s required service period. The Company estimated the fair value of employee stock options using the Black-Scholes option pricing model. The fair values of employee stock options granted under the 2015 and 2017 plans were estimated using the following assumptions:

	Stock Option Grants			Stock Option Grants
	11/11/2020			05/10/2021
Stock price	$	10.84		$	16.38
Exercise price	$	10.84		$	16.38
Dividend yield		0.00	%		0.00	%
Expected volatility		29.08	%		25.61	%
Risk-free interest rate		0.98	%		1.63	%
Expected term in years		7.00			7.50

2016 CEO Share Allocation Plan

In April 2016, the Company’s Board of Directors adopted the 2016 CEO Share Allocation Plan and in June 2016, the Company’s shareholders approved the 2016 CEO Share Allocation Plan, pursuant to which the Company will grant awards covering up to 1,000,000 shares of the Company’s common stock in the form of restricted stock, restricted stock units, and/or other stock- or cash-based awards to eligible employees and other service providers of the Company. The 2016 CEO Share Allocation Plan was adopted in connection with a contribution agreement that the Company entered into with Sven-Olof Lindblad, the Company’s Co-Chairperson and former Chief Executive Officer and President, pursuant to which Mr. Lindblad will transfer up to 1,000,000 shares from his holdings of the Company’s common stock (i.e., an equivalent number of shares as is reserved for issuance under the 2016 CEO Share Allocation Plan) (the “Contribution Shares”) to the Company as a contribution to the capital of the Company. Mr. Lindblad will not receive any consideration in exchange for the Contribution Shares. However, as a condition

to the contribution of any Contribution Shares, the Company must grant awards under the 2016 CEO Share Allocation Plan, such that the number of Contribution Shares that Mr. Lindblad actually contributes to the Company will equal the number of shares corresponding to awards granted under the plan. The administrator may amend, suspend or terminate the 2016 CEO Share Allocation Plan at any time. On January 10, 2017, Mr. Lindblad contributed to the Company and the Company thereafter granted, 716,550 restricted shares at a grant price of $9.65. The grants vested in three equal installments in  January 2017, 2018 and 2019.

Long-Term Incentive Compensation

See the following table for a summary of PSU, restricted stock, RSU and MSU activity.

	Performance-based Stock Units					Restricted Stock and Restricted Stock Units					Market-based Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2019		162,780		$	9.63		619,726		$	10.16		-	$	-
Granted		61,631			15.25		139,168			15.97		-		-
Vested and released		-			-		(413,661	)		10.11		-		-
Forfeited		(8,990	)		8.98		(3,187	)		11.31		-		-
Balance, December 31, 2019		215,421			11.16		342,046			12.47		-		-
Granted		86,783			5.42		648,617			11.22		102,062		8.51
Vested and released		(57,022	)		8.98		(213,583	)		11.99		-		-
Forfeited		(66,484	)		9.69		(35,479	)		8.81		-		-
Balance, December 31, 2020		178,698			9.73		741,601			11.70		102,062		8.51
Granted		-			-		283,872			17.16		50,072		18.90
Vested and released		(41,990	)		10.27		(358,144	)		10.21		-		-
Forfeited		(61,767	)		9.79		(98,978	)		14.18		-		-
Balance, December 31, 2021		74,941			9.39		568,351			14.93		152,134		11.93

Stock Options

The following table is a summary of stock option activity:

	Number of Options			Weighted Average Exercise Price		Weighted Average Contractual Live (Years)		Aggregate Intrinsic Value
Options outstanding as of January 1, 2019		220,000		$	3.23		7.6	$	842,000
Exercised		(20,000	)		11.26
Options outstanding as of December 31, 2019		200,000			9.47		7.6		1,376,000
Granted		310,000			10.84
Options outstanding as of December 31, 2020		510,000			10.30		6.7		3,476,800
Granted		1,000,000			16.38
Exercised		(12,000	)		9.47
Options outstanding as of December 31, 2021		1,498,000			14.37		8.8		1,848,040

	As of December 31, 2021
	Number of Options		Weighted Average Exercise Price		Weighted Average Contractual Live (Years)		Aggregate Intrinsic Value
Options vested and/or expected to vest		1,498,000	$	14.37		8.8	$	1,848,040
Options exercisable		265,500		9.87		6.0		1,521,340

Stock-based Compensation Expense

Stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 was $5.6 million, $2.4 million and $3.6 million, respectively, and is included in general and administrative expenses. The total income tax benefit recognized for stock-based compensation plans for the years ended December 31, 2021, 2020 and 2019 was $0.0 million, $0.0 million and $0.1 million, respectively. As of December 31, 2021, unrecognized stock-based compensation expense was $13.8 million. This amount is expected to be recognized over a weighted average period of approximately 3.4 years.

Mr. Lawrence, President of Off the Beaten Path, was issued 1,007 profit interest units in the equity of Off the Beaten Path as part of the acquisition. The profit interest units had a $132.86 per share grant date fair value and are considered vested upon issuance. The Company recorded $0.1 million in stock-based compensation expense related to the value of these profit units for the year ended December 31, 2021, included in the Company’s total stock-based compensation disclosed above.