Stock Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

Stock Based Compensation On September 23, 2022, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved the Company’s 2022 Long-Term Incentive Plan (the “2022 Plan”), which became effective on January 12, 2023. The 2022 Plan provides for the granting of restricted stock, restricted stock units, performance stock units, stock options as well as cash-based performance awards, to select employees and non-employee directors of the Company. The 2022 Plan stated that 3,200,516 shares of common stock were available for issuance.

In December 2020, the Compensation Committee approved a Long Term Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the granting of restricted stock, restricted stock units and performance stock units (collectively “restricted stock units” or “stock units”), as well as cash-based performance awards, to select employees and non-employee directors of the Company.

The Compensation Committee granted 1,073,494 and 191,691 restricted stock and restricted stock units during the three months ended March 31, 2023 and 2022, under the 2022 Plan and 2021 Plans, respectively. Members of the Board of Directors were granted 3,332 and 15,196 restricted stock during the three months ended March 31, 2023 and 2022, respectively, with a service period of 1 year. The fair value of restricted stock and restricted stock units under the 2022 Plan for awards granted at the time of the Company’s IPO were granted at the IPO price of $15.00 per share. The fair value of subsequent grants were equal to the closing stock price on the date the restricted stock units were granted.

The Compensation Committee granted 759,990 stock options during the three months ended March 31, 2023. The grant date fair value of the options was determined using the Black-Scholes model where the term was the contractual term of 10 years less the weighted average service period. The volatility was determined based on the historical volatility of comparable publicly traded insurance companies.

The restricted stock and restricted stock units granted to employees and the Board of Directors during the three months ended March 31, 2023 and 2022 were valued at approximately $17.0 million and $2.5 million, respectively, based on the grant date fair value. The stock options granted to employees during the three months ended March 31, 2023 were valued at approximately $4.4 million based on the grant date fair value.

The following table sets forth the Company’s equity awards, target payout ranges and authorized target restricted stock and stock units for the three months ended March 31, 2023 and 2022:

	Award Payout Range	Requisite Service Period	Target Stock and Stock Units
Three months ended March 31, 2023
Market condition awards	0%–150%	3 years	37,622
Performance condition awards	0%–150%	3 years	91,350
Service condition awards	N/A	1–4 years	944,522
Stock options	N/A	3–4 years	759,990
			1,833,484
Three months ended March 31, 2022
Market condition awards	0%–150%	3 years	28,495
Performance condition awards	0%–150%	3 years	26,214
Service condition awards	N/A	1–3 years	136,982
			191,691

The following table sets forth option activity for the three months ended March 31, 2023:

	Weighted-Average Exercise Price		Stock
Outstanding at January 1, 2023			—
Granted	$	15.00	759,990
Exercised			—
Forfeited			—
Outstanding at March 31, 2023	$	15.00	759,990

The intrinsic value of each option is determined based on the difference between the fair value of the underlying share and the exercise price of the underlying option. The aggregate intrinsic value of options outstanding at March 31, 2023 was $5.2 million. The weighted-average remaining contractual life of the options outstanding at March 31, 2023 was 9.8 years.

The following table sets forth the Company’s restricted stock and restricted stock units activity for the three months ended March 31, 2023 and 2022:

	Weighted-Average Grant-Date Fair Value		Stock and Stock Units
Non-vested at January 1, 2023	$	12.55	419,896
Granted	15.85		1,073,494
Vested	12.91		(32,496)
Forfeited	15.10		(7,459)
Non-vested at March 31, 2023	$	14.97	1,453,435
Non-vested at January 1, 2022	$	13.23	375,643
Granted	13.16		191,691
Vested	12.47		(55,851)
Forfeited	$	—	—
Non-vested at March 31, 2022	$	13.28	511,483

The total fair value of shares vested at March 31, 2023 and 2022 were $0.7 million and $0.7 million, respectively.

As of March 31, 2023 the total unrecognized compensation cost related to non-vested, share-based compensation awards was $22.2 million and the weighted average period over which that cost is expected to be recognized is 2.1 years. For the three months ended March 31, 2023 and 2022, the Company recognized $1.9 million and $0.5 million, respectively, of stock based compensation expense.