Note 10 - Stock-based Compensation

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 10. STOCK-BASED COMPENSATION

The Company has granted equity or equity-based awards to eligible participants under its incentive plans. The awards include options to purchase the Company’s common stock, restricted stock and phantom stock units. These awards include time-based vesting awards as well as awards that include a combination of service and market conditions, as further described below. 

We recognize stock-based compensation on a straight-line basis over the total requisite service period for the entire award for the time-based restricted stock units; for the awards with market conditions, we recognize the expense over the service period derived from the related valuation; for the time-based phantom stock units, we concurrently recognize compensation cost over the requisite service period for each separately-vesting tranche using the graded vesting method.

The following provides the total unrecognized stock-based compensation expense under all programs as of the following dates:

	March 31, 2025				March 31, 2024
	Unrecognized Compensation Expense (in thousands)		Expected Weighted Average Period to be Recognized (years)		Unrecognized Compensation Expense (in thousands)		Expected Weighted Average Period to be Recognized (years)
Stock Options		-		-		-		-
Restricted Stock Units		4,872		2.0		2,231		2.3
Phantom Stock Units		4,237		1.3		7,535		2.0

Stock Options

The Company calculates the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options and other stock awards that contain a market condition related to the return on investment that the Company’s stockholders achieve or obtaining a certain stock price, the awards are valued using a lattice-based valuation model. The assumptions used in these calculations are the expected dividend yield, expected volatility, risk-free interest rate and expected term (in years). Expected volatilities are based on implied volatilities from comparable companies. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. There were no options granted during the three months ended March 31, 2025 and 2024.

Stock option awards represent options to purchase common stock and are granted pursuant to the Company’s incentive plans, and include options that the Company primarily classifies as Tranche A or time based, Tranche B and Tranche C.

Tranche A or time-based options are eligible to vest in equal installments of 20% or 25% on each of the first five or four anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries. In the event of a termination of employment without cause or as a result of death or disability, any such time-based options which would have vested on the next applicable vesting date shall become vested, and the remaining unvested time-based options shall be forfeited. In addition, upon a Change in Control (as defined in the incentive plans), subject to continued employment through the date of the Change in Control, all outstanding unvested time-based options shall immediately vest. An initial public offering does not qualify as a Change in Control as it relates to the vesting of stock options.

All other option awards, comprised of Tranche B and Tranche C, are eligible to vest upon the satisfaction of certain performance conditions (collectively, “Performance Options”). These performance conditions included the achievement of investor returns or common stock trading prices. These performance conditions were achieved in October 2018 for all Performance Options that have been granted and there are currently 77,974 Performance Options exercisable and outstanding.

A summary of the changes in stock options outstanding during the three months ended March 31, 2025, is as follows:

	Number of Options
Options outstanding as of December 31, 2024		570,839
Granted		-
Exercised		120,458
Canceled or forfeited		-
Options outstanding as of March 31, 2025		450,381
Options exercisable as of March 31, 2025		450,381

Restricted Stock Units

Restricted stock units are typically eligible to vest in equal installments of 25% on each of the first four anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries. In the event of a termination of employment without cause or as a result of death or disability, any such unvested time-based awards shall become vested. In the event of a change in control, certain awards vest immediately and certain awards vest only upon termination within 12 months of the change in control event.

Certain restricted stock units are eligible to vest upon the satisfaction of certain performance conditions. Vesting occurs on the first day that the average price per share of our common stock for a specified number of consecutive trading days exceeds certain stock price targets, subject to continued employment with the Company or its subsidiaries. The performance-based restricted stock units will be forfeited if the performance target is not achieved within a specified number of years from the grant date.

In April 2024, the Company granted restricted stock awards that are scheduled to vest in three years from the grant date and the number of shares that will vest, varies based on a 20-day average of the stock price ending on the three year anniversary of the grant date (the "Ending Average Price") compared to the average trading price of our common stock for the 20 days beginning on March 15, 2024 (the "Beginning Average Price"). The value of the awards will be $3.2 million if the Ending Average Price is equal to 25% greater than the Beginning Average Price, which is the "Target Share Price". The number of shares to be issued upon vesting will be determined according to a linear interpolation between a minimum of 40% below the Target Share Price in which 60% of the shares will be issued and a maximum of 60% above the Target Share Price in which 160% of the shares will be issued. The maximum number of shares that can be issued is 451,232. These awards are not included in the table below.

A summary of the changes in restricted stock units outstanding during the three months ended March 31, 2025, is as follows:

	Shares Outstanding
Restricted Stock Units Outstanding as of December 31, 2024		1,061,184
Granted		4,125
Vested		318,588
Canceled or forfeited		-
Restricted Stock Units Outstanding as of March 31, 2025		746,721

Phantom Stock Units

Phantom stock units are typically eligible to vest in equal installments of 25% on each of the first four anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries. In the event of a termination of employment without cause upon or as a result of death or disability, any such unvested units shall become vested. In the event of a change in control, certain awards vest immediately and certain awards vest only upon termination within 12 months of the change in control event. The phantom stock units outstanding at the end of the period  may be settled in cash or stock at the Company’s discretion. The phantom stock units that the Company intends to settle in cash are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period. The liability associated with such awards is included in “Accrued Liabilities” within the Consolidated Balance Sheets. All other stock-based awards are classified as equity.

A summary of the changes in phantom stock units outstanding during the three months ended March 31, 2025 is as follows:

	Equity Awards Shares Outstanding		Liability Awards Shares Outstanding
Phantom Stock Outstanding as of December 31, 2024		1,511,660		210,416
Granted		-		-
Vested		93,730		-
Canceled or forfeited		24,721		3,589
Phantom stock outstanding as of March 31, 2025		1,393,209		206,827