Management Incentive Plans

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Upon approval of the Company's stockholders on May 30, 2019, the Company amended and restated the 2016 Plan (the “Restated 2016 Plan”). The Restated 2016 Plan intends to: (a) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (b) give participants an incentive for excellence in individual performance; (c) promote teamwork among participants; and (d) give the Company a significant advantage in attracting and retaining key employees, directors and consultants. To accomplish such purposes, the Restated 2016 Plan provides that the Company may grant options, stock appreciation rights, restricted shares, RSUs, performance-based awards (including performance-based restricted shares and restricted stock units), other share based awards, other cash-based awards or any combination of the foregoing.

The Company has reserved 1,650,000 shares of its common stock for issuance under the Restated 2016 Plan. The number of shares issued or reserved pursuant to the Restated 2016 Plan will be adjusted by the plan administrator, as they deem appropriate and equitable, as a result of stock splits, stock dividends, and similar changes in the Company’s common stock. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control. All awards are made in the form of shares only.

Service-Based Awards

The Company grants service-based stock awards in the form of RSUs. Service-based RSUs granted to executives, employees, and non-employee directors vest ratably, on an annual basis, over three years. The grant date fair value of the service-based awards was equal to the closing market price of the Company’s common stock on the date of grant.

The following table summarizes our service-based RSU activity:


	Awards	Weighted-Average Grant Date Fair Values
Unvested at January 1, 2019	173,087	$	13.30
Granted	268,851	6.32
Vested	(103,381)	12.99
Forfeited	(9,982)	8.58
Unvested at December 31, 2019	328,575	$	7.83
Granted	178,633	2.64
Vested	(211,300)	8.12
Forfeited	(10,109)	6.80
Unvested at December 31, 2020	285,799	$	6.32

Performance-Based Awards

The Company grants performance-based restricted stock units (“PRSUs”) under which shares of the Company’s common stock may be earned based on the Company’s performance compared to defined metrics. The number of shares earned under a performance award may vary from zero to 150% of the target shares awarded, based upon the Company’s performance

compared to the metrics. The metrics used for the grant are determined by the compensation committee of the board of directors and are based on internal measures such as the achievement of certain predetermined adjusted EBITDA, EPS growth and EBITDA margin performance goals over a 3-year period.

The Company recognizes stock-based compensation expense for these awards over the vesting period based on the projected probability of achievement of the performance conditions as of the end of each reporting period during the performance period and may periodically adjust the recognition of such expense, as necessary, in response to any changes in the Company’s forecasts with respect to the performance conditions.

In 2020 and 2019, the Company granted 96,500 and 6,000 PRSUs, respectively, to its executives and certain employees under the Restated 2016 Plan.

For PRSUs granted on or prior to December 31, 2018, the Company has not recognized any stock-based compensation expense to-date related to these awards based on the Company’s determination that achievement of the minimum performance goal was not probable as of each reporting period.

For the PRSUs granted in 2017 and 2018, the performance conditions were not met over the 3-year periods ending December 31, 2019 and December 31, 2020, respectively. As such, all remaining PRSUs outstanding under the aforementioned tranches of awards were forfeited as of December 31, 2019 and December 31, 2020.

The following table summarizes our PRSU activity:


	Awards	Weighted-Average Grant Date Fair Values
Unvested at January 1, 2019	124,057	$	13.34
Granted	6,000	4.98
Vested	—	—
Forfeited	(67,750)	13.27
Unvested at December 31, 2019	62,307	$	12.62
Granted	96,500	3.67
Vested	—	—
Forfeited	(59,307)	12.95
Unvested at December 31, 2020	99,500	$	4.23

Market-Based Awards

On September 4, 2020, the Compensation Committee of the Board of Directors approved amendments to certain RSUs initially awarded on August 30, 2017 by the Company to certain employees. Pursuant to the amendment adopted on September 4, 2020, the measurement period was extended to July 16, 2022. In addition to the market performance-based vesting condition, the vesting of such restricted stock unit is subject to continued employment from August 1, 2017 through the later of July 31, 2019 or the date on which the Compensation Committee certifies the achievement of the performance goal. The Company has accounted for this amendment as a Type I modification and will recognize approximately $0.2 million of incremental stock-based compensation expense over 1.26 years based on an updated Monte Carlo simulation model.

The following table summarizes our MRSU activity for the fiscal years ended December 31, 2020 and December 31, 2019:


	Awards	Weighted-Average Grant Date Fair Values
Unvested at January 1, 2019	140,500	$	6.58
Granted	—	—
Vested	—	—
Forfeited	(15,500)	6.58
Unvested at December 31, 2019	125,000	$	6.58
Granted	—	—
Vested	—	—
Forfeited	(22,500)	6.58
Unvested at December 31, 2020	102,500	$	8.26

The table below sets forth the assumptions used within the initial Monte Carlo simulation model to value the MRSU awards:


Risk-free interest rate	1.56		%
Dividend yield	0		%
Remaining performance period (years)	3.92
Expected volatility	28.54		%
Estimated grant date fair value (per share)	$	6.58
Derived service period (years)	1.96

Total recognized stock-based compensation expense amounted to $1.1 million for the year ended December 31, 2020 and $1.8 million for the year ended December 31, 2019. The aggregate fair value as of the vest date of RSUs that vested during the years ended December 31, 2020 and 2019 was $1.1 million and $0.6 million, respectively. Total unrecognized stock-based compensation expense related to unvested RSUs which are probable of vesting amounted to $1.1 million at December 31, 2020. These costs are expected to be recognized over a weighted average period of 1.52 years.