XML 23 R13.htm IDEA: XBRL DOCUMENT v3.22.2
Stock Based Compensation
 6 Months Ended
Jun. 30, 2022
Share-based Payment Arrangement [Abstract]  
Stock Based Compensation Stock Based Compensation
PetIQ, Inc. Omnibus Incentive Plan
The PetIQ, Inc. Omnibus Incentive Plan, as amended (the “Plan”), provides for the grant of various equity-based incentive awards to directors of the Company, employees, and consultants. The types of equity-based awards that may be granted under the Plan include: stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), and other stock-based awards. On June 22, 2022, the Company’s stockholders approved an amendment and restatement of the Omnibus Plan to, among other things, increase the total number of shares of the Company’s Class A Common Stock reserved and available for issuance thereunder by 1,890 thousand shares resulting in a total of 5,804 thousand Class A Common Stock issuable under the Plan. As of June 30, 2022 and 2021, 1,914 thousand and 698 thousand shares were available for issuance under the Plan, respectively. All awards issued under the Plan may only be settled in shares of Class A common stock. Shares issued pursuant to awards under the incentive plans are from our authorized but unissued shares.
PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees
The PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees (the “Inducement Plan”) provided for the grant of stock options to employees hired in connection with an acquisition in 2018 as employment inducement awards pursuant to NASDAQ Listing Rule 5635(c)(4). The Inducement Plan reserved 800 thousand shares of Class A common stock of the Company, of which 760 thousand were granted. No further grants may be made under the Inducement Plan. All awards issued under the Inducement Plan may only be settled in shares of Class A common stock.
Stock Options
The Company awards stock options to certain employees under the Plan and previously issued stock options under the Inducement Plan, which are subject to time-based vesting conditions, typically 25% on each anniversary of the grant date until fully vested. Upon a termination of service relationship by the Company, all unvested options will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The maximum contractual term for stock options is 10 years.
The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $0.9 million and $2.2 million for the three and six months ended June 30, 2022, respectively, and $1.4 million and $2.7 million for the three and six months ended June 30, 2021, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients. The fair value of the stock option awards was determined on the grant dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the periods ended June 30, 2022 and 2021:
June 30, 2022June 30, 2021
Expected term (years) (1)
6.256.25
Expected volatility (2)
37.21 %33.91 %
Risk-free interest rate (3)
1.44 %0.90 %
Dividend yield (4)
0.00 %0.00 %
(1)The Company utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
(2)The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term.
(3)The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options.
(4)The Company has not paid and does not anticipate paying a cash dividend on our common stock.
The weighted average grant date fair value of stock options granted during the period ended June 30, 2022 was $9.14 per option. At June 30, 2022, total unrecognized compensation cost related to unvested stock options was $4.8 million and is expected to be recognized over a weighted-average period of 2.1 years.
Stock
Options
(in 000's)		Weighted
Average
Exercise
Price		Aggregate
Intrinsic
Value
(in 000's)		Weighted
Average
Remaining
Contractual
Life
(years)
Outstanding at January 1, 20202,086 $23.93 $30,302 7.2
Granted354 35.66 
Exercised(583)23.05 $8,499 
Forfeited(64)24.84 
Cancelled(25)25.70 
Outstanding at December 31, 20211,768 $26.51 $2,897 7.3
Granted37 21.91 
Exercised(2)19.49 $10 
Forfeited(21)28.93 
Cancelled (1)35.66 
Outstanding at June 30, 20221,780 $26.39 $198 6.8
Options exercisable at June 30, 20221,183 
Restricted Stock Units
The Company awards RSUs to certain employees and directors under the Plan, which are subject to time-based vesting conditions. Upon a termination of service relationship by the Company, all unvested RSUs will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The fair value of RSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant. At June 30, 2022, total unrecognized compensation cost related to unvested RSUs was $20.3 million and is expected to vest over a weighted average 3.2 years.
The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $2.0 million and $4.4 million for the three and six months ended June 30, 2022, respectively, and $1.0 million and $1.8 million for the three and six months ended June 30, 2021, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients.
The following table summarizes the activity of the Company’s RSUs for the period ended June 30, 2022.
Number of
Shares
(in 000's)		Weighted
Average
Grant Date
Fair Value
Outstanding at January 1, 2020317 $22.91 
Granted268 37.91 
Settled(103)24.81 
Forfeited(23)26.02 
Outstanding at December 31, 2021459 $31.08 
Granted795 20.42 
Settled(187)28.31 
Forfeited(62)31.72 
Nonvested RSUs at June 30, 20221,004 $23.19