Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

In January 2019, the Company’s Board of Directors adopted the 2019 Stock Incentive Plan (the “Plan”). A total of 2,000,000 shares of common stock has been authorized and reserved for issuance under the Plan in the form of incentive or nonqualified stock options and stock awards. A committee appointed by the Board of Directors of the Company determines the terms and conditions of each grant under the Plan. Employees, directors, and consultants are eligible to receive stock options and stock awards under the Plan. The aggregate number of shares available under the Plan and the number of shares subject to outstanding options may be increased or decreased by the Plan administrator to reflect any changes in the outstanding common stock by reason of any recapitalization, reorganization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock or similar transaction.

The exercise price of incentive stock options may not be less than the fair market value of the common stock at the date of grant. The exercise price of incentive stock options granted to individuals that own greater than 10% of the voting stock may not be less than 110% of the fair market value of the common stock at the date of grant.

The term of each incentive and nonqualified option is based upon such conditions as determined by the option agreement; however, the term can be no more than ten years from the date of the grant. In the case of an incentive stock option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the term of the option will be such shorter term as may be provided in the option agreement, but not more than five years from the date of the grant.

As of December 31, 2021, a total of 1,311,083 shares of common stock was available for further award grants under the Plan.

Stock Options

A summary of the Company’s stock option activity under the Plan for the year ended December 31, 2021 is as follows:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life (In Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2020	15,000	$	10.00	8 years	$	—
Granted	430,000	18.86
Exercised	(10,000)	10.00			$	116,000
Outstanding at December 31, 2021	435,000	$	18.76	9.7 years	$	632,000
Expected to vest at December 31, 2021	435,000	$	18.76	9.7 years	$	632,000
Exercisable at December 31, 2021	5,000	$	10.00	7 years	$	51,000

The weighted-average grant date fair-value of the stock options granted for the year ended December 31, 2021 was $5.74 per share. At December 31, 2021, total remaining stock-based compensation cost for unvested stock options was approximately $2,090,000. The cost is expected to be recognized over a weighted-average period of 1.8 years.

The aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of the Company’s common stock on December 31, 2021, multiplied by the number of shares per each option.

The assumptions that were used to calculate the grant date fair value of the Company’s stock option grants for the year ended December 31, 2021 were as follows:


	December 31, 2021
Risk-free interest rate	1.22	%
Expected term (years)	6.25 years
Volatility	30	%
Dividend yield	0.40	%

There were no stock options granted for the year ended December 31, 2020.

Restricted Stock Units

The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the period ended December 31, 2021:


	Number of Shares Outstanding	Weighted Average Grant Date Fair Value
Unvested at December 31, 2020	256,000	$	10.00
Granted	40,000	17.98
Vested	(84,917)	11.55
Forfeited	(52,083)	11.14
Unvested at December 31, 2021	159,000	$	11.08

The weighted-average grant-date fair value of restricted stock units granted during the years ended December 31, 2021 and 2020 was 17.98 and 10.00 respectively. The total fair value of restricted stock units, as of their respective vesting date, during the years ended December 31, 2021 and 2020 was $1,884,000 and 0, respectively. In September 2021, the Company’s Board of Directors accelerated the vesting of the Company’s restricted stock units, with each tranche of award vesting 6 months earlier than the original vesting date. The acceleration of the restricted stock units vesting was treated as an award modification under ASC 718, resulting in an additional stock-based compensation expense of approximately $719,000 recognized for the year ended December 31, 2021. At December 31, 2021, total remaining stock-based compensation cost for unvested restricted stock units was approximately $1,151,000. The cost is expected to be recognized over a weighted-average period of 1.4 years.

For the years ended December 31, 2021 and 2020, the Company recognized a total of $2,026,000 and $0 in stock-based compensation expense, respectively. The restricted stock units and stock options granted prior to April 15, 2021 were subjected to vesting conditions contingent upon the closing of an initial public offering of the Company. Such awards began vesting on April 15, 2021 when the Company completed its initial public offering. The Company recognizes stock-based compensation over the vesting period, which is generally three years for both the restricted stock units and stock options. The Company recognized a net tax benefit of $237,000 and $0 from compensation expense related to stock options and restricted stock units during the year ended December 31, 2021 and 2020, respectively.