Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

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 were 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 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 a shorter term as provided in the option agreement, but not more than five years from the date of the grant.

As of December 31, 2023, a total of 1,350,684 shares of common stock was available for further award grants under the Plan. For the years ended December 31, 2023 and 2022, the Company recognized a total of $770,000 and $2,047,000 in stock-based compensation expense, respectively. The Company recognizes stock-based compensation over the vesting period, which is generally 3 years for both the restricted stock units and stock options. The Company recognized a net tax benefit of $187,000 and $89,000 from compensation expense related to stock options and restricted stock units during the years ended December 31, 2023 and 2022, respectively.

Stock Options

A summary of the Company’s stock option activity under the Plan for the years ended December 31, 2023 and 2022 is as follows:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life (In Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2021	435,000	$	18.76	9.7	$	632,000
Granted	50,000	16.53
Exercised	(5,000)	10.00
Forfeited	(60,000)	18.86
Outstanding at December 31, 2022	420,000	$	18.58	8.8	—
Exercised	(6,860)	17.84
Forfeited	(26,667)	18.86
Outstanding at December 31, 2023	386,473	$	18.58	7.8	$	2,424
Vested and expected to vest at December 31, 2023	386,473	$	18.58	7.8	$	2,424
Exercisable at December 31, 2023	249,807	18.73		7.8	$	1,528

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, 2023, multiplied by the number of shares per each option.

At December 31, 2023, total remaining stock-based compensation cost for unvested stock options under the Plan was approximately $183,000. The cost is expected to be recognized over a weighted-average period of 0.8 years.

There were no stock options granted during the year ended December 31, 2023. The weighted-average grant date fair value of stock options granted during the year ended December 31, 2022 was $5.18.

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, 2022 were as follows:


	December 31, 2022
Risk-free interest rate	1.70	%
Expected term (years)	6.25 years
Volatility	30.0	%
Dividend yield	0.40	%

Restricted Stock Units

A summary of the Company’s unvested restricted stock units activity under the Plan for the years ended December 31, 2023 and 2022 is as follows:


	Number of Shares Outstanding	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	159,000	$	11.08
Granted	9,900	16.69
Vested	(75,588)	10.72
Forfeited	(11,166)	15.54
Unvested at December 31, 2022	82,146	$	11.47
Vested	(75,133)	11.13
Forfeited	(1,667)	10.00
Unvested at December 31, 2023	5,346	$	16.71

At December 31, 2023, total remaining stock-based compensation cost for unvested restricted stock units under the Plan was approximately $15,000. The cost is expected to be recognized over a weighted-average period of 0.8 years.

There were no restricted stock units granted during the year ended December 31, 2023. There were 9,900 restricted stock units granted during the year ended December 31, 2022 with a weighted-average grant date fair value of $16.69. The total fair value of restricted stock units, as of their respective vesting date, during the year ended December 31, 2023, and 2022, was $1,612,000 and $1,156,000, respectively.