Equity Incentive Plan

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Note 9 - Equity Incentive Plan

Stock Incentive Plan

The Broadmark Realty 2019 Stock Incentive Plan (the “Plan”) allows for the issuance of up to 5,000,000 stock options, stock appreciation rights, restricted stock awards, restricted stock units or other equity-based awards or any combination thereof to the directors, employees, consultants or any other party providing services to us. The Plan is administered by the compensation committee of our board of directors.

Awards made to our employees and directors typically consist of restricted stock units (“RSUs”) with only a service vesting condition. Awards to certain of our employees contain both service vesting and market conditions and are referred to as performance restricted stock units (“pRSUs”).

The RSUs granted under the Plan generally vest from one to three years depending on the terms of the specific award. All RSUs awarded will be settled upon vesting in shares of our common stock.

For the Company's pRSUs, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of market-based performance conditions. The market-based performance conditions are based on the Company's achievement of a relative total shareholder return (“TSR”) performance requirement, on a percentile basis, compared to a defined group of peer companies over three year performance periods, or contingent upon achieving specific stock price milestones over a five year performance period.

The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market-based performance conditions. The weighted average fair value and assumptions used to value the pRSU awards granted with market-based performance conditions are as follows:


	Six Months Ended
	June 30, 2022			June 30, 2021
Performance share fair value	$	6.74		$	8.20
Risk-free interest rate		1.74	%		0.27	%
Expected volatility		30.48	%		25.71	%
Expected life (in years)		2.85			2.77
Expected dividend yield		9.82	%		8.13	%

Dividend equivalents are not accrued or paid on unvested equity awards granted to employees, executive officers and directors and accordingly those unvested equity awards are not considered participating securities.

If an award granted under the Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid will again become available for the issuance of additional awards.

As of June 30, 2022, there were 3,106,272 shares available to be awarded under the Plan.

The following tables summarize the activity related to RSUs and pRSUs during 2022:


	Shares			Weighted Average Grant Date Fair Market Value
Unvested RSUs outstanding as of December 31, 2021		541,296
Granted		419,101		$	6.90
Vested		(109,355	)	$	9.50
Forfeited		(5,691	)	$	8.82
Unvested RSUs outstanding as of March 31, 2022		845,351
Granted		105,773		$	6.49
Vested		(71,036	)	$	10.52
Forfeited		(40,862	)	$	8.84
Unvested RSUs outstanding as of June 30, 2022		839,226


	Shares			Weighted Average Grant Date Fair Market Value
Unvested pRSUs outstanding as of December 31, 2021		56,978
Granted		276,679		$	6.74
Unvested pRSUs outstanding as of March 31, 2022		333,657
Forfeited		(39,084	)	$	7.35
Unvested pRSUs outstanding as of June 30, 2022		294,573

As of June 30, 2022, there was $7.1 million of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation will be recognized on a straight-line basis over a weighted-average recognition period of 1.9 years.