STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 14. STOCK-BASED COMPENSATION

In connection with the closing of the IPO, the Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans. The purpose of the Equity Incentive Plans is to provide equity incentive opportunities to members of the Manager’s management team and employees who perform services for the Company, the Company’s independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to the Manager.

On November 26, 2019, the Company granted restricted shares of common stock to each of the inaugural non-employee directors under the Individual Plan. Each of the inaugural non-employee directors received an award of 2,000 restricted shares of common stock on November 26, 2019. The restricted shares will vest in substantially equal installments on each of the first, second and third anniversaries of the grant date. As of December 31, 2021, the first and second increments of this award had vested, leaving 2,668 shares unvested. In addition, the restricted shares are subject to a holding period beginning on the grant date and ending on the date that the grantee ceases to serve as a member of the Board (the “Holding Period”). During the Holding Period, the restricted shares may not be sold, pledged or otherwise transferred by the grantee. Except for the one-time IPO-related grant of these 8,000 restricted shares of common stock, and the quarterly common stock grants to the non-employee directors in lieu of cash retainer fees (pursuant to the directors’ annual election under the Company’s Non-Employee Director Compensation Policy), the Company has not made any grants under the Equity Incentive Plans. Any future grants under the Equity Incentive Plans will be approved by the compensation committee of the Board. The 2019 non-employee director share awards had an aggregate grant date fair value of $0.2 million. The Company’s determination of the grant date fair value of the three-year vest restricted stock

awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is recognized on a straight-line basis over the vesting period and is included in general and administrative expenses in the Company’s consolidated statements of operations. Award forfeitures are accounted for in the period in which they occur.

A summary of activity for these awards during the six months ended June 30, 2022 is presented below: 

Non-Vested Restricted Shares	Shares	Wtd. Avg. Fair Value
Non-Vested at January 1, 2022	2,668	$	18.80
Granted	—		—
Vested	—	$	—
Expired	—		—
Forfeited	—		—
Non-Vested at June 30, 2022	2,668	$	18.80

As of June 30, 2022, there was $0.02 million of unrecognized compensation cost related to the three-year vest restricted shares, which will be recognized over a remaining period of 0.4 years.

Each member of the Board has the option to receive his or her annual retainer in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer payment due to such director by the trailing 20-day average price of the Company’s common stock as of the last business day of the calendar quarter, rounded down to the nearest whole number of shares. During the six months ended June 30, 2022, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $0.1 million, or 7,203 shares, of which 3,514 shares were issued on April 1, 2022 and 3,689 shares were issued on July 1, 2022. During the six months ended June 30, 2021, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $0.1 million, or 6,978 shares, of which 3,453 were issued on April 1, 2021 and 3,525 shares were issued on July 1, 2021. 

Stock compensation expense for the three and six months ended June 30, 2022 and 2021 is summarized as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Stock Compensation Expense – Director Restricted Stock	$	12	$	13	$	25	$	25
Stock Compensation Expense – Director Retainers Paid in Stock		66		66		132		127
Total Stock Compensation Expense	$	78	$	79	$	157	$	152