Note 8 - Options

12 Months Ended

Dec. 31, 2024

Notes

Note 8 - Options

Note 8 – Options

The Company has stock option plans which authorize the grant of stock options to eligible employees, directors and other individuals to purchase up to an aggregate of 275 thousand shares of common stock, of which 98 thousand are outstanding as of December 31, 2024.  All options granted under the plans are granted at current market value at the date of grant, and may be exercised between six months and ten years following the date of grant.  The plans are intended to advance the interest of the Company by attracting and ensuring retention of competent directors, employees and executive personnel, and to provide incentives to those individuals to devote their utmost efforts to the advancement of stockholder value.  Changes in stock options were as follows:

	Shares	Price Range
	(000’s)	Per Share
2024
Granted	25	$64.09	$64.09
Expired or canceled	3	49.18	82.60
Exercised	8	49.18	58.50
Total outstanding at December 31	98	58.50	82.60
Total exercisable at December 31	52	58.50	82.60
2023
Granted	19	$77.07	$77.07
Expired or canceled	0.4	77.05	77.05
Exercised	2	49.18	77.05
Total outstanding at December 31	84	49.18	82.60
Total exercisable at December 31	50	49.18	82.60
2022
Granted	21	$82.60	$82.60
Expired or canceled	2	33.30	77.05
Exercised	4	33.30	77.05
Total outstanding at December 31	67	33.30	77.05
Total exercisable at December 31	40	33.30	77.05

For the years ended December 31, 2024, 2023 and 2022, the Company reduced current income taxes payable by $20, $12 and $6, respectively, for the income tax benefit attributable to sale by optionees of common stock received upon the exercise of stock options.

Stock-Based Compensation

In 2024, the Company recognized $255 in equity compensation cost, compared to $225 in 2023 and $183 in 2022.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Years ended December 31,
	2024	2023	2022
Expected dividend amount per quarter	$ 0.3150	$ 0.3090	$ 0.3050
Expected stock price volatility	31.21%	31.67%	29.87%
Risk-free interest rate	4.23%	4.75%	4.09%
Expected life of options	5.8 years	5.6 years	5.7 years

The per share weighted average fair value of options granted during 2024 is $19.77, 2023 is $25.09 and in 2022 is $25.34.

All UTMD options vest over a four-year service period.  At December 31, 2024 there was $898 total unrecognized compensation expense related to non-vested stock options under the plans. A $329 portion of the cost is expected to be recognized over the next twelve months, and the remaining $570 recognized over the next 4 years. Expected dividend amounts were estimated based on the actual cash dividend rate at the time the options were granted and an estimate of future dividends based on past dividend rate changes as well as management’s expectations of future dividend rates over the expected holding period of the options.  Expected volatility is based on UTMD’s historical volatility over recent periods of time and trends in that volatility, giving weight to more recent periods.  Risk free interest rates were estimated based on actual U.S. Treasury Securities Interest rates as reported by the Federal Reserve Bank for periods of time equivalent to the holding periods estimated for the options on the dates the options were granted.  Expected term of options were estimated based on historical holding periods for similar options previously granted by UTMD to employees and directors.  

The following table summarizes information about stock options outstanding at December 31, 2024:

				Options Outstanding				Options Exercisable
					Weighted
					Average
					Remaining		Weighted			Weighted
	Range of			Actual	Contractual		Average			Average
	Exercise			Number	Life		Exercise	Number		Exercise
	Prices			Outstanding	(Years)		Price	Exercisable		Price
$	58.50	-	64.09	29,575	8.49	$	63.15	4,975	$	58.50
	74.64	-	77.07	48,310	6.39		76.60	34,210		76.41
	82.60	-	82.60	20,100	7.78		82.60	10,050		82.60
$	58.50	-	82.60	97,985	7.31	$	73.77	49,235	$	75.86

	2024	2023	2022
Intrinsic Value of Stock Options Exercised	$77	$31	$141
Intrinsic Value of Stock Options Outstanding	-	814	1,812