The Company recognizes all stock-based compensation to employees and directors, including awards of stock options and restricted stock units (“RSUs”) or restricted stock awards (“RSAs”), in the financial statements as compensation cost over the applicable vesting periods based on the fair value of the awards on the date of grant.


(in thousands)	2020		2019		2018
Cost of sales - contracts	$	367	$	234	$	90
Selling, general and administrative	3,884		2,472		949
Total stock-based compensation expense	$	4,251	$	2,706	$	1,039

As a result of forfeitures of unvested stock awards prior to the completion of the requisite service period or failure to meet requisite performance targets, the Company recorded benefits for the years ended December 31, 2020, 2019, and 2018 of $226,000, $121,000, and $18,000 respectively.

The Company has 2.7 million shares of common stock reserved for stock-based awards under its Amended and Restated 2015 Equity Incentive Plan (“2015 Plan”). The 2015 Plan provides for the grant of several different forms of stock-based awards, including stock options to purchase shares of the Company's common stock. Stock options granted under the 2015 Plan may be incentive stock options or non-qualified stock options. Generally, stock options are nontransferable other than upon death. Stock options generally vest over a one to three year period and expire ten years after the date of the grant. The Compensation Committee of the Board of Directors (“Compensation Committee”) has authority to administer the 2015 Plan and determine the material terms of option and other awards under the 2015 Plan.


(in thousands, except for exercise price)	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2019	400	$	14.50
Options granted	619	13.82
Options exercised	(47)	10.90
Options forfeited	(15)	11.36
Outstanding at December 31, 2020	957	$	14.29	$	46,398
Vested and expected to vest at December 31, 2020	938	$	14.27
Total shares exercisable as of December 31, 2020	222	$	12.03
Shares remaining available for future grant	601

The Company recorded option expense for the years ended December 31, 2020, 2019, and 2018 of $1.4 million, $0.5 million, and $0.3 million respectively. The weighted average grant date fair value of stock options granted during 2020, 2019, and 2018 was $13.82, $24.87, and $19.36 respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019, and 2018 was $1.9 million, $5.4 million, and $1.6 million. New shares of the Company’s common stock were issued as a result of stock option exercises in 2020 and for options exercised in 2019 and 2018.

The fair value of options at the date of the grant was estimated using the Black-Scholes model with the following assumptions for the respective period ending December 31:


	2020		2019
Expected option life	4.4 years		3.0 years
Weighted average risk-free interest rate	0.4	%	2.0	%
Weighted average expected volatility	47.6	%	35.0	%
Expected dividend yield	None		None

For the years ended December 31, 2020 and 2019, the expected option life was based on the Company’s historical experience with similar type options. Expected volatility is based on historic volatility levels of the Company’s common stock over the preceding period of time consistent with the expected life. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life. Stock options outstanding at December 31, 2020 are summarized as follows:

At December 31, 2020, the aggregate unrecognized compensation cost of unvested equity awards, as determined using a Black-Scholes option valuation model for option awards and the closing stock price on the date of grant for RSAs and RSUs was $11.6 million, which is expected to be recognized as compensation expense in fiscal years 2021 through 2024. The Company has not paid cash dividends on its common stock, and the Company presently intends to continue to retain earnings for reinvestment in growth opportunities. Accordingly, it is anticipated no cash dividends will be paid in the foreseeable future.

The 2015 Plan also provides for the issuance of RSAs and RSUs. These types of awards can have service-based and/or performance-based vesting. Grants of RSAs and RSUs with service-based vesting are subject to vesting periods ranging from 1 to 3 years. Grants of RSAs and RSUs with performance-based vesting are subject to a vesting period of 1 to 4 years and performance targets as defined by the Compensation Committee. The Company assesses the likelihood of achievement throughout the performance period and recognizes compensation expense associated with its performance awards based on this assessment in accordance with ASC Topic 718. Other terms and conditions applicable to any RSA or RSU award will be determined by the Compensation Committee and set forth in the agreement relating to that award.


Non-vested RSAs	Shares (in thousands)	Weighted Average grant- date fair value
Balance at January 1, 2020	149	$	24.62
Granted	29	30.96
Vested	(112)	26.36
Forfeited	(5)	23.91
Balance at December 31, 2020	61	$	25.62

Total stock-based compensation related to RSAs and RSUs includes $2.9 million, $2.2 million, and $0.7 million in 2020, 2019, and 2018 respectively. During 2020, 2019, and 2018 the Company granted 29,000, 225,000, and 79,000 RSAs, respectively. For the periods ended 2020, 2019, and 2018 the Company recognized compensation expense related to performance awards based on its estimate of the probability of achievement in accordance with ASC Topic 718. For the ended December 31, 2020, the Company determined the achievement of performance based awards to be probable for the Government segment; the achievement of performance based awards was determined to not be probable for the Restaurant/Retail segment. For the years ended December 31, 2019 and 2018, performance based awards were achieved for both the

The fair value of RSAs is based on the closing price of the Company’s common stock on the date of grant. The weighted average grant date fair value of RSAs granted during the years 2020, 2019, and 2018 was $30.96, $24.77 and $17.08, respectively. In accordance with the terms of the RSA agreements, the Company released 112,000, 13,000, and 31,000 shares during 2020, 2019, and 2018 respectively. During 2020, there were approximately 5,000 shares of RSA canceled, 4,000 of which were performance-based RSAs. During 2019, there were approximately 53,000 shares of RSA canceled, 38,000 of which were performance-based RSAs. During 2018, there were 13,000 shares of RSA canceled, of which 12,000 were performance-based RSAs.


Non-vested RSUs	Shares (in thousands)	Weighted Average grant- date fair value
Balance at January 1, 2020	67	$	29.73
Granted	383	13.80
Vested	(23)	29.66
Forfeited	—	—
Balance at December 31, 2020	427	$	15.46

During 2020 and 2019, the Company granted 383,000 and 67,000 RSUs respectively. In accordance with ASC Topic 718, the Company recorded $0.1 million in compensation expense associated with performance based RSUs in 2020. There were no RSUs granted in 2018.

The fair value of RSUs is based on the closing price of the Company’s common stock on the date of grant. The weighted average grant date fair value of RSUs granted during the years 2020 and 2019 was $13.80 and $29.73, respectively. In accordance with the terms of the RSU agreements, the Company issued 23,000 and zero shares during 2020 and 2019, respectively. There were no forfeited or canceled RSUs during the years 2020 or 2019.