Note 6 - Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

6. Stock-Based Compensation

Equity Compensation Plans

The 2014 Equity Compensation Plan has 4.1 million shares authorized for issuance. During 2021 and 2020, the Company issued no stock-based awards outside of existing plans. To the extent allowable, service-based options are incentive stock options. Options granted under the plans are at prices equal to or greater than the fair market value at the date of grant. Upon exercise of stock options, the Company issues shares first from treasury stock, if available, then from authorized but unissued shares. At December 31, 2021, the Company had reserved 2.6 million shares of common stock for possible future issuance under its 2014 Equity Compensation Plan and other previously expired equity compensation plans.

Classification of Stock-Based Compensation Expense

Stock-based compensation consists of time based awards to employees, financial liability based awards to employees and non-employees to be settled in stock, performance based awards to employees, and financial liability based awards to Directors for quarterly and annual services. Stock-based compensation expense was recognized in the Consolidated Statements of Operations as follows: 

	Year Ended December 31,
	2021		2020
	(In thousands)
General and administrative expense	$	1,779	$	965
	$	1,779	$	965

Stock-based compensation expense of $1.2 million and $1.0 million was recognized during the years ended December 31, 2021 and 2020, respectively, related to annual and quarterly Board fees, time based management awards and management bonuses earned during the year that were subsequently settled in stock.  For the years ended December 31, 2021 and 2020, respectively, the Company issued 83 thousand and 93 thousand of restricted shares to Directors for their annual and quarterly services.  The annual grants vest over a one year period, or are vested at issuance for directors 65 or older, while quarterly amounts are paid in arrears.  The Company vested 95 thousand and 78 thousand during the years ended December 31, 2021 and 2020.  The Company vested 67 thousand and 96 thousand  shares during the years ended December 31, 2021 and 2020, respectively, for time based management compensation.  The Company settled in stock other management bonuses resulting in the issuance of 60 thousand and 0 thousand vested shares for the years ended December 31, 2021 and 2020, respectively.  The Company issued 20 thousand vested shares to a non-employee for services during 2021. The Company had liabilities of $0.8 million and $0.5 million as of December 31, 2021 and 2020, respectively, that were settled through the issuance of common stock in the subsequent period. 

The Company has previously granted certain performance-based stock units that vest based on the achievement of targeted capital returns based on net cash proceeds received by the Company on the sale, merger or other exit transaction of certain identified companies. The requisite service periods for these performance-based awards were based on the Company’s estimate of when the performance conditions will be met. Compensation expense was recognized for performance-based awards for which the performance condition is considered probable of achievement. During the years ended December 31, 2021 and 2020, respectively, 6 thousand and 129 thousand performance-based stock units pursuant to these targeted capital return pools were canceled or forfeited. The Company recorded a reduction of compensation expense related to these performance-based awards of $0.1 million and $0.7 million for the years ended December 31, 2021 and 2020  respectively. During 2020 and in January 2022, the Company also granted a CEO bonus award that will be settled in the vesting of performance-based units based on criteria determined by the Board of Directors.  The performance-based stock units represent the right to receive shares of the Company’s common stock, on a one-for-one basis at target, or up to 120% with respect to the 2020 grant, for certain specified thresholds. The 2020 award resulted in $0.5 million of compensation cost in 2021 based upon the vesting of 85 thousand performance based units. The January 2022 award could result in the vesting of up to 80 thousand performance-based stock units.

Unrecognized compensation expense related to performance stock units and restricted stock at December 31, 2021 was immaterial.

While there were no stock options granted during 2021 and 2020, the Company had outstanding options that vest based on two different types of vesting schedules:

1) performance-based; and

2) service-based.

Performance-based option awards also entitled participants to vest in a number of awards determined by achievement by the Company of target capital returns based on net cash proceeds received by the Company upon the sale, merger or other exit transaction of certain identified companies. Compensation expense is recognized over the requisite service periods using the straight-line method but is accelerated if capital return targets are achieved earlier than estimated.  The Company did not issue any performance-based units during the years ended December 31, 2021 and 2020.  During the years ended December 31, 2021 and 2020, respectively, 1 thousand and 0 performance-based options vested and an immaterial amount of compensation cost was recognized.  During the years ended December 31, 2021 and 2020, respectively, 11 thousand and 72 thousand performance-based options were canceled or forfeited. The maximum number of unvested options at December 31, 2021 attainable under these grants was 10 thousand shares.

Service-based awards generally vest over four years after the date of grant and expire eight years after the date of grant. Compensation expense is recognized over the requisite service period using the straight-line method. The requisite service period for service-based awards is the period over which the award vests. During the years ended December 31, 2021 and 2020, respectively, the Company issued no service-based options to employees and recorded $0.0 million of compensation expense from the vesting of previously issued awards. During the years ended December 31, 2021 and 2020, respectively, 5 thousand and 62 thousand service-based options were canceled or forfeited.  

Option activity of the Company is summarized below: 

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding at January 1, 2020		179			15.27
Options granted		—			—
Options exercised		—			—
Options canceled/forfeited		(134	)		14.36
Outstanding at December 31, 2020		45			14.20
Options granted		—			—
Options exercised		—			—
Options canceled/forfeited		(16	)		14.20
Outstanding at December 31, 2021		29			14.20		1.85	$	—
Options exercisable at December 31, 2021		19			14.06		2.43		—
Shares available for future grant		2,374

At December 31, 2021, total unrecognized compensation cost related to non-vested service-based options was immaterial. At December 31, 2021, total unrecognized compensation cost related to non-vested performance-based options was immaterial.

Deferred stock unit, performance-based stock unit and restricted stock activity are summarized below: 

	Shares			Weighted Average Grant Date Fair Value
	(In thousands)
Unvested at January 1, 2020		287		$	14.44
Granted		313			5.89
Vested		(174	)		7.77
Forfeited		(139	)		15.24
Unvested at December 31, 2020		287			8.78
Granted		163			7.21
Vested		(242	)		6.82
Forfeited		(6	)		14.99
Unvested at December 31, 2021		202			9.70