Note 6 - Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

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 2022 and 2021, 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, 2022, the Company had reserved 2.2 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,
	2022		2021
	(In thousands)
General and administrative expense	$	1,445	$	1,779
	$	1,445	$	1,779

Stock-based compensation expense of $1.2 million and $1.2 million was recognized during the years ended  December 31, 2022 and 2021, 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, 2022 and 2021, respectively, the Company issued 165 thousand and 83 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 110 thousand and 95 thousand shares during the years ended December 31, 2022 and 2021.  The Company vested 22 thousand and 67 thousand shares during the years ended December 31, 2022 and 2021, respectively, for time based management compensation.  The Company settled in stock other management bonuses resulting in the issuance of 82 thousand and 60 thousand vested shares for the years ended December 31, 2022 and 2021, respectively.  The Company issued 15 thousand and 20 thousand vested shares to a non-employee for services during the years ended December 31, 2022 and 2021. The Company had liabilities of $0.4 million and $0.8 million as of December 31, 2022 and 2021, 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, 2022 and 2021, respectively, 92 thousand and 6 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 zero and $0.1 million for the years ended December 31, 2022 and 2021, respectively. During October 2020 and in January 2022, the Company granted the CEO restricted stock units that may vest based on certain performance targets and criteria determined by the Board of Directors.  Such 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. For the years ended December 31, 2022 and 2021, the Company recognized stock based compensation expense of $0.2 million and $0.5 million, respectively, and vested 64 thousand and 85 thousand shares, respectively, pursuant to these arrangements.

Unrecognized compensation expense related to performance stock units and restricted stock at December 31, 2022 was immaterial.

While there were no stock options granted during 2022 and 2021, 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, 2022 and 2021.  During the years ended December 31, 2022 and 2021, respectively, 0 thousand and 1 thousand performance-based options vested and an immaterial amount of compensation cost was recognized.  During the years ended December 31, 2022 and 2021, respectively, 11 thousand and 11 thousand performance-based options were canceled or forfeited. The maximum number of unvested options at December 31, 2022 attainable under these grants was zero 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, 2022 and 2021, respectively, the Company issued no service-based options to employees and recorded zero compensation expense from the vesting of previously issued awards. During the years ended December 31, 2022 and 2021, respectively, 0 thousand and 5 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, 2021		45			14.20
Options granted		—			—
Options exercised		—			—
Options canceled/forfeited		(16	)		14.20
Outstanding at December 31, 2021		29			14.20
Options granted		—			—
Options exercised		—			—
Options canceled/forfeited		(11	)		14.48
Outstanding at December 31, 2022		18			14.05		1.50	$	—
Options exercisable at December 31, 2022		18			14.05		1.50		—
Shares available for future grant		2,134

At December 31, 2022, total unrecognized compensation cost related to non-vested service-based options was immaterial. At December 31, 2022, 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, 2021		287		$	8.78
Granted		163			7.21
Vested		(242	)		6.82
Forfeited		(6	)		14.99
Unvested at December 31, 2021		202			9.70
Granted		343			5.60
Vested		(293	)		5.77
Forfeited		(92	)		13.90
Unvested at December 31, 2022		160			5.70