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Note 13 - Share-based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

On May 7, 2014, our shareholders approved the 2014 Omnibus Incentive Plan and in May 2021 this plan was amended as our shareholders authorized an additional 600,000 shares (as amended, the "2014 Plan"). The 2014 Plan includes 1,100,000 of our common shares that may be granted under various types of awards as described in the 2014 Plan. As of December 31, 2021, we were authorized to issue 573,250 shares under the 2014 Plan.

On January 24, 2021, we adopted the 2021 Inducement Option Plan (the "2021 Plan") pursuant to which 25,000 non-qualified stock options were granted to seven key employees acquired with the Acquisition. The 2021 Plan did not require shareholder approval under Nasdaq Listing Rule 5635(c). As of December 31, 2021, there were no remaining shares available to grant under the 2021 Plan.

Stock Options

The following table presents the weighted average assumptions used in the option-pricing model at the grant date for options granted during the years ended December 31:

	2021			2020
Assumptions:
Risk-free interest rate		0.32	%		1.61	%
Expected dividend yield		1.18	%		2.00	%
Expected volatility of Rocky's common stock		51.87	%		42.27	%
Expected option term (years)		5.6			6.3
Weighted-average grant date fair value per share	$	12.16		$	9.36

For the years ended December 31, 2021 and 2020, we recognized share-based compensation expense and the corresponding tax benefit as follows:

($ in thousands)	2021		2020
Share-based compensation expense	$	1,265	$	780
Tax benefit		192		58

The following summarizes stock option activity for the year ended December 31, 2021:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
($ amounts are per share)	Shares			Exercise Price		Actual Term		Intrinsic Value
Options outstanding at January 1, 2021		257,400		$	22.61
Issued		121,250			32.32
Exercised		(47,700	)		17.29
Forfeited or expired		(2,950	)		26.84
Options outstanding at December 31, 2021		328,000		$	26.94		5.6	$	1,510,216
Expected to vest		153,700		$	29.62		6.9	$	580,937
Exercisable at December 31, 2021		174,300		$	24.57		3.8	$	929,279

In the first quarter of 2021, our officers and certain employees were granted 76,250 options. The plans generally provided for grants with the exercise price equal to fair value on the date of grant, graduated vesting periods of up to 5 years, and lives not exceeding 10 years. For the years ended 2021 and 2020, cash received for the exercise of stock options was approximately $825,000 and $136,000, respectively.

In the first quarter of 2021, Board of Director members were granted 45,000 stock options that vest over a year and will expire in 5 years.

As of December 31, 2021, the total unrecognized compensation cost related to non-vested stock options and restricted stock units was approximately $1,303,000 with a weighted-average expense recognition period of 3.8 years.

During the years ended December 31, 2021 and 2020, we issued 6,868 and 10,456 shares of common stock to members of our Board of Directors, respectively.