Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

12. STOCK-BASED COMPENSATION

At the 2005 annual meeting of stockholders, stockholders of the Company approved an equity incentive plan (as amended, the “2005 Plan”). The 2005 Plan expired in June 2015. There are stock options issued under the 2005 Plan that remain outstanding. The 2005 Plan provided for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, all as defined in the 2005 Plan. The 2005 Plan provided for the issuance of up to 2,000,000 shares of common stock to eligible individuals, including directors, through the various forms of permitted awards. The Company was not permitted to issue stock options at an exercise price lower than fair market value at the date of grant. All stock options were required to have an exercise period not to exceed ten years. The Company had granted awards of incentive stock options and non-qualified stock options under the 2005 Plan, all of which had exercise prices that were not less than the fair market value at the date of grant. Options granted had six month, one year, three year or four year vesting periods. All outstanding options were issued at market value as of the date of the grant.

Stockholders of the Company approved the 2016 Equity Incentive Plan (the “2016 Plan”) at the 2016 annual meeting of stockholders. The 2016 Plan will expire in June 2026. The 2016 Plan provides for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, all as defined in the 2016 Plan. The 2016 Plan provides for the issuance of up to 3,500,000 shares of common stock to eligible individuals, including directors, through the various forms of permitted awards. The Company is not permitted to issue stock options at an exercise price lower than fair market value at the date of grant. All stock options are required to have an exercise period not to exceed ten years. As of December 31, 2022, the Company has granted 1,062,162 target performance stock units (“PSUs”) under the 2016 Plan. Any committee as delegated by the board of directors has the power and discretion to, among other things, prescribe the terms and conditions for the exercise of, or modification of, any outstanding awards in the event of merger, acquisition or any other form of acquisition other than a reorganization of the Company under the United States Bankruptcy Code or liquidation of the Company. The 2016 Plan also allows limited transferability of any stock options to legal entities that are 100% owned or controlled by the optionee or to the optionee’s family trust.

PSUs

The PSUs vest subject to market and performance conditions. The conditions are weighted 25% based on market conditions and 75% based on performance conditions. Market conditions are based on the Company’s total shareholder return (“TSR”) relative to a select group of peer companies at the end of a three year performance period. Performance conditions are based on the Company’s actual Adjusted EBITDA over the three year performance period compared to forecasted Adjusted EBITDA over the same period. Depending on the TSR and Adjusted EBITDA at the end of the performance period, anywhere from 0% to 200% of the target grant may vest. Expense is recognized on a straight-line basis over the performance period beginning on the date of grant. Probability is assessed quarterly on the performance conditions and compensation expense is adjusted accordingly. Actual forfeitures are recognized as they occur.

Activity in the Company’s stock-based compensation plan for the PSUs was as follows:


	Target PSUs		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2020	441,223	$	9.62
Granted	413,964		3.75
Vested	(87,171)		6.75
Forfeited	(80,797)		9.41
Nonvested at December 31, 2020	687,219	$	6.47
Granted	268,947		6.44
Vested	—		—
Forfeited	(141,002)		11.97
Nonvested at December 31, 2021	815,164	$	5.51
Granted	420,989		10.22
Vested	(227,510)		9.17
Forfeited	(21,481)		6.14
Nonvested at December 31, 2022	987,162	$	6.66

At December 31, 2022, there was a total of $3.3 million of total unrecognized compensation expense related to the PSUs. The cost is expected to be recognized over a weighted-average period of 1.7 years. The PSUs granted during 2020 will vest in March 2023.

The fair value of the PSUs granted is estimated on the date of grant using the Monte Carlo model with the following assumptions:


Assumptions for PSU Awards
	2022	2021	2020
Risk-free interest rate	2.47%	0.19%	0.19%
Expected life	2.8 years	2.9 years	2.2 years
Expected volatility	91.0%	82.2%	88.4%
Expected dividends	$0	$0	$0
Forfeiture rate	0%	0%	0%

Stock Options

Activity related to options in the Company’s stock-based compensation plans for employee stock options was as follows:


	Option Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term ⁽¹⁾	Options Exercisable		Weighted-Average Exercise Price
Outstanding at January 1, 2022	1,127,500	$	5.05	2.99	1,127,500	$	5.05
Granted	—		—
Exercised	(52,500)		5.05
Cancelled or forfeited	—		—
Expired	—		—
Outstanding at December 31, 2022	1,075,000	$	5.05	1.99	1,075,000	$	5.05

⁽¹⁾ In years

‎

The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2022:


Dollar amounts in thousands	Options Outstanding	Options Exercisable		Intrinsic Value of Options Outstanding		Intrinsic Value of Options Exercisable	Weighted-Average Life of Options Outstanding ⁽¹⁾	Weighted-Average Life of Options Exercisable ‎⁽¹⁾
Exercise Price:
$5.05	1,075,000	1,075,000	$	2,129	$	2,129	2.0	2.0

⁽¹⁾ In years

The aggregate intrinsic value represents the difference between the Company’s closing stock price of $7.03 per share as of December 31, 2022 and the exercise price multiplied by the number of options outstanding or exercisable as of that date.

There were no options issued to directors of the Company during 2022. As of December 31, 2022, there were 96,700 options outstanding to independent directors of the Company with a weighted-average exercise price of $7.16 per share. At December 31, 2022, there was $0.1 million in unrecognized compensation expense related to directors’ options.

The following table includes additional information related to exercises of stock options:


	For the year ended December 31,
Amounts in thousands	2022		2021		2020
Intrinsic value of share-based awards exercised	$	183	$	451	$	—

Stock-based compensation expense was recognized in general and administrative expenses on the Company’s consolidated statement of earnings (loss) as follows:


	For the year ended December 31,
Amounts in thousands	2022		2021		2020
Compensation expense:
2016 Plan	$	3,335	$	2,652	$	(214)