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Note 11 - Stock Based Compensation and Other Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

11. Stock Based Compensation and Other Plans

2021 Plan

On June 4, 2021, the Board and the Board's Compensation Committee (the "Compensation Committee") approved the revised proposed 2021 Stock Compensation Plan of SPAR Group, Inc. (the "2021 Plan") for submission, approval and ratification by the Company's stockholders at their Annual Meeting on August 12, 2021. At that meeting, the 2021 Plan was ratified and approved by the Company's stockholders and became effective immediately on August 12, 2021 (the "2021 Plan Effective Date"), through May 31, 2022 (the "2021 Plan Period"). The 2021 Plan terminates on May 31, 2022.

The 2021 Plan provides for the issuance of Awards for NQSOs and RSUs (as defined below) respecting shares of SGRP's Common Stock ("SGRP Shares") covering up to a total of 400,000 SGRP Shares ("Maximum Award") under the 2021 Plan ("New Awards") to, in or otherwise respecting SGRP Shares ("New Award Shares") so long as the New Award Shares covered by each proposed New Award or group of New Awards in the aggregate (NQSOs plus RSUs) do not at the time of the proposed issuance exceed the Maximum Award and the RSU component does not exceed 150,000 New Award Shares.

As of December 31, 2021, 58,011 RSU Awards had been granted under the 2021 Plan (all of which remained outstanding).

Option Awards under the 2021 Plan expire on the fifth anniversary of grant or sooner as provided in the 2021 Plan, whether or not vested. Once vested under the 2021 Plan, RSU Awards do not expire. Under the 2021 Plan: (i) each stock option Award must vest over a four-year period following the date of grant in four (4) equal amounts annually starting on the first anniversary of the grant date; (ii) any RSU Award granted to an employee shall vest over a three-year period following the date of grant annually in three (3) equal amounts starting on the first anniversary of the RSU grant date; and (iii) any RSU Award granted to a Director shall vest over a one-year period following the date of grant in four (4) equal amounts quarterly with one (1) installment vesting at the end of each three-month period following the date of the RSU grant date.

2020 Plan

The Board authorized and approved the revised proposed 2020 stock compensation plan of SGRP (the "2020 Plan"), which was submitted to and approved by SGRP's stockholders at the Special Meeting of SGRP's stockholders on January 19, 2021 (the "2020 Plan Effective Date"). The 2020 Plan became effective immediately upon such approval.

The 2020 Plan: (a) has a four-month term from the 2020 Plan Effective Date (as defined below) through May 1, 2021 (the "2020 Plan Period"); and (b) provides for the issuance of "non-qualified" option awards to purchase shares of SGRP's Common Stock ("SGRP Shares") aggregating: (i) 550,000 SGRP Shares; plus (ii) 50,000 SGRP Shares for each of up to the first three (3) additional new Directors during the period December 1, 2020, to April 30, 2021 (for a possible total of 700,000 SGRP Shares) available for future Awards during the 2020 Plan Period as outlined below (the "20-21 Maximum") under 2020 Plan. Since one (1) new director joined the Board on the 2020 Plan Effective Date, 600,000 SGRP Shares were available for Awards on the 2020 Plan Effective Date.

The 2020 Plan required the Company to issue as of the plan effective date new awards for options to purchase: (i) an aggregate of 125,000 SGRP Shares to 19 employees (other than the Named Executive Officers) in individual amounts designated by the Board; (ii) 10,000 SGRP Shares to each of Panagiotis N. Lazaretos, Igor Novgorodtsev, Robert G. Brown and Arthur H. Baer (each a director); and (iii) 50,000 SGRP Shares to each member of the Board of Directors on the Effective Date of the Plan. Those options were granted by the Board on February 4, 2021. The 2020 Plan was terminated on May 1, 2021, and no further options were granted under it.

Inducement Stock Award Summary

On August 2, 2021 as an inducement to Ron Lutz to become the Corporation's Chief Global Commercial Officer, the Corporation granted to Mr. Lutz RSU Awards issued and effective on that date having a fair market value of $50,000 (i.e., 26,882 SGRP Shares at $1.86 per share) as of that date and vesting in one (1) year.

On August 2, 2021 as an inducement to William Linnane to become the Corporation's Chief Strategy and Growth Officer, the Corporation granted to Mr. Linnane RSU Awards issued and effective on that date having a fair market value of $50,000 (i.e., 26,882 SGRP Shares at $1.86 per share) as of that date and vesting in one (1) year.

On February 22, 2021, as an inducement to Michael R. Matacunas to become the Corporation's Chief Executive Officer and a Director, the Corporation granted to Mr. Matacunas Awards consisting of: (a) nonqualified option Awards to acquire 630,000 SGRP shares at $1.90 per share; and (b) RSU Awards issued and effective: (i) on that date having a fair market value of $50,000 (i.e., respecting 26,315 SGRP Shares at $1.90 per share) as of that date and vesting in one (1) year on February 22, 2022.

On August 31, 2020, as an inducement to Fay DeVriese to become the Corporation's Chief Financial Officer, Treasurer and Secretary, the Corporation granted to Ms. DeVriese an Award consisting of nonqualified options to acquire 200,000 SGRP shares at $0.85 per share, vesting twenty-five percent (25%) of the total number of shares of Common Stock subject hereto on August 31, 2021, and the balance of the Option shall thereafter vest and become exercisable in a series of three (3) successive equal annual installments upon the Optionee's completion of each additional year of employment over the three-year period following August 31, 2021, such that the balance of the Option will be fully vested on August 31, 2024.

2008 Plan Summary

2008 Plan Stock option award activity for the years ended December 31, 2021 and 2020 is summarized below:

					*Weighted-*
			*Weighted-*		*Average*		*Aggregate*
			*Average*		*Remaining*		*Intrinsic*
			*Exercise*		*Contractual*		*Value*
Option Awards	*Shares*		*Price*		*Term (Years)*		*(Thousands)*
Outstanding at January 1, 2020		2,227,211	$	1.22		4.83	$	452
Granted		–		–		–		–
Exercised/cancelled		57,500		1.00		–		–
Forfeited or expired		711,775		–		–		–
Outstanding at December 31, 2020		1,457,936	$	1.31		3.63	$	113
Granted		–		–		–		–
Exercised		87,712		1.08		–		–
Forfeited or expired		679,062		–		–		–
Outstanding at December 31, 2021		691,162	$	1.53		2.60	$	72
Exercisable at December 31, 2021		691,162	$	1.53		2.60	$	72

No stock options were granted in 2021 under the 2008 Plan. The total intrinsic value of stock option awards exercised during the year ended December 31, 2021 and 2020 was $295,000 and $6,000, respectively.

The Company recognized $13,000 and $37,000 in stock-based compensation expense relating to stock option awards during the years ended December 31, 2021 and 2020, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended December 31, 2021 and 2020, was approximately $3,000 and $23,000, respectively.

As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was $0.

2018 Plan Summary

2018 Plan Stock option award activity for the years ended December 31, 2021 and 2020 are summarized below:

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Exercise

Contractual

Value

Option Awards

Shares

Price

Term (Years)

(Thousands)

Outstanding at January 1, 2020

555,000

0.89

8.88

–

Granted

–

Exercised/cancelled

18,750

–

Forfeited or expired

106,250

–

Outstanding at December 31, 2020

430,000

0.90

7.87

Granted

–

Exercised

60,000

0.85

–

Forfeited or expired

210,000

–

Outstanding at December 31, 2021

160,000

0.93

6.82

Exercisable at December 31, 2021

118,750

0.97

6.60

No stock options were granted in 2021 under the 2018 Plan. The total intrinsic value of stock option awards exercised during the years ended December 31, 2021 and 2020 was $235,000 and $3,000.

The Company recognized $23,000 and $28,000 in stock-based compensation expense relating to stock option awards during the years ended December 31, 2021 and 2020, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended December 31, 2021 and 2020 was approximately $6,000 and $8,000, respectively.

As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was $8,000. This expense is expected to be recognized over a weighted average period of approximately 1.0 years and will be adjusted for changes in estimated forfeitures.

2020 Plan Summary

Following are the specific valuation assumptions used for options granted in 2021 and 2020 for the 2020 Plan:

	*2021*			*2020*
Expected volatility		52.8	%		0.0	%
Expected dividend yields		0.0	%		0.0	%
Expected term (in years)		5			0
Risk free interest rate		1.0	%		0.0	%
Expected forfeiture rate		4.0	%		0.0	%

2020 Plan Stock option award activity for the years ended December 31, 2021 and 2020 are summarized below:

				Weighted-
		*Weighted-*		*Average*	*Aggregate*
		*Average*		*Remaining*	*Intrinsic*
		*Exercise*		*Contractual*	*Value*
Option Awards	*Shares*	*Price*		*Term (Years)*	*(Thousands)*
Outstanding at January 1, 2020	–		–	–		–
Granted	–		–	–		–
Exercised/cancelled	–		–	–		–
Forfeited or expired	–		–	–		–
Outstanding at December 31, 2020	–	$	–	–	$	–
Granted	565,000		1.55	4.10		–
Exercised	–		–	–		–
Forfeited or expired	180,000		–	–		–
Outstanding at December 31, 2021	385,000	$	1.55	4.10	$	–
Exercisable at December 31, 2021	–	$	–	–	$	–

The weighted-average grant-date fair value of stock option awards granted during the year ended December 31, 2021 was $1.55. The total intrinsic value of stock option awards exercised during the years ended December 31, 2021 and 2020 was $0.

The Company recognized $57,000 and $0 in stock-based compensation expense relating to stock option awards during the years ended December 31, 2021 and 2020, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended December 31, 2021 and 2020 was approximately $16,000 and $0, respectively.

As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was $188,000. This expense is expected to be recognized over a weighted average period of approximately 3.0 years, and will be adjusted for changes in estimated forfeitures.

CFO Inducement Plan Summary

CFO Inducement Plan Stock option award activity for the years ended December 31, 2021 and 2020 are summarized below:


				*Weighted-*
		*Weighted-*		*Average*	*Aggregate*
		*Average*		*Remaining*	*Intrinsic*
		*Exercise*		*Contractual*	*Value*
Option Awards	*Shares*	*Price*		*Term (Years)*	*(Thousands)*
Outstanding at January 1, 2020	–		–	–		–
Granted	200,000		0.85	9.67		–
Exercised/cancelled	–		–	–		–
Forfeited or expired	–		–	–		–
Outstanding at December 31, 2020	200,000	$	$ 0.85	9.67	$	$ 60
Granted	–		–	–		–
Exercised	50,000		0.85	–		–
Forfeited or expired	–		–	–		–
Outstanding at December 31, 2021	150,000	$	$ 0.85	8.67	$	$ 57
Exercisable at December 31, 2021	–	$	-	–	$	-

The total intrinsic value of stock option awards exercised during the years ended December 31, 2021 and 2020 was $37,000 and $0.

The Company recognized $22,000 and $7,000 in stock-based compensation expense relating to stock option awards during the years ended December 31, 2021 and 2020, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended December 31, 2021 and 2020, was approximately $5,000 and $2,000, respectively.

As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was $52,000. This expense is expected to be recognized over a weighted average period of approximately 3.0 years, and will be adjusted for changes in estimated forfeitures.

CEO Inducement Plan Summary

Following are the specific valuation assumptions used for options granted in 2021 and 2020 for the CEO Plan:

	*2021*			*2020*
Expected volatility		52.7	%		0.0	%
Expected dividend yields		0.0	%		0.0	%
Expected term (in years)		1			0
Risk free interest rate		0.76	%		0.0	%
Expected forfeiture rate		6.0	%		0.0	%

CEO Inducement Plan Stock option award activity for the years ended December 31, 2021 and 2020 are summarized below:


				*Weighted-*
		*Weighted-*		*Average*	*Aggregate*
		*Average*		*Remaining*	*Intrinsic*
		*Exercise*		*Contractual*	*Value*
Option Awards	*Shares*	*Price*		*Term (Years)*	*(Thousands)*
Outstanding at December 31, 2020	–	$	–	–	$	–
Granted	630,000		1.90	9.15		–
Exercised	–		–	–		–
Forfeited or expired	–		–	–		–
Outstanding at December 31, 2021	630,000	$	1.90	9.15	$	–
Exercisable at December 31, 2021	–	$	–	–	$	–

The weighted-average grant-date fair value of stock option awards granted during the year ended December 31, 2021 was $1.90. There were no stock option awards exercised during the year ended December 31, 2021.

The Company recognized $509,000 in stock-based compensation expense relating to stock option awards during the years ended December 31, 2021. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended December 31, 2021, was approximately $126,000.

As of December 31, 2021, total unrecognized stock-based compensation expense related to stock options was $85,000. This expense is expected to be recognized over a weighted average period of approximately 0.1 years, and will be adjusted for changes in estimated forfeitures.

Restricted Stock Awards

The restricted stock awards issued vest over one (1) year following issuance so long as the holder continues to be employed by the Company. Restricted stock granted is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation expense ratably over the requisite service period which generally is the award's vesting period.

The following table summarizes the activity for restricted stock Awards during the years ended December 31, 2021 and 2020:

			*Weighted-*
			*Average*
			*Grant Date*
			*Fair Value*
	*Shares*		*per Share*
Unvested at January 1, 2020		–	$	-
Granted		–		–
Vested		–		–
Forfeited		–		–
Unvested at December 31, 2020		–	$	-
Granted		80,079		1.87
Vested		–		–
Forfeited		–		–
Unvested at December 31, 2021		80,079	$	1.87

During the years ended December 31, 2021 and 2020, the Company recognized approximately $87,000 and $0, respectively, of stock-based compensation expense related to restricted stock. The recognized tax benefit on stock-based compensation expense related to restricted stock during the years ended December 31, 2021 and 2020 was approximately $21,000 and $0, respectively.

During the years ended December 31, 2021 and 2020, the total fair value of restricted stock vested was $0.

As of December 31, 2021, total unrecognized stock-based compensation expense related to unvested restricted stock awards was $66,000.

Employee Stock Purchase Plans

In 2001, SGRP adopted its 2001 Employee Stock Purchase Plan (the "ESP Plan"), which replaced its earlier existing plan, and its 2001 Consultant Stock Purchase Plan (the "CSP Plan"). These plans were each effective as of June 1, 2001. The ESP Plan allows employees of the Company, and the CSP Plan allows employees of the affiliates of the Company to purchase SGRP's Common Stock from SGRP without having to pay any brokerage commissions. On August 8, 2002, the Board approved a 15% discount for employee purchases of Common Stock under the ESP Plan and recommended that its affiliates pay 15% of the value of the stock purchased as a cash bonus for affiliate consultant purchases of Common Stock under the CSP Plan.