STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

12. STOCKHOLDERS’ EQUITY:

Common Stock

The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights.

Stock Repurchase Program

From time to time, the Board of Directors has authorized, and may authorize, repurchases of shares of the Company’s Class A and Class D common stock. Under the stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”). Under open authorizations, repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. shares are retired when repurchased. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. When in effect, the Company executes upon stock repurchase programs in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value.

On March 7, 2022, the Board of Directors authorized and approved a share repurchase program for up to $25.0 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock over a period of 24 months. On December 6, 2022, the Board of Directors authorized and approved a share repurchase program for up to an additional $10.0 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock. During the years ended December 31, 2023 and 2022, the Company repurchased 824 and 4,779,969 shares of Class D common stock in the amount of approximately $3,000 and $25.0 million at an average price of $3.99 and $5.24 per share. The Company did not repurchase any shares of Class A common stock during the years ended December 31, 2023 and 2022.

On September 27, 2022, the Compensation Committee authorized the repurchase of up to $0.5 million worth of shares in the aggregate from employees who want to sell in connection with the Company’s most recent employee stock grant. During the year ended December 31, 2023, the Company did not repurchase any shares of Class A or Class D stock under this authorization. During the year ended December 31, 2022, the Company repurchased 13,577 shares of Class D common stock in the amount of $57,000 at an average price of $4.23 per share. Giving effect to the repurchases, the Company has approximately $0.4 million remaining under its most recent and open authorization. The Company did not repurchase any shares of Class A stock during the year ended December 31, 2022.

In addition, the Company has limited but ongoing authority to purchase shares of Class D common stock (in one or more transactions at any time there remain outstanding grants) under the 2019 Equity and Performance Incentive Plan (as defined below). This limited authority is used to satisfy any employee or other recipient tax obligations in connection with the exercise of an option or a share grant under the 2019 Equity and Performance Incentive Plan, to the extent that the Company has capacity under its financing agreements (i.e., its current credit facilities and indentures) (each a “Stock Vest Tax Repurchase”).

During the years ended December 31, 2023 and 2022, the Company executed Stock Vest Tax Repurchases of 312,448 shares of Class D Common Stock in the amount of approximately $1.6 million at an average price of $5.21 per share and 344,702 shares of Class D Common Stock in the amount of approximately $1.5 million at an average price of $4.29 per share, respectively.

Stock Option and Restricted Stock Grant Plan

The Company’s 2019 stock option and restricted stock plan (“2019 Equity and Performance Incentive Plan”), currently in effect was approved by the stockholders at the Company’s annual meeting on May 21, 2019. The Board of Directors adopted, and on May 21, 2019, the Company’s stockholders approved, the 2019 Equity and Performance Incentive Plan which was funded with 5,500,000 shares of Class D Common Stock. On June 23, 2021, the Company’s Board of Directors authorized an amendment of the Urban One 2019 Equity and Performance Incentive Plan to increase the number of shares available for grant and to provide the grant of Class A as well as Class D shares. The amendment was approved by the Company’s shareholders and added 5,519,575 shares of Class D shares and added 2,000,000 Class A shares. As of December 31, 2023, 2,111,305 shares of Class D common stock and 1,250,000 shares of Class A common stock were available for grant under the 2019 Equity and Performance Incentive Plan. The Company settles stock options, net of tax, upon exercise by issuing stock.

Pursuant to the terms of the Company’s stock plan and subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold in the open market for tax purposes on or about the vesting dates.

The Company measures compensation cost for all stock-based awards at fair value on date of grant and recognizes the related expense over the service period for awards expected to vest. The restricted stock-based awards do not participate in dividends until fully vested. The fair value of restricted stock-based awards is based on the closing price of the Company’s common stock on the date of grant. The fair value of stock options is determined using the BSM. Such fair value is recognized as an expense over the requisite service period, which is generally the vesting period, net of an estimated forfeitures rate, using the straight-line method. Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from the Company’s current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards expected to vest are revised. The Company considers many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from the Company’s current estimate.

Stock options generally vest over a period of one year and generally expire ten years from the grant date. Restricted stock generally vests over a period of one year.

The Company’s use of the BSM to calculate the fair value of stock-based awards incorporates various assumptions including volatility, expected life, and interest rates. For options granted, the BSM determines: (i) the term by using the simplified “plain-vanilla” method as allowed under Staff Accounting Bulletin (“SAB”) No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant.

Stock-based compensation expense for the years ended December 31, 2023 and 2022, was approximately $10.0 million and $9.9 million, respectively. Tax benefits from stock-based compensation for the years ended December 31, 2023 and 2022 were $0.3 million.

The per share weighted-average fair value of options granted during the years ended December 31, 2023 and 2022, was $2.80 and $2.82, respectively.

These fair values were derived using the BSM with the following weighted-average assumptions:

	For the Years Ended December 31,
	2023		2022
Average risk-free interest rate	4.18	%	2.79	%
Expected dividend yield	—	%	—	%
Expected lives	5.59 years		5.69 years
Expected volatility	53.14	%	79.92	%

Transactions and other information relating to stock options of Class D common stock for the years ended December 31, 2023 and 2022 are summarized below:

				Weighted-Average
				Remaining	Aggregate
	Number of	Weighted-Average		Contractual Term	Intrinsic
	Options	Exercise Price		(In Years)	Value
Outstanding at December 31, 2021	3,770,913	$	2.18	5.68	$	4,659,601
Grants	884,061		4.22	—		—
Exercised	(60,240)		0.83	—		315,620
Forfeited/cancelled/expired/settled	—		—	—		—
Outstanding at December 31, 2022	4,594,734	$	2.59	5.72	$	5,871,492
Grants	649,453		5.20	—		—
Exercised	—		—	—		—
Forfeited/cancelled/expired/settled	(20,051)		4.75	—		—
Outstanding at December 31, 2023(1)	5,224,136		2.90	5.28	$	5,021,952
Vested and expected to vest at December 31, 2023	5,171,594		2.89	5.24		5,021,952
Unvested at December 31, 2023	452,524		4.71	9.19		—
Exercisable at December 31, 2023	4,771,612		2.73	4.91		5,021,952

(1) The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the year ended December 31, 2023, and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their options on December 31, 2023. This amount changes based on the fair market value of the Company’s stock.
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As of December 31, 2023, approximately $0.8 million of total unrecognized compensation cost, net of estimated forfeitures, related to Class D stock options is expected to be recognized over a weighted-average period of 10 months. There were no tax benefits from Class D stock options exercised for the years ended December 31, 2023 and 2022. The weighted-average grant date fair value of options granted during the year ended December 31, 2023 was $2.80.

Transactions and other information relating to grants of restricted shares of Class D common stock for the years ended December 31, 2023 and 2022 are summarized below:

		Average
		Fair Value
		at Grant
	Shares	Date
Unvested at December 31, 2021	76,056	$	3.90
Grants	1,357,687		4.27
Vested	(999,479)		4.25
Forfeited/cancelled/expired	—		—
Unvested at December 31, 2022	434,264	$	4.27
Grants	895,520		5.17
Vested	(1,001,667)		4.92
Forfeited/cancelled/expired	(15,000)		4.12
Unvested at December 31, 2023	313,117	$	4.77

The Company did not grant any restricted shares of Class A common stock during the year ended December 31, 2023. During the year ended December 31, 2022, the Company granted 750,000 shares of restricted Class A common stock at an average fair value at grant date of $5.39 per share. There were no shares that vested or were cancelled during the years ended December 31, 2023 and 2022. There were 750,000 unvested shares of restricted Class A common stock outstanding as of December 31, 2023 and 2022 with an average fair value at grant date of $5.39.  

Restricted stock grants for Class A shares and Class D shares are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2023, approximately $1.0 million of total unrecognized compensation cost, net of estimates forfeitures, related to restricted stock grants for Class D shares is expected to be recognized over a weighted-average period of 13 months and approximately $1.4 million of total unrecognized compensation cost related to restricted stock grants for Class A shares is expected to be recognized over a weighted-average period of 12 months.