Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

15. Stock-Based Compensation

The Company’s stock-incentive program is a long-term retention program that is intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. Currently, the Company is able to grant options, stock appreciation rights (“SARs”) and restricted shares from the Interpace Biosciences, Inc. 2019 Equity Incentive Plan. No new grants may be made under the Company’s prior stock incentive plan, the Interpace Diagnostics Group, Inc. (now known as Interpace Biosciences, Inc.) Amended and Restated 2004 Stock Award and Incentive Plan (the “2004 Plan”). Unless earlier terminated by action of the Company’s board of directors, the 2004 Plan will remain in effect until such time as no stock remains available for delivery and the Company has no further rights or obligations under the 2004 Plan with respect to outstanding awards thereunder.

Historically, stock options have been granted with an exercise price equal to the market value of the common stock on the date of grant, expire 10 years from the date they are granted, and generally vested over a one to three-year period for employees and members of the Board. Upon exercise, new shares will be issued by the Company. The restricted shares and restricted stock units (“RSUs”) granted to employees generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances. Restricted shares and RSUs granted to Board members generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances.

The Company primarily uses the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatility is based on historical volatility. As there is no trading volume for the Company’s options, implied volatility is not representative of the Company’s current volatility so the historical volatility of the Company’s common stock is determined to be more indicative of the Company’s expected future stock performance. The expected life is determined using the safe-harbor method. The Company expects to use this simplified method for valuing employee options until more detailed information about exercise behavior becomes available over time. The Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. The Company recognizes compensation cost, net of estimated forfeitures, arising from the issuance of stock options on a straight-line basis over the vesting period of the grant.

The Company began an employee stock purchase plan in 2020 and recognized approximately $0.1 million and $0.04 million in expense related to that plan for the years ended December 31, 2021 and 2020, respectively.

The estimated compensation cost associated with the granting of restricted stock and restricted stock units is based on the fair value of the Company’s common stock on the date of grant. The Company recognizes the compensation cost, net of estimated forfeitures, arising from the issuance of restricted stock and restricted stock units on a straight-line basis over the shorter of the vesting period or the period from the grant date to the date when retirement eligibility is achieved.

The following table provides the weighted average assumptions used in determining the fair value of the stock options granted during the years ended December 31, 2021 and December 31, 2020.

	December 31, 2021			December 31, 2020
Risk-free interest rate		0.79	%		0.75	%
Expected life		6.0 years			6.5 years
Expected volatility		134.73	%		123.71	%
Dividend yield		-			-

The weighted-average fair value of stock options granted during the year ended December 31, 2021 was estimated to be $4.64. The weighted-average fair value of stock options granted during the year ended December 31, 2020 was estimated to be $5.36. There were 13,042 options exercised in 2021. There were no options exercised in 2020. Historically, shares issued upon the exercise of options have been new shares and have not come from treasury shares.

Stock-based compensation for the years ended December 31, 2021 and 2020 is as follows:

	2021		2020
RSUs and restricted stock	$	433	$	176
Performance-based awards		107		265
Common stock awards		-		116
Options		715		1,630
Total stock-based compensation expense	$	1,255	$	2,187

A summary of stock option activity for the year ended December 31, 2021, and changes during such year, is presented below:

						Weighted-Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
				Grant		Period		Intrinsic
	Shares			Price		(in years)		Value
Outstanding at January 1, 2021		848,819		$	8.76		8.59	$	-
Granted		347,500			6.00		9.21		-
Exercised		(13,042	)		9.45
Forfeited or expired		(550,766	)		9.15				-
Outstanding at December 31, 2021		632,511			6.89		8.40		-
Exercisable at December 31, 2021		206,732			9.14		7.53		-
Vested and expected to vest		537,520			7.15		8.36		-

A summary of the status of the Company’s non-vested options for the year ended December 31, 2021, and changes during such year, is presented below:

	Shares			Weighted- Average Grant Date Fair Value
Nonvested at January 1, 2021		487,318		$	5.81
Granted		347,500			4.64
Vested		(127,696	)		6.54
Forfeited		(284,646	)		5.72
Nonvested at December 31, 2021		422,476		$	4.78

The aggregate fair value of options vested during the years ended December 31, 2021 and 2020 was $0.8 million and $1.5 million, respectively. The weighted-average grant date fair value of options vested during the year ended December 31, 2020 was $7.34.

A summary of the Company’s non-vested shares of restricted stock and restricted stock units for the year ended December 31, 2021, and changes during such year, is presented below:

						Average
				Weighted-		Remaining
				Average		Vesting		Aggregate
				Grant Date		Period		Intrinsic
	Shares			Fair Value		(in years)		Value
Nonvested at January 1, 2021		239,457		$	10.00		1.75	$	1,348,781
Granted		207,438			5.46		-		-
Vested		(65,577	)		4.65		-		-
Forfeited		(52,379	)		5.23		-		-
Nonvested at December 31, 2021		328,939		$	3.67		1.34	$	2,467,043

The aggregate fair value of restricted stock units vested during each of the years ended December 31, 2021 and 2020 was $0.3 million and $0.4 million, respectively.

As of December 31, 2021, there was approximately $2.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options and restricted stock units.