Note 7 - Stock Based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 7 - Stock Based Compensation

Employee Stock Incentive Plan

In December 2019, our Board approved the 2019 HireQuest, Inc. Equity Incentive Plan (the “2019 Plan”). Subject to adjustment in accordance with the terms of the 2019 Plan, no more than 1.5 million shares of common stock are available in the aggregate for the grant of awards under the 2019 Plan. No more than 1 million shares may be issued in the aggregate pursuant to the exercise of incentive stock options. In addition, no more than 250 thousand shares may be issued in the aggregate to any employee or consultant, and no more than 50 thousand shares may be issued in the aggregate to any non-employee director, in any twelve-month period. Shares of common stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. The 2019 Plan was approved by our shareholders in June 2020 and became effective as of that date.

In September 2019, our Board approved a share purchase match program to encourage ownership and further align the interests of key employees and directors with those of our shareholders. Under this program, we will match 20% of any shares of our common stock purchased on the open market by or granted in lieu of cash compensation to key employees and directors up to $25 thousand in aggregate value per individual within any calendar year. These shares vest on the second anniversary of the date on which the matched shares were purchased if the individual is still employed by the Company or still serves as a director and certain other vesting criteria are met. During the first nine months of 2023, we issued 3,702 shares valued at approximately $72 thousand under this program. During the first nine months of 2022, we issued approximately 10 thousand shares valued at approximately $151 thousand under this program.

In the first nine months of 2023, we issued 7,679 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $162 thousand to members of our Board of Directors for their services in lieu of cash compensation. Of these, 6,397 shares vested equally over the three months post grant. The remaining 1,282 shares were issued pursuant to our share purchase match program. Also in the first nine months of 2023, we issued 1,261 shares pursuant to our share purchase match program related to open market purchases by members of our Board of Directors. 

Also in the first nine months of 2023, we issued 55,431 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $1.2 million to key employees for their services in lieu of cash compensation. Of these, 9,272 shares were issued to our CEO and vest equally over the three months post grant. Of the remaining shares, 45,000 vest over 4 years and 1,159 shares were issued pursuant to our share purchase match program and vest the second anniversary of the date of grant. 

In the first nine months of 2022, we issued 12,512 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $205 thousand to members of our Board of Directors for their services in lieu of cash compensation. Of these, 10,532 shares vested equally over the three months post grant. The remaining 1,980 shares were issued pursuant to our share purchase match program. Also in the first nine months of 2022, we issued 94,871 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $1.5 million to key employees for their services in lieu of cash compensation. Of these, 41,066 shares vested equally over the three months post grant. Of the remaining 53,805 shares, 50,000 were issued to our CEO pursuant to his employment contract which vest over 4 years, and 3,805 shares were issued pursuant to our share purchase match program. In addition, we issued 28,735 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $537 thousand to the vast majority of our workforce for services and to encourage retention. These shares vest on the first anniversary of the date of grant. 

The following table summarizes our restricted stock outstanding at December 31, 2022, and changes during the nine months ended September 30, 2023 (number of shares in thousands).

	Shares			Weighted average grant date price
Non-vested, December 31, 2022		202		$	15.15
Granted		64			20.84
Vested		(107	)		15.04
Non-vested, September 30, 2023		159			17.99

Stock options that were outstanding at Command Center were deemed to be issued on the date of the Merger. Outstanding awards continue to remain in effect according to the terms of the Command Center 2008 Plan, the Command Center 2016 Plan, and the corresponding award documents. There were approximately 13 thousand stock options vested at  September 30, 2023 and December 31, 2022.

The following table summarizes our stock options outstanding at December 31, 2022, and changes during the nine months ended September 30, 2023 (number of shares in thousands).

	Number of shares underlying options		Weighted average exercise price per share		Weighted average grant date fair value
Outstanding, December 31, 2022		13	$	5.47	$	2.98
Granted		-		-		-
Outstanding, September 30, 2023		13		5.47		2.98

There were no non-vested stock options outstanding at September 30, 2023 or at  December 31, 2022.

The following table summarizes information about our outstanding stock options, and reflects the intrinsic value recalculated based on the closing price of our common stock of $15.43 at September 30, 2023 (number of shares and intrinsic value in thousands). 

	Number of shares underlying options		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding and exercisable		13	$	5.47		4.5	$	129

At September 30, 2023, there was unrecognized stock-based compensation expense totaling approximately $1.9 million relating to non-vested restricted stock grants that will be recognized over the next 3.9 years.