XML 40 R29.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation STOCK-BASED COMPENSATION
Restricted Stock
The Company has adopted the Heritage Insurance Holdings, Inc. 2023 Omnibus Incentive Plan (the “2023 Plan”), which became effective on June 7, 2023. The 2023 Plan authorized 2,125,000 shares of common stock for issuance under the Plan for future grants. Upon effectiveness of the 2023 Plan, no new awards may be granted under the prior Omnibus Incentive Plan, which will continue to govern the terms of awards previously made under such plan.
At June 30, 2024, there were in aggregate 854,857 shares available for grant under the 2023 Plan. The Company recognizes compensation expense under ASC 718 for its stock-based payments based on the fair value of the awards.
In June 2024, the Company awarded to non-employee directors in aggregate 39,312 shares of restricted stock with a fair value at the time of grant of $8.14 per share. The awards shall vest on the next annual meeting of the Company's stockholders that occurs after the award date, provided the member remains on the Board until such date.
On February 26, 2024, the Company awarded 163,640 shares of time-based restricted stock and 253,918 shares of performance-based restricted stock, with a fair value at the time of grant of $7.02 per share under the 2023 Plan to certain employees. The time-based restricted stock shall vest annually in three equal installments commencing on December 15, 2024. The performance based restricted stock has a three-year performance period beginning on January 1, 2024 and ending on December 31, 2026 and will vest following the end of the performance period but no later than March 30, 2027. The number of shares that will be earned at the end of the performance period is subject to increase or decrease based on the results of the performance condition.
On July 11, 2023, the Company awarded 351,716 shares of time-based restricted stock and 857,843 shares of performance-based restricted stock, with a fair value at the time of grant of $4.08 per share under the 2023 Plan to certain employees. The time-based restricted stock shall vest annually in three equal installments commencing on December 15, 2023. The performance based restricted stock has a three-year performance period beginning on January 1, 2023 and ending on December 31, 2025 and will vest following the end of the performance period but no later than March 30, 2026. The number of shares that will be earned at the end of the performance period is subject to decrease based on the results of the performance condition.
In June 2023, the Company awarded to non-employee directors in aggregate 63,744 shares of restricted stock with a fair value at the time of grant of $5.02 per share. The awards shall vest on the next annual meeting of the Company's stockholders that occurs after the award date, provided the member remains on the Board until such date. In August 2023, the awards were amended to reflect the correct grant date fair market value that resulted in an adjustment to the number of shares of restricted stock awarded from 63,744 to 77,296 shares of restricted stock. The Company's annual shareholders meeting was held on June 5, 2024, at which time 77,296 shares of restricted stock were effectively vested.
For the performance-based shares issued in 2023, the number of shares that will be earned at the end of the performance period is subject to decrease based on the result of the performance condition, as these shares were issued at the maximum amount. For the performance-based shares issued in 2024, the number of shares that will be earned at the end of the performance period is subject to increase or decrease based on the result of the performance condition, as these shares were issued at the target amount.
The Plan authorizes the Company to grant stock options at exercise prices equal to the fair market value of the Company’s stock on the dates the options are granted.
Restricted stock activity for the six months ended June 30, 2024 is as follows:
Number of shares
Weighted-Average Grant-Date Fair
Value per Share
Non-vested, at December 31, 20231,161,811$4.25 
Granted - Performance-based restricted stock253,9187.12 
Granted - Time-based restricted stock211,3427.02 
Vested(77,296)4.14 
Canceled and surrendered— — 
Non-vested, at June 30, 20241,549,775$6.07 
Awards are being amortized to expense over the one to three-year vesting periods. For the three months ended June 30, 2024 and 2023 the Company recognized $833,000 and $403,000 of stock compensation expense, respectively. The Company recognized $1.4 million and $797,980 of stock compensation expense for the six months ended June 30, 2024 and 2023, respectively. For the three and six month periods ending June 30, 2024, 77,296 shares of restricted stock previously granted to non-employee directors were vested and released. For the three months ended June 30, 2023, 86,954 shares of restricted stock were vested and released, all of which had been granted to employees. For the six months ended June 30, 2023, 111,954 shares of restricted stock previously granted to employees and non-employee directors were vested and released. Of the shares released to employees, 4,200 shares were withheld by the Company to cover withholding taxes of $7,560, and there were also 1,482 shares forfeited upon employment terminations.
At June 30, 2024, there was approximately $2.0 million unrecognized expense related to time-based non-vested restricted stock and an additional $3.2 million for performance-based restricted stock, net of expected forfeitures which is expected to be recognized over the remaining restriction periods as described in the table below. At June 30, 2023, there was approximately $1.5 million of unrecognized expense.
Additional information regarding the Company’s outstanding non-vested time-based restricted stock and performance-based restricted stock at June 30, 2024 is as follows:
Grant dateRestricted shares unvestedShare Value at Grant Date Per ShareRemaining Restriction Period (Years)
March 16, 202237,9476.720.6
July 11, 20231,046,5684.081.3
February 26, 2024417,5587.022.5
March 11, 20248,3907.150.6
June 6, 202439,3128.141
Total1,549,775