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Note 12 - Equity-based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Text Block]

12.

EQUITY-BASED COMPENSATION

The Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”) provides for grants of incentive stock options, non-qualified stock options, restricted stock awards, SARs, restricted stock units (“RSUs”), cash-based awards, performance-based awards, dividend equivalent units (“DEUs” and, together with restricted stock awards and RSUs, “Restricted Stock”) and other stock-based awards, including performance stock units and deferred stock units. Directors, officers, employees and consultants of the Company are eligible for grants under the 2015 Plan as part of the Company’s approach to long-term incentive compensation. At March 31, 2021, 106,986 shares were available for issuance under the 2015 Plan.

Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award, with forfeitures recognized as incurred. The Company’s equity-based compensation expense, included within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income, was as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Restricted Stock	$	3,424	$	2,506
SARs		703		715
Total	$	4,127	$	3,221

The Company recognized income tax benefits of $3.6 million and $5.2 million during the three months ended March 31, 2021 and 2020, respectively. The deferred tax asset related to all outstanding equity-based awards was $3.2 million as of March 31, 2021.

Restricted Stock. A summary of Restricted Stock activity during the three months ended March 31, 2021 is as follows:

	Restricted Stock			Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2020		34,944		$	1,037.83
Granted		9,763		$	2,227.72
Forfeited		(780	)	$	1,268.13
Vested and issued		(10,561	)	$	829.79
Outstanding as of March 31, 2021		33,366		$	1,446.46

Vested and deferred as of March 31, 2021		5,338		$	626.73

At March 31, 2021, there was $28.9 million of unrecognized compensation expense related to Restricted Stock, which is expected to be recognized over a weighted average period of 1.7 years.

Stock Appreciation Rights. A summary of SARs activity during the three months ended March 31, 2021 is as follows:

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2020		58,365		$	866.54	$	204.29	$	79,446		7.3
Granted		1,500		$	2,227.72	$	584.38	$	-		9.8
Exercised		-		$	-	$	-	$	-		-
Forfeited		(1,601	)	$	834.92	$	201.50
Outstanding as of March 31, 2021		58,264		$	902.45	$	214.15	$	54,615		7.1

Exercisable as of March 31, 2021		32,187		$	650.86	$	148.65	$	37,900		6.2

At March 31, 2021, there was $6.3 million of unrecognized compensation expense related to SARs, which is expected to be recognized over a weighted average period of 1.4 years.

The grant date fair value of the SARs is measured using the Black-Scholes valuation model. The weighted average inputs used in the model for grants awarded during the three months ended March 31, 2021 were as follows:

	Inputs
Expected volatility		27.37	%
Risk-free interest rate		0.54	%
Expected term (in years)		6.25
Expected dividend yield		0.45	%