Stockholder's Equity (Tables)

3 Months Ended

Mar. 31, 2023

Summary of Issued Shares of Common Stock

The Company issued the following shares of common stock:

	Three Months Ended March 31,
	2023						2022
	Shares		Average Price per Share		Total		Shares		Average Price per Share		Total
Exercise of options		124,455	$	21.61	$	2,690		30,607	$	14.03	$	429
Restricted shares, net (1)		90,116		36.81		—		25,289		66.58		—
Total		214,571	$	27.99	$	2,690		55,896	$	37.81	$	429

(1) Represents the non-cash release of common shares due to the vesting of restricted stock.

Schedule of Share Authorized to be Issue and Available for Grant

The following number of shares were authorized to be issued and available for grant:

	March 31, 2023
	2017 Plan		2013 Plan		Total
Shares authorized to be issued		6,329,913		2,037,019		8,366,932
Shares available for grant(1)		893,522		—		893,522
	March 31, 2022
	2017 Plan		2013 Plan		Total
Shares authorized to be issued		8,272,487		1,904,644		10,177,131
Shares available for grant(1)		577,139		—		577,139

(1) In January 2023 and January 2022 the Board of Directors ratified the addition of 1,189,801 and 1,185,112 shares of common stock, respectively, to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan. Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. Shares available for grant exclude awards of stock appreciation rights approved in December 2021 that are subject to vesting based on the achievement of certain market conditions, which have not yet been, and may not be, achieved. See footnote 1 to the table in Common Stock Reserved for Future Issuance below for additional information on stock appreciation rights.

Schedule of Stock Compensation Expense

Total stock compensation expense for the Plans was as follows:

	Three Months Ended March 31,
	2023										2022
	2017 plan						2013 plan				2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total		Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	349	$	543	$	—	$	—	$	892	$	294	$	—	$	—	$	—	$	294
Selling, general and    administrative expense		1,724		8,154		2,265		—		12,143		1,979		5,792		2,360		—		10,131
Total	$	2,073	$	8,697	$	2,265	$	—	$	13,035	$	2,273	$	5,792	$	2,360	$	—	$	10,425

Summary of Performance Hurdles

The performance hurdles are as follows:

SARs Stock Price Performance Hurdle		Portion of SARs Subject to Performance Hurdle
$	133.58	1/3
$	166.98	1/3
$	200.37	1/3

Summary of Weighted Average Assumptions Used in Black-Sholes Option-pricing Model

The following weighted-average assumptions were used in the Black-Sholes option-pricing model calculation:

	March 31,			March 31,
	2023			2022
Common stock value (per share)	$	32.16		$	44.11
Expected volatility		33.79	%		33.45	%
Risk-free interest rate		3.72	%		1.74	%
Expected life (years)		7.00			6.33
Forfeiture rate	None			None
Dividend rate	None			None

Schedule of Common Stock Reserved for Future Issuance

The Company has reserved certain stock of its authorized but unissued common stock for possible future issuance in connection with the following:

	March 31,
	2023		2022
Montrose 2013 Stock Incentive Plan		832,519		878,614
Montrose 2017 Stock Incentive Plan(1)		8,722,930		7,893,918
Total		9,555,449		8,772,532

(1) In January 2023 and 2022, the Board of Directors ratified the addition of 1,189,801 and 1,185,112 shares of common stock, respectively, to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan. Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. The Company expects to have sufficient shares available under the 2017 Plan to satisfy the future settlement of outstanding awards. Shares reserved for future issuance include 3,000,000 shares underlying the 3,000,000 performance SARs granted in December 2021 that are subject to vesting based on the achievement of certain market conditions. Assuming achievement at the highest price performance hurdle, approximately 2,000,000 shares of common stock would be issued upon vesting of these performance SARs. To date, none of the market conditions have been achieved.

Montrose Amended & Restated 2017 Stock Incentive Plan

Schedule of Restricted Stock Activity

RSAs and RSUs activity was as follows:

	Three Months Ended March 31,
	2023						2022
	Shares		Average Price per Share		Fair Value		Shares		Average Price per Share		Fair Value
Awards granted		464,186	$	32.62	$	15,140		106,324	$	46.82	$	4,978

Summary of Stock Option Activity

The following summarizes the options activity of the 2017 Plan:

	Options to Purchase Common Stock			Weighted- Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contract Life (in Years)		Aggregate Intrinsic Value of In-The- Money Options (in Thousands)
Outstanding as of January 1, 2022		2,036,729		$	26	$	14		8.30	$	91,030
Granted		547,884			44		16		—		—
Forfeited/ cancelled		(23,082	)		36		—		—		—
Exercised		(11,547	)		27		—		—		313
Outstanding as of March 31, 2022		2,549,984			30		14		8.46		59,955
Outstanding as of January 1, 2023		2,579,566		$	31	$	15		7.76	$	37,292
Granted		233,955			32		14		—		—
Forfeited/ cancelled		(34,619	)		35		—		—		—
Exercised		(101,279	)		25		—		—		2,467
Outstanding as of March 31, 2023		2,677,623		$	31	$	15		7.78	$	21,127
Exercisable at March 31, 2023		1,305,511			29		—		7.19		11,880

Montrose Amended and Restated 2013 Stock Option Plan

Summary of Stock Option Activity

The following summarizes the activity of the 2013 Plan:

	Options to Purchase Common Stock			Weighted- Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contract Life (in Years)		Aggregate Intrinsic Value of In-The- Money Options (in Thousands)
Outstanding as of January 1, 2022		897,674		$	6	$	2		4.37	$	57,529
Exercised		(19,060	)		6		—		—		821
Outstanding as of March 31, 2022		878,614			6		2		4.13		40,860
Outstanding as of January 1, 2023		855,695		$	6	$	2		3.31	$	32,478
Exercised		(23,176	)		9		—		—		963
Outstanding as of March 31, 2023		832,519		$	6	$	2		3.03	$	24,393
Exercisable at March 31, 2023		832,519			6		—		3.03		24,393