Stockholder's Equity (Tables)

3 Months Ended

Mar. 31, 2024

Summary of Issued Shares of Common Stock

The Company issued the following shares of common stock:

	Three Months Ended March 31,
	2024						2023
	Shares		Average Price per Share		Total		Shares		Average Price per Share		Total
Acquisitions		220,734	$	29.81	$	6,580		—	$	—	$	—
Exercise of options		27,396		17.80		487		124,455		21.61		2,690
Restricted shares, net (1)		144,251		37.58		—		90,116		36.81	—
Payment of earn-out liability		35,250		30.84		1,087		—		—		—
Total		427,631	$	31.75	$	8,154		214,571	$	27.99	$	2,690

(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, 2024
	2017 Plan		2013 Plan		Total
Shares authorized to be issued		7,538,276		2,036,219		9,574,495
Shares available for grant(1)		1,674,558	—			1,674,558
	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

(1) In January 2024 and January 2023 the Board of Directors ratified the addition of 1,207,563 and 1,189,801 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-based Compensation Expense

Total stock-based compensation expense for the 2017 Plans was as follows:

	Three Months Ended March 31,
	2024								2023
	Options		RSUs		SARs		Total		Options		RSUs		SARs		Total
Cost of revenue	$	274	$	637	$	—	$	911	$	349	$	543	$	—	$	892
Selling, general and administrative expense		789		7,282		2,290		10,361		1,724		8,154		2,265		12,143
Total	$	1,063	$	7,919	$	2,290	$	11,272	$	2,073	$	8,697	$	2,265	$	13,035

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-Scholes option-pricing model calculation:

	March 31,
	2023
Common stock value (per share)	$	32.16
Expected volatility		33.79	%
Risk-free interest rate		3.72	%
Expected life (years)		7.00
Forfeiture rate	None
Dividend rate	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,
	2024		2023
Montrose 2013 Stock Incentive Plan		783,541		832,519
Montrose 2017 Stock Incentive Plan(1)		9,692,222		8,722,930
Total		10,475,763		9,555,449

(1) In January 2024 and 2023, the Board of Directors ratified the addition of 1,207,563 and 1,189,801 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,
	2024							2023
	Shares			Average Price per Share		Fair Value		Shares		Average Price per Share		Fair Value
Awards granted		259,118		$	39.65	$	10,273		464,186	$	32.62	$	15,140
Awards forfeited		(14,336	)		37.04		531		—		—		—

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 December 31, 2022		2,579,566		$	30.58	$	14.96		7.8	$	37,292
Granted		233,955			32.16		13.90	—		—
Forfeited/ cancelled		(34,619	)		35.16	—		—		—
Exercised		(101,279	)		24.55	—		—			2,467
Outstanding as of March 31, 2023		2,677,623		$	30.89	$	15.47		7.8	$	21,127
Outstanding as of December 31, 2023		2,516,272		$	30.92	$	15.95		7.0	$	13,825
Forfeited/ cancelled		(36,105	)		38.78		—		—		—
Expired		(13,010	)		44.16		—		—		—
Exercised		(18,746	)		23.26		—		—		200
Outstanding as of March 31, 2024		2,448,411		$	30.80	$	16.00		6.8	$	25,468
Exercisable at March 31, 2024		1,513,438		$	31.13	$	—		6.4	$	15,380

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 December 31, 2022		855,695		$	6.43	$	2.10		3.3	$	32,478
Exercised		(23,176	)		8.78	—		—			963
Outstanding as of March 31, 2023		832,519			6.37		2.06		3.0		24,393
Outstanding as of December 31, 2023		792,191		$	6.40	$	2.16		2.4	$	20,380
Exercised		(8,650	)		5.95		—		—		289
Outstanding as of March 31, 2024		783,541		$	6.41	$	2.18		2.2	$	25,669
Exercisable at March 31, 2024		783,541			6.41				2.2		25,669