SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

The International Money Express, Inc. 2020 Omnibus Equity Compensation Plan (the “2020 Plan”) was approved by stockholders at the 2020 Annual Meeting of Stockholders on June 26, 2020, and provides for the granting of stock-based incentive awards, including stock options and restricted stock units (“RSUs”), to employees and independent directors of the Company. There are 3.7 million shares of the Company's common stock reserved for issuance under the 2020 Plan, consisting of 3.3 million new issuable shares and 0.4 million shares that were available for grant under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan”). As of June 30, 2020, no stock options or RSUs have been issued under the 2020 Plan. The 2020 Plan replaced the 2018 Plan effective June 26, 2020. As of June 30, 2020, there were 3.3 million shares reserved for outstanding awards granted under the 2018 Plan.

The value of each option grant is estimated on the grant date using the Black-Scholes option pricing model (“BSM”). The option pricing model requires the input of highly subjective assumptions, including the grant date fair value of our common stock, expected volatility, risk-free interest rates, expected term and expected dividend yield. To determine the grant date fair value of the Company’s common stock, we use the closing market price of our common stock at the grant date. We also use an expected volatility based on the historical volatility of the Company's common stock and the “simplified” method for calculating the expected life of our stock options as the options are “plain vanilla” and we do not have any significant historical post-vesting activity. We have elected to account for forfeitures as they occur. The risk-free interest rates are obtained from publicly available U.S. Treasury yield curve rates.

Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The stock options issued by the Company under the 2018 Plan have 10-year terms and vest in four equal annual installments beginning one year after the date of the grant. During the six months ended June 30, 2020, 11.3 thousand stock options vested. The Company recognized compensation expense for stock options of approximately $0.6 million for both the three months ended June 30, 2020 and 2019 and $1.2 million for both the six months ended June 30, 2020 and 2019, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. As of June 30, 2020, there were 3.1 million outstanding stock options and unrecognized compensation expense of $6.8 million is expected to be recognized over a weighted-average period of 2.4 years.

A summary of the stock option activity under the 2018 Plan during the six months ended June 30, 2020 is presented below:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2019	2,905,219	$	10.51	8.74	$	3.58
Granted	320,000	$	10.98		$	4.53
Exercised	(11,250)	$	9.91		$	3.43
Forfeited	(163,000)	$	12.42		$	4.09
Outstanding at June 30, 2020	3,050,969	$	10.46	8.36	$	3.66

Exercisable at June 30, 2020	623,680	$	9.96	8.10	$	3.45

The RSUs issued under the 2018 Plan to the Company’s independent directors vest on the one-year anniversary from the grant date. The Company recognized compensation expense for RSUs of $0.1 million for both the three months ended June 30, 2020 and 2019, and $0.2 million and $0.1 million for the six months ended June 30, 2020 and 2019, respectively, which is included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. During the six months ended June 30, 2020, 22.5 thousand and 13.9 thousand RSUs were granted and vested, respectively. There were no forfeited RSUs during the six months ended June 30, 2020. As of June 30, 2020, there was $0.3 million of unrecognized compensation expense for the restricted stock units.