Note 9 - Equity

12 Months Ended

Dec. 31, 2022

Notes To Financial Statements

EQUITY

NOTE 9—EQUITY

We are authorized to issue up to a total of 260,000,000 shares of common stock and 50,000,000 shares of preferred stock, each having a par value of $0.01 per share. Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders and to receive ratably in proportion to the shares of common stock held by them any dividends declared from time to time by the board of directors. Our common stock has no preferences or rights of conversion, exchange, pre-exemption or other subscription rights.

The Company routinely allows employees to surrender common stock to pay estimated taxes upon the vesting or exercise of stock-based compensation awards. The value of common stock tendered by employees is determined based on the price of the Company’s common stock at the time of relinquishment. There were no other repurchases of common shares.

Stock-Based Compensation Awards

Our Long-Term Incentive Plan (“LTIP”) is currently authorized by shareholders for the issuance of awards of up to approximately 10.9 million shares of common stock. As of December 31, 2022, there were approximately 5.4 million shares of common stock available for grant under the LTIP, which includes 4.0 million authorized shares that became effective on February 23, 2022. Additionally, granted but unvested shares are forfeited upon termination of employment, unless an employee enters into another written arrangement, and may not be sold, assigned, transferred, pledged or otherwise encumbered.

As of December 31, 2022, we had four types of stock-based awards outstanding: stock options, restricted stock, restricted stock units, and performance stock units. Stock-based compensation expense for all stock-based awards totaled $8.2 million in 2022, $5.3 million in 2021, and $4.1 million in 2020.

Options—We granted options for the purchase of a total of 937,424 shares of our common stock for $5.34 per share to two executives on August 31, 2016. The options have a ten-year term from the grant date and are fully vested. During the third quarter of 2022, 20,000 options with an intrinsic value of $0.124 million were exercised, leaving a balance of 917,424 options. The remaining options are outstanding and unexercised and were in-the-money at December 31, 2022 with an intrinsic value of $3.2 million. No compensation expense was recognized for these awards in 2022, 2021, or 2020 as the awards became fully vested in previous years.

The following table summarizes the remaining stock-based awards outstanding, as well as activity for the periods:

	Restricted Stock			Restricted Stock Units			Performance Stock Units
		Weighted			Weighted			Weighted
		Average Grant			Average Grant			Average Grant
	Shares	Date Fair Value		Shares	Date Fair Value		Shares	Date Fair Value
Outstanding at December 31, 2020	2,845,525		4.28	—		—	—		—
Granted	1,592,659		4.37	—		—	—		—
Vested	(567,135)		6.55	—		—	—		—
Forfeited	(129,279)		4.11	—		—	—		—
Outstanding at December 31, 2021	3,741,770	$	3.98	—	$	—	—	$	—
Granted	214,363		14.59	248,706		15.65	248,706		22.21
Vested	(809,539)		6.57	(82,903)		15.65	—		—
Forfeited	(637)		15.65	—		—	—		—
Outstanding at December 31, 2022	3,145,957	$	4.04	165,803	$	15.65	248,706	$	22.21

The total fair value of awards vested was $11.0 million during 2022, $5.1 million during 2021, and $1.5 million during 2020.

Restricted Stock—We grant shares of restricted stock to certain senior executives, key employees and directors. These shares vest over approximately one to three and a half years from the date of grant. During the vesting period, the participants have voting rights and may receive dividends. Upon vesting, the restricted stock becomes unrestricted common shares. The fair value of the restricted stock on the date of the grant during 2022, which averaged $14.59 per share, is amortized ratably over the service period. At December 31, 2022, there was $5.0 million of total unrecognized compensation cost related to unvested restricted stock to be recognized over a weighted-average period of 0.8 years. The fair value of restricted stock awards that vested during 2022 was $10.3 million. The fair value of the outstanding restricted stock awards was $27.7 million based on the year-end 2022 closing stock price.

In December 2019, we entered into modification agreements with 14 executives and employees holding 1.4 million shares of unvested restricted stock whereby the vesting periods for these share grants was extended an additional six months. In exchange for the modification, we made an additional restricted stock grant to each of these executives and employees. In all, we granted 22,000 additional restricted shares in the modification. Incremental compensation costs associated with these modifications totaled $0.8 million and was recognized during 2020.

Restricted Stock Units—We grant shares of restricted stock units to certain senior executives and key employees. These share units vest ratably over approximately three years from the date of grant. During the vesting period, the participants have no voting rights and no dividend rights; however, participants are entitled to receive dividend equivalents, which shall be subject to the same conditions applicable to the units and payable at the time the units vest. Upon vesting and within 30 days thereafter, the recipient will receive one share of common stock for each stock unit.

The 248,706 restricted stock units granted during 2022 are linked to the Company’s common stock value which was fair valued on the date of grant at $15.65 per share and is recognized ratably over the service period. At December 31, 2022, there was $2.7 million of total unrecognized compensation cost related to unvested restricted stock units to be recognized over the next two years. The fair value of restricted stock unit awards that vested during 2022 was $0.7 million. The fair value of the outstanding restricted stock unit awards was $1.5 million based on the year-end 2022 closing stock price.

Performance Stock Units—We grant shares of performance stock units to certain senior executives and key employees. These share units cliff-vest approximately three years from the date of grant based on the achievement of

targeted performance levels related to pre-established relative total shareholder return goals. These performance stock units have the potential to be earned from 0% to 200% of target depending on actual results. During the vesting period, the participants have no voting rights and no dividend rights; however, participants are entitled to receive dividend equivalents, which shall be subject to the same conditions applicable to the units and payable at the time the units vest. Upon vesting and within 30 days thereafter, the recipient will receive one share of common stock for each stock unit.

The Company’s 248,706 performance stock units were valued relative to the stock price performance of a peer group of companies, which was fair valued at $22.21 per share at the date of grant based on a Monte Carlo simulation. The fair value of the performance stock units on the date of the grant is recognized ratably over the service period. At December 31, 2022, there was $3.8 million of total unrecognized compensation cost related to unvested performance stock units to be recognized over the next two years. The intrinsic value of the outstanding performance stock units, at target, was $2.2 million at December 31, 2022.

Dividends

On February 18, 2022, the Company announced that its Board of Directors approved an increase in its initial quarterly cash dividend to $5.0 million from the formerly approved $2.5 million that was declared and accrued in December 2021. Dividends in the amount of $5.0 million, or approximately $0.11 per share of common stock, were paid on March 15, 2022, to shareholders of record on March 1, 2022.

Dividends in the amount of $5.0 million, or approximately $0.11 per share of common stock, were paid on June 15, 2022, to shareholders of record on June 1, 2022.

Dividends in the amount of $5.0 million, or approximately $0.11 per share of common stock, were paid on September 15, 2022, to shareholders of record on September 1, 2022.

Dividends in the amount of $5.0 million, or approximately $0.11 per share of common stock, were paid on December 15, 2022, to shareholders of record on December 1, 2022.

On December 8, 2022, the Company announced that its Board of Directors declared a quarterly cash dividend of approximately $0.1250 per share of common stock. Dividends of $5.5 million were accrued in December 2022, and are payable on March 15, 2023, to shareholders of record on March 1, 2023.

For the full year 2022, the Company recognized $23.1 million of cash dividends declared against retained earnings, including $5.5 million that were unpaid as of December 31, 2022. For the full year 2022, the Company paid $20.0 million of dividends, including $2.5 million that were accrued at December 31, 2021.