Equity

12 Months Ended

Dec. 31, 2021

Equity

Equity

9.        Equity

Dividends

Solaris LLC paid distributions totaling $19,205 and $19,026 to all Solaris LLC unitholders in the years ended December 31, 2021 and 2020, respectively, of which $13,407 and $12,391 was paid to Solaris Inc. Solaris Inc. used the proceeds from the distributions to pay quarterly cash dividends to all holders of shares of Class A common stock totaling $13,407 and $12,391 in the years ended December 31, 2021 and 2020, including $365 and $314 related to shares of restricted stock, respectively.

Share Repurchase Program

On December 3, 2019, the Company’s board of directors authorized a share repurchase plan to repurchase up to $25,000 of the Company’s Class A common stock until the plan terminates pursuant to its provisions. On February 27, 2020, the Company’s board of directors approved an additional $5,000 repurchase of the Company’s Class A common stock. During the three months ended March 31, 2020, Solaris Inc. purchased and retired 2,374,092 shares of the

Company’s Class A common stock for $26,746, or $11.27 average price per share, and, in connection therewith, Solaris LLC purchased and retired 2,374,092 Solaris LLC Units from the Company for the same amount. As of March 31, 2020, the share repurchase plan was completed. During the year ended December 31, 2019, Solaris Inc. purchased and retired 251,930 shares of the Company’s Class A common stock for $3,254, or $12.90 average price per share, and, in connection therewith, Solaris LLC purchased and retired 251,930 Solaris LLC Units from the Company for the same amount. During the full share repurchase plan, Solaris Inc. purchased and retired 2,626,022 shares of the Company’s Class A common stock for $30,000, or $11.41 average price per share, and, in connection therewith, Solaris LLC purchased and retired 2,626,022 Solaris LLC Units from the Company for the same amount.

Stock-based compensation

The Company’s long-term incentive plan for employees, directors and consultants of the Company and its affiliates (the “LTIP”) provides for the grant of all or any of the following types of equity-based awards: (i) incentive stock options qualified as such under United States federal income tax laws; (ii) stock options that do not qualify as incentive stock options; (iii) stock appreciation rights; (iv) restricted stock awards; (v) restricted stock units; (vi) bonus stock; (vii) performance awards; (viii) dividend equivalents; (ix) other stock-based awards; (x) cash awards; and (xi) substitute awards.

Subject to adjustment in accordance with the terms of the LTIP, 5,118,080 shares of Solaris Inc.'s Class A common stock have been reserved for issuance pursuant to awards under the LTIP. Class A common stock withheld to satisfy exercise prices or tax withholding obligations will be available for delivery pursuant to other awards. The LTIP will be administered by the Board, the Compensation Committee of the Board or an alternative committee appointed by the Board.

A total of 591,261 options to purchase Class A common stock of the Company have been issued to employees, directors and consultants under the LTIP at an exercise price of $2.87 per option, and a weighted average grant date fair value of $12.04 per option. All options were vested by November 13, 2017. During the years ended December 31, 2021, 2020 and 2019, 4,600, 22,421 and 103,207 options were exercised, respectively, in exchange for an equal number of shares of Class A common stock. As of December 31, 2021, 549,306 options have been exercised, 33,348 forfeited and 8,606 remain outstanding.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on implied volatilities from historical trading of publicly traded companies which are in the same industry sector. The simplified method is used to derive an expected term. The expected term represents an estimate of the time options are expected to remain outstanding. The risk-free rate for periods within the contractual life of the option is based on the United States treasury yield curve in effect at the time of grant.

Compensation cost, as measured at the grant date fair value of the award, is recognized as an expense over the employee's requisite service period for service-based awards (generally the vesting period of the award of four years). For the years ended December 31, 2021, 2020 and 2019, the Company did not recognize stock-based compensation expense on options.

The following is a summary of the option activity under the LTIP for the years ended December 31, 2021, 2020 and 2019:

	Options Outstanding
				Weighted
				Average
		Weighted		Remaining	Aggregate
		Average Exercise		Contractual	Intrinsic Value
	Options	Price		Term (years)	(in thousands)
Balance, January 1, 2019	138,837	$	2.87	6.92	$	1,280
Exercisable, January 1, 2019	138,837	$	2.87	6.92	$	1,280
Canceled	—		—			—
Granted	—		—			—
Exercised	(103,207)		2.87			—
Forfeited	(4)		2.87			—
Balance, December 31, 2019	35,626	$	2.87	5.92	$	397
Exercisable, December 31, 2019	35,626	$	2.87	5.92	$	397
Canceled	—		—			—
Granted	—		—			—
Exercised	(22,421)		2.87			—
Forfeited	—		—			—
Balance, December 31, 2020	13,205	$	2.87	4.92	$	70
Exercisable, December 31, 2020	13,205	$	2.87	4.92	$	70
Canceled	—		—			—
Granted	—		—			—
Exercised	(4,600)		2.87			—
Forfeited	—		—			—
Balance, December 31, 2021	8,605	$	2.87	3.92	$	30
Exercisable, December 31, 2021	8,605	$	2.87	3.92	$	30

As of December 31, 2021, the Company had no unvested options outstanding.

The Company accounts for its stock-based compensation including grants of restricted stock in the consolidated statements of operations based on their estimated fair values on the date of grant. The following table further summarizes activity related to restricted stock for the years ended December 31, 2021, 2020 and 2019:

	Restricted Stock Awards
		Weighted Average
		Grant Date Fair
	Number of Shares	Value ($)
Unvested at January 1, 2019	411,497	$	13.67
Awarded	448,745		16.62
Vested	(208,697)		15.13
Forfeited	(24,294)		15.52
Unvested at December 31, 2019	627,251	$	15.23
Awarded	536,301		9.72
Vested	(360,891)		14.48
Forfeited	(99,546)		13.14
Unvested at December 31, 2020	703,115	$	12.33
Awarded	522,794		10.98
Vested	(353,307)		12.17
Forfeited	(25,287)		10.46
Unvested at December 31, 2021	847,315	$	11.62

As of December 31, 2021, total unrecognized compensation cost related to non-vested restricted stock was $5,663, which is expected to be recognized over a weighted-average period of 0.81 years. 414,274 shares, 266,053 shares and 166,989 shares of restricted stock vest in 2022, 2023 and 2024, respectively.

The number of shares remaining available for future issuance under LTIP is 2,466,988.

Earnings (Loss) Per Share

Basic earnings (loss) per share of Class A common stock is computed by dividing net income attributable to Solaris by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings (loss) per share is computed giving effect to all potentially dilutive shares.

The following table sets forth the calculation of earnings (loss) per share, or EPS, for the years ended December 31, 2021, 2020 and 2019:

	Year Ended December,
Basic net income (loss) per share:	2021		2020		2019
Numerator
Net income (loss) attributable to Solaris	$	(868)	$	(29,341)	$	52,007
Less income attributable to participating securities (1)		(365)		(314)		(1,120)
Net income (loss) attributable to common stockholders	$	(1,233)	$	(29,655)	$	50,887
Denominator
Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share		30,786		28,915		30,141
Effect of dilutive securities:
Stock options (2)		—		—		44
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share		30,786		28,915		30,185
Earnings (loss) per share of Class A common stock - basic	$	(0.04)	$	(1.03)	$	1.69
Earnings (loss) per share of Class A common stock - diluted	$	(0.04)	$	(1.03)	$	1.69

(1) The Company's restricted shares of common stock are participating securities.

(2) The year ended December 31, 2019 includes 44 shares of Class A common stock resulting from an assumed exercise of the stock options in the calculation of the denominator for diluted earnings per common share as these shares were dilutive.

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion:

	Year Ended December,
	2021		2020		2019
Class B common stock		14,035		15,842		16,688
Stock options		8		13		—
Restricted stock awards		282		38		320
Total		14,325		15,893		17,008