Stock based compensation

9 Months Ended

Sep. 30, 2023

Stock based compensation

Stock based compensation

Note 17. Stock based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to 2,000,000 shares.

On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by 2,500,000 shares.

The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC 718, Compensation – Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument. For units, fair value is equivalent to the adjusted closing stock price at the date preceding the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options.

Cancellations and forfeitures are accounted for as incurred.

Stock awards were granted on September 18, 2023, June 26, 2023, April 18, 2023, March 13, 2023, February 28, 2023, January 25, 2023, July 19, 2022, April 19, 2022 and February 28, 2022.

During the nine months ended September 30, 2023, 254,169 units vested. For the same period, 195,264 options vested with a weighted average strike price of $11.67. During the nine months ended September 30, 2022, 271,992 units vested. For the same period, 512,927 options vested with a strike price of $9.18.

As of September 30, 2023, 1,299,713 options remained outstanding with a weighted average strike price of $10.51 and a weighted average contractual life of 6.71 years remaining.

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Unit awards	$	856	$	247	$	2,445	$	1,873
Option awards		480		(106)		1,311		982
Stock based compensation expense, net of tax	$	1,336	$	141	$	3,756	$	2,855

A roll-forward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of September 30, 2023 will be expensed over the remaining requisite service period from which individual award values relate, up to July 19, 2025.

	Units		Options		Total
Balance as of December 31, 2022	$	1,739	$	1,050	$	2,789
Grants		3,560		2,585		6,145
Forfeitures		(211)		(83)		(294)
Expense		(715)		(351)		(1,066)
Balance as of March 31, 2023	$	4,373	$	3,201	$	7,574
Grants		785		—		785
Forfeitures		(48)		—		(48)
Expense		(874)		(480)		(1,354)
Balance as of June 30, 2023	$	4,236	$	2,721	$	6,957
Grants		20		—		20
Forfeitures		(50)		—		(50)
Expense		(856)		(480)		(1,336)
Balance as of September 30, 2023	$	3,350	$	2,241	$	5,591