XML 40 R27.htm IDEA: XBRL DOCUMENT v3.22.0.1
Stock based compensation
12 Months Ended
Dec. 31, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock based compensation

Note 21. Stock-based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provided the Company the ability to grant monetary payments based on the value of its common stock, up to two million 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 Topic 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 June 3, 2021, May 12, 2021, February 28, 2021, May 12, 2020, February 27, 2020, and May 8, 2019. There were no stock awards granted prior to this.

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

 

 

 

Twelve Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

IPO unit awards

 

$

 

 

$

1,029

 

 

$

1,871

 

Unit awards

 

 

3,006

 

 

 

2,305

 

 

 

1,080

 

Option awards

 

 

1,956

 

 

 

1,398

 

 

 

536

 

Stock based compensation expense, net of tax

 

$

4,962

 

 

$

4,732

 

 

$

3,487

 

 

One-time IPO unit awards were fully expensed as of December 31, 2020.

A rollforward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of December 31, 2021 will be expensed over the remaining requisite service period from which individual award values relate, up to February 28, 2023.

 

 

 

Units

 

 

Options

 

 

Total

 

Balance as of December 31, 2018

 

$

 

 

$

 

 

$

 

Grants

 

 

5,634

 

 

 

1,748

 

 

 

7,382

 

Forfeitures

 

 

(88

)

 

 

(88

)

 

 

(176

)

Expense

 

 

(2,951

)

 

 

(536

)

 

 

(3,487

)

Balance as of December 31, 2019

 

 

2,595

 

 

 

1,124

 

 

 

3,719

 

Grants

 

 

3,022

 

 

 

2,041

 

 

 

5,063

 

Forfeitures

 

 

(738

)

 

 

(335

)

 

 

(1,073

)

Expense

 

 

(3,334

)

 

 

(1,398

)

 

 

(4,732

)

Balance as of December 31 2020

 

 

1,545

 

 

 

1,432

 

 

 

2,977

 

Grants

 

 

3,456

 

 

 

2,130

 

 

 

5,586

 

Forfeitures

 

 

(319

)

 

 

(69

)

 

 

(388

)

Expense

 

 

(3,006

)

 

 

(1,956

)

 

 

(4,962

)

Balance as of December 31, 2021

 

$

1,676

 

 

$

1,537

 

 

$

3,213

 

 

 

Units

A summary of the Company’s unit award activity is as follows:

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

 

Number of Units

 

 

Weighted-Average Grant Date Fair Value

 

 

Number of Units

 

 

Weighted-Average Grant Date Fair Value

 

Nonvested, beginning of year

 

 

456,257

 

 

$

7.69

 

 

 

326,288

 

 

$

17.00

 

Grants

 

 

233,963

 

 

$

14.54

 

 

 

457,369

 

 

$

6.61

 

Forfeitures

 

 

(20,412

)

 

$

13.03

 

 

 

(62,409

)

 

$

8.90

 

Vested

 

 

(314,902

)

 

$

8.04

 

 

 

(264,991

)

 

$

17.00

 

Nonvested, end of year

 

 

354,906

 

 

$

11.59

 

 

 

456,257

 

 

$

7.69

 

 

Stock Options

A summary of the Company’s stock option award activity is as follows:

 

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

 

Number of Options

 

 

Weighted-Average Exercise Price

 

 

Number of Options

 

 

Weighted-Average Exercise Price

 

Nonvested, beginning of year

 

 

718,528

 

 

$

8.74

 

 

 

273,479

 

 

$

17.00

 

Grants

 

 

307,365

 

 

$

14.01

 

 

 

718,489

 

 

$

7.12

 

Forfeitures

 

 

(14,337

)

 

$

10.41

 

 

 

(148,026

)

 

$

9.13

 

Vested

 

 

(484,661

)

 

$

9.68

 

 

 

(125,414

)

 

$

17.00

 

Nonvested, end of year

 

 

526,895

 

 

$

10.91

 

 

 

718,528

 

 

$

8.74

 

 

As of December 31, 2021, there were 250,505 and 344,282 options issued and outstanding at exercise prices of $17.00 and $7.12 per share, respectively, with a remaining weighted average contractual life of 7.93 years. The intrinsic values of these outstanding options was zero and $7.79, respectively, based on the Company’s stock price as of December 31, 2021.

The Company uses the Black-Scholes valuation model to estimate the fair value of stock options which were $6.93 and $2.84 for those options granted during the years ended December 31, 2021 and 2020, respectively. The Company utilized the following assumptions in determining these fair values:

 

 

Inputs

 

Assumptions

 

2021

 

 

2020

 

Stock price at date of grant/exercise price

 

$

14.01

 

 

$

7.12

 

Expected term (in years)

 

 

5.75

 

 

 

5.75

 

Estimated volatility

 

 

53.9

%

 

 

41.2

%

Estimated risk-free rate of return

 

 

0.8

%

 

 

1.2

%

Expected dividend yield

 

 

0.0

%

 

 

0.0

%

 

The Company does not have historical option exercise data to estimate the expected term. For options granted, the Company utilizes the simplified method prescribed by Staff Accounting Bulletin (SAB) Topic 14 to estimate the expected term, which is calculated as the average of the vesting term and the contractual term. The option grants have a contractual life of 10 years and a requisite service period, or vesting term, of 2 years with 50% vesting on the annual anniversary dates. Applying the simplified method, the Company calculated the expected terms of each tranche to be 5.5 years and 6.0 years resulting in an average expected term of 5.75 years for these awards. The Company will continue to employ the simplified method until more relevant detailed information becomes available from which to make this estimate.