ShareBased Compensation

12 Months Ended

Dec. 31, 2023

ShareBased Compensation

Share-based Compensation

10. Share-Based Compensation

Stock Options

The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $200 and $271 of share-based employee compensation expense during the years ended December 31, 2023 and 2022, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations. No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2023 and 2022 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. In 2022, the Company paid dividends on January 10, for a dividend declared in 2021, May 16, August 8 and November 8. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.

	FY 2023			FY 2022
Expected Volatility		55.8	%		55.3	%
Expected Dividends		0	%		5.0	%
Expected Term (in years)		6.5			6.5
Risk-Free Rate		3.67	%		2.38	%
Estimated Forfeitures		0.0	%		0.0	%

A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2023, and changes during the year ended December 31, 2023, are presented below:

	Stock Options		Wgt. Avg. Exercise Price ($)  Per Share		Wgt. Avg. Remaining Contractual Life (Years)		Wgt Avg. Grant Date Fair Value ($) Per Share		Aggregate Intrinsic Value ($)
As of January 1, 2023
Outstanding		200,300		15.48		7.87		5.64		460,925
Vested		86,846		17.83		6.73		6.57		101,090
Nonvested		113,454		13.68		8.74		4.93		359,835
Period activity
Issued		43,600		12.89		—		7.44		—
Exercised		4,000		11.65		—		3.79		—
Forfeited		35,300		17.08		—		6.27		—
Expired		2,000		11.15		—		7.02		—
As of December 31, 2023
Outstanding		202,600		14.76		7.60		5.94		37,773
Vested		105,313		16.01		6.80		5.78		9,661
Nonvested		97,287		13.41		8.47		6.12		28,112

Outstanding:

Range of Exercise Prices ($) Per Share			Stock Options Outstanding		Wgt. Avg. Exercise Price ($) Per Share		Wgt. Avg. Remaining Contractual Life (Years)
	11.51	15.53		149,800		13.19		8.44
	16.20	25.50		52,800		19.23		5.24
				202,600		14.76		7.60

Exercisable:

Range of Exercise Prices ($) Per Share			Stock Options Exercisable		Wgt. Avg. Exercise Price ($) Per Share
	11.51	15.53		63,873		13.51
	16.20	25.50		41,440		19.85
				105,313		16.01

The weighted-average grant-date fair value per option granted during the years ended December 31, 2023 and 2022 was $5.94 and $5.64, respectively.  There were 4,000 and no stock options exercised during the years ended December 31, 2023 and 2022, respectively.

Restricted Stock Units

In connection with the restricted stock units granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements.  The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant.

A summary of non-vested restricted stock under the Company’s non-employee director share-based incentive compensation plan is as follows:

Year ended December 31, 2023	Number of Shares			Weighted Average Grant Date Price per Share
Unvested as of January 1, 2023		41,129		$	13.20
Granted		45,412			12.37
Vested and issued		(66,954	)		12.63
Cancelled/forfeited		-			-
Unvested as of December 31, 2023		19,587		$	13.22

Year ended December 31, 2022	Number of Shares			Weighted Average Price per Share
Unvested at January 1, 2022		27,411		$	16.65
Granted		40,857		$	11.95
Vested and issued		(27,139	)	$	14.80
Cancelled/forfeited		-			-
Unvested at December 31, 2022		41,129		$	13.20

During the years ended December 31, 2023 and 2022, the Company also issued 7,040 and 7,680 RSU’s, respectively, under a consulting agreement for advisory services to the Board of Directors.  The principal of the consulting firm was elected as the Chairman of the Board of Directors in December 2023.

During 2023, the Company’s Board of Directors approved the Executive Salary Swap Plan to prospectively swap a portion of certain executive’s salaries for a 12 month period (10% minimum, up to 50%) otherwise payable in cash for a grant of RSUs (with each RSU representing a contingent right to receive one share of the Company’s Common Stock) at a fixed rate of $10 per share, rounded down to the nearest whole RSU.  The Restricted Stock Units vest at the date of the grant. The Company issued 6,739 under this arrangement through December 31 , 2023.

As of December 31, 2023 and 2022, there was approximately $299 and $1,058, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units. This compensation cost is expected to be recognized approximately over one to four years.