We have adopted stock incentive plans and other arrangements pursuant to which our Board of Directors may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees. As of December 31, 2023, there were approximately 707,595 restricted stock units, performance awards and stock options outstanding to officers, directors, and key employees. The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of our Board at the time of grant and may vary.

In May 2021, our shareholders approved the amendment and restatement to the 2018 Team, Inc. Equity Incentive Plan (the “2018 Plan”). The 2018 Plan authorized issuance of share-based awards representing 420,000 shares, after giving effect of the reverse stock split discussed below. As of December 31, 2023, the 2018 Plan had 86,772 shares available for issuance, not including 445,136 performance awards granted in 2023, which can be settled in shares, cash or a combination thereof when vested. These performance awards are discussed in further detail below. Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock.

On December 21, 2022, we completed a reverse stock split of our outstanding common stock at a ratio of one-for-ten (the “Reverse Stock Split”) that effected a proportionate reduction in shares available for issuance under the 2018 Plan. We have made proportionate adjustments to the number of stock units outstanding and issuable upon exercise or vesting of our outstanding awards as well as the applicable exercise prices and weighted average fair value. No fractional shares were issued in connection with the Reverse Stock Split.

Compensation expense related to share-based compensation totaled $1.6 million, consisting of $1.4 million of stock units related expense and $0.2 million of performance units related expense, and $0.2 million, consisting of $1.5 million of stock units related expense and $1.3 million of credit related to performance units, for the years ended December 31, 2023 and 2022, respectively. Share-based compensation expense reflects an estimate of expected forfeitures. As of December 31, 2023, $3.7 million of unrecognized compensation expense related to share-based compensation is expected to be recognized over a remaining weighted-average period of 2.0 years. There was no income tax benefit recognized for the years ended December 31, 2023 or 2022.

Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash. We determine the fair value of each stock unit based on the market price on the date of grant. Stock units generally vest in annual installments over three or four years and the expense associated with the units is recognized over the same vesting period. Compensation expense related to stock units totaled $1.4 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively.


	Twelve Months Ended December 31, 2023
	No. of Stock Units	Weighted Average Fair Value at Date of Grant
	(in thousands)
Stock and stock units, beginning of year	98	$	19.55
Changes during the year:
Granted	253	$	8.22

Vested and settled	(87)	$	19.81
Cancelled	(2)	$	44.04
Stock and stock units, end of year	262	$	8.36

We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers. Under this program, we communicate “target awards” to the executive officers during the first year of a performance period. LTPSU awards vest with the achievement of the performance goals and completion of the required service period. Settlement occurs with common stock as soon as practicable following the vesting date.

We granted 445,136 LTPSUs during 2023 to certain executives with a milestone factor related to our adjusted EBITDA. This milestone factor is considered a non-market condition under GAAP. For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant. For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome. For performance awards, we recorded an expense of $0.2 million and income of $1.3 million for the years ended December 31, 2023 and 2022, respectively.

Transactions involving our performance awards during the twelve months ended December 31, 2023 are summarized below:


	Twelve Months Ended December 31, 2023
	Performance Units Not Subject to Market Conditions
	No. of Stock Units1	Weighted Average Fair Value at Date of Grant
	(in thousands)
Performance stock units, beginning of period	2	$	116.90
Changes during the period:
Granted	445	$	8.22

Cancelled and forfeited	(2)	$	116.90
Performance stock units, end of period	445	$	8.22

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We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period. There was no compensation expense related to stock options for the years ended December 31, 2023 and 2022. Our options typically vest in equal annual installments over a four-year service period. Expense related to an option grant is recognized on a straight-line basis over the specified vesting period for those options. Stock options generally have a ten-year term.