Note 7 - Stock-based Awards

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. Stock-Based Awards

The 2006 Incentive Plan initially adopted in 2006 provides for grants of options with terms of up to ten years, grants of restricted stock or stock unit awards (“SUAs”), issuances of stock bonuses or grants other stock-based awards plus cash-based awards, to officers, directors, employees, and consultants. Such shares are issuable out of the Company’s authorized but unissued common stock. In May 2021, the 2006 Incentive Plan was amended to increase the total number of shares issuable thereunder from 1.2 million to 1.6 million. As of December 31, 2022, 183 thousand shares remained available for future grant under the 2006 Incentive Plan.

The fair value of the SUAs is determined by the closing price on the date of grant. The fair value of options is determined using a Black-Scholes model. The SUAs and options vest over a period of two to four years and are convertible or exercisable into an equivalent number of shares of the Company’s common stock provided that the employee receiving the award remains continuously employed throughout the vesting period. The Company records stock compensation expense related to the SUAs and options on a straight-line basis over the vesting term. Employees are issued shares upon vesting of SUAs, net of tax withholdings. As a result of our adoption of ASU 2016-09 in 2016, we recognize the impact of forfeitures when they occur with no adjustment for estimated forfeitures and recognize excess tax benefits as a reduction of income tax expense regardless of whether the benefit reduces income taxes payable.

On April 4, 2022, the Company granted SUAs covering two thousand shares of common stock. On May 20, 2022, the Company granted SUAs covering 126 thousand shares of common stock. On August 12, 2022, the Company granted SUAs covering 18 thousand shares of common stock.

The following table represents all shares granted by the Company under the 2006 Incentive Plan for the last three years (shares in thousands):

Grant Date	Type	Shares		Fair Value Per Share (1)
August 12, 2022	SUA		18	$	6.65
May 20, 2022	SUA		126	$	6.51
April 4, 2022	SUA		2	$	7.04
May 13, 2021	SUA		116	$	6.55
March 16, 2021	SUA		2	$	7.04
January 25, 2021	SUA		2	$	5.54
December 16, 2020	SUA		5	$	4.71
November 11, 2020	Options		40	$	1.13
November 11, 2020	SUA		190	$	4.07

(1) The fair value for the SUA’s is the closing price of the Company’s stock on that date. The fair value for options represents the fair value calculated using the Black-Scholes model. Options have contractual lives of 10 years. The options granted on November 11, 2020, have a fair value of $1.13 per share based on the $4.07 grant date and exercise prices and assuming 6.25 and 5.75 year estimated terms, 45% volatility, 0.9% interest rate and a 4.0% dividend yield rate. No options were granted during fiscal years ended December 31, 2022, and 2021. For options granted during fiscal year ended December 31, 2020, the weighted average grant date fair value was $3.47. For SUAs granted during fiscal years ended December 31, 2022, 2021 and 2020, the weighted average grant date fair values were $6.53, $6.55, and $4.89, respectively.

A summary of the Company’s stock option activity is as follows (in thousands, except price per share):

	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (2)
Outstanding, December 31, 2021		574		$	14.23	6.1 years	$	100
Granted		-		$	-
Exercised		(1	)	$	4.07
Forfeited		(1	)	$	4.07
Canceled		(64	)	$	15.03
Outstanding, December 31, 2022		508		$	14.19	5.1 years	$	25
Exercisable, December 31, 2022		467		$	14.70	4.9 years	$	14

(2) The aggregate intrinsic value on this table was calculated based on the amount, if any, by which the closing market price of the Company’s stock on December 31 of the applicable year exceeded the exercise price of any of the underlying options, multiplied by the number of shares subject to each such option. The closing stock price as of December 31, 2022, and 2021 was $4.90 and $7.02, respectively.

A summary of the Company’s stock unit award activity is as follows (in thousands, except price per share):

	Number of Shares			Weighted Average Grant-Date Fair Value per Share (3)
Outstanding & Unvested, December 31, 2021		224		$	5.48
Granted		146		$	6.53
Converted to common stock		( 90	)	$	6.33
Cancelled		( 12	)	$	6.29
Forfeited		( 30	)	$	6.26
Outstanding & Unvested, December 31, 2022		238		$	6.10

(3) Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants related to each transaction type. The weighted average fair value is the weighted average share price times the number of shares.

The fair value of stock unit award vesting was $548 thousand, $296 thousand and $274 thousand for the years ended December 31, 2022, 2021, and 2020, respectively. The intrinsic value of stock unit awards converted to common stock was based on the stock price on the vesting date and amounted to $650 thousand, $501 thousand and $115 thousand for the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022, a total of 1,032 thousand shares of common stock were reserved for issuance under 2006 Incentive Plan. As of December 31, 2022, the unamortized fair value of outstanding options and awards was $1.2 million to be amortized over a weighted average period of 2.3 years.

The Board of Directors approved the accelerated vesting of 35 thousand SUAs to certain directors upon retirement from the Board of the Company during the year ended December 31, 2022. The Company determined the value of the modifications to be $230 thousand, which is included in stock-based compensation in the accompanying consolidated financial statements, for the year ended December 31, 2022.