Note 15 - Share-based Payments

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

15. Share-based Payments:

Stock options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatility of the Company's common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant.

Details of stock option transactions for the three months ended  September 30, 2021 and  September 30, 2020 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020
	Number of shares			Weighted average exercise price per share		Number of shares			Weighted average exercise price per share
Outstanding, beginning of period		991,097		$	61.81		897,278		$	53.41
Granted		26,675			76.93		23,800			68.30
Exercised		(46,803	)		46.47		(38,102	)		38.58
Forfeited		(14,087	)		68.95		(10,678	)		60.54
Expired		(648	)		56.40		(636	)		58.77
Outstanding, end of period		956,234			62.88		871,662			54.38
Options exercisable, end of period		470,317		$	54.87		436,862		$	48.57

Details of stock option transactions for the nine months ended  September 30, 2021 and  September 30, 2020 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020
	Number of shares			Weighted average exercise price per share		Number of shares			Weighted average exercise price per share
Outstanding, beginning of period		845,020		$	55.31		754,497		$	49.94
Granted		265,725			79.18		219,325			60.18
Exercised		(120,828	)		45.36		(80,037	)		26.87
Forfeited		(31,649	)		64.54		(18,993	)		60.41
Expired		(2,034	)		60.17		(3,130	)		59.64
Outstanding, end of period		956,234			62.88		871,662			54.38
Options exercisable, end of period		470,317		$	54.87		436,862		$	48.57

As of September 30, 2021, the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	Options outstanding								Options exercisable
Exercise price	Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value
$19.41 - $19.95		24,500	$	19.56		0.6	$	1,455		24,500	$	19.56		0.6	$	1,455
$21.10 - $21.10		20,892		21.10		1.3		1,209		20,892		21.10		1.3		1,209
$37.35 - $37.35		4,375		37.35		0.3		182		4,375		37.35		0.3		182
$46.90 - $48.00		13,000		47.36		4.3		411		7,000		47.29		3.3		222
$51.82 - $59.98		253,656		55.57		2.8		5,930		239,131		55.59		2.7		5,586
$60.01 - $68.41		360,661		62.02		4.8		6,107		164,219		63.07		4.5		2,607
$72.50 - $79.87		279,150		78.69		6.4		185		10,200		72.64		6.2		65
		956,234	$	62.88		4.6	$	15,479		470,317	$	54.87		3.2	$	11,326

Total unrecognized compensation cost relating to unvested stock options at September 30, 2021, prior to the consideration of expected forfeitures, is approximately $10.3 million and is expected to be recognized over a weighted average period of 2.8 years.

The Company recorded stock-based compensation of $1.1 million for the three months ended September 30, 2021, and $1.0 million for the three months ended September 30, 2020, respectively. 

The Company recorded stock-based compensation of $3.4 million for the nine months ended September 30, 2021, and $2.7 million nine months ended September 30, 2020, respectively.

The Company has not capitalized any stock-based compensation expense as part of the cost of an asset.