Note 8 - Share-based Compensation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

8. Share-based Compensation

Stock Appreciation Rights

In conjunction with the offering, the Company vested all remaining stock appreciation rights (“SARS”) and settled the resulting liabilities related thereto. As a result, the Company recorded additional compensation expense in the amount of

$3.2

million in the

second

quarter of

2018.

The total intrinsic value of SARS outstanding was

$0.5

million as of

December 31, 2017.

Restricted

Stock

Units

As part of the Reorganization, all of the redeemable restricted units of New Mountain Lake were converted into restricted stock units of the Company, with the same vesting schedules. Therefore, we refer to redeemable restricted units issued prior to the Reorganization as restricted stock units. At the time of conversion, the restricted stock unit amounts were reclassified to additional paid in capital. The following is a summary of the Company’s restricted stock unit activity for the

nine

months ended

September 30, 2018:

			Weighted
	Number of		Average Grant
	Units		Date Fair Value
Unvested at December 31, 2017		446,000	$	9.14
Granted		-		-
Vested-pre IPO		105,307		7.74
Forfeited-pre IPO		6,667		7.52
Unvested at June 13, 2018		334,026		9.62
Conversion in connection with IPO		4.6666667
Unvested post-IPO		1,558,787		2.06
Vested-post IPO		96,446		2.93
Unvested at September 30, 2018		1,462,341	$	2.01

These restricted stock unit grants vest over periods ranging from

three

to

seven

years. The Company recognized compensation expense of

$0.8

million and

$0.4

million during the

nine

months ended

September 30, 2018

and

2017,

respectively. At

September 30, 2018

and

December 31, 2017,

the Company had

$2.3

million and

$3.2

million in unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a period of approximately

5.0

and

5.4

years, respectively.

Incentive Plan

In

June 2018,

the Board approved the

2018

Omnibus Incentive Plan (the “Incentive Plan”) to become effective in connection with the offering. The Company has reserved an aggregate of

3,200,000

shares of its Class A common stock for issuance of awards under the Incentive Plan. Participants in the Incentive Plan will be selected by the Compensation Committee from the executive officers, directors, employees and consultants of the Company. Awards under the Incentive Plan

may

be made in the form of stock options, stock appreciation rights, stock awards, restricted stock units, performance awards, performance units, and any other form established by the Compensation Committee pursuant to the Incentive Plan.

The following is a summary of the Incentive Plan restricted stock and restricted stock unit activity from

June 13, 2018

to

September 30, 2018:

			Weighted
	Number of		Average Grant
	Units		Date Fair Value
Unvested at June 13, 2018		-
Granted		236,351	$	15.84
Forfeited '		7,858		16.00
Unvested at September 30, 2018		228,493	$	15.83

The restricted stock grants vest over periods of

one

to

four

years. The Company recognized compensation expense of

$0.4

million during the

nine

months ended

September 30, 2018.

At

September 30, 2018,

the Company had

$3.3

million in unrecognized compensation expense related to the above restricted stock awards which is expected to be recognized over a period of approximately

3.2

years.

The following is a summary of the Incentive Plan stock option activity from

June 13, 2018

to

September 30, 2018:

			Weighted
	Number of		Average Grant
	Units		Date Fair Value
Unvested at June 13, 2018		-
Granted		192,203	$	6.09
Unvested at September 30, 2018		192,203	$	6.09

The stock options vest over a period of

four

years and expire

ten

years from the date of grant. The Company recognized compensation expense of

$0.1

million during the

nine

months ended

September 30, 2018.

The fair value of the stock option grant was estimated using the Black-Scholes method as of the grant date using the following assumptions:

Strike price	$	16.00
Risk-free interest rate		2.91	%
Expected dividend yield		0	%
Expected volatility		32.67	%
Expected term (in years)		6.25

At

September 30, 2018,

the Company had

$1.0

million in unrecognized compensation expense related to the stock option awards which is expected to be recognized over a period of approximately

3.8

years.