XML 42 R25.htm IDEA: XBRL DOCUMENT v3.20.4
Stock-Based Compensation and Other Benefit Plans
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation and Other Benefit Plans Stock-Based Compensation and Other Benefit Plans
Stock-Based Incentive Plans
Stockholders approved long-term incentive plans in 2019, 2018, 2014, 2010 and 2007 (the “2019 Plan,” the “2018 Plan,” the “2014 Plan,” the “2010 Plan” and the “2007 Plan,” respectively) under which the Company may grant equity awards to officers, key employees, non-employee directors and service providers in the form of stock options, restricted stock, and certain other incentive awards. The maximum number of shares that may be issued under the 2019 Plan, 2018 Plan, 2014 Plan, 2010 Plan and 2007 Plan are 1.0 million, 3.0 million, 5.2 million, 6.0 million and 2.2 million, respectively. At December 31, 2020, the Company had a total of 1.8 million shares remaining to be granted under the 2019 Plan and 2018 Plan. Shares may no longer be granted under the 2007, 2010 and 2014 Plans.
Stock Options
All stock options are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. During 2020, 1.3 million stock options were granted, all market-based options. The market-based options are restricted until criteria defined in the agreement are met. Proceeds received from stock option exercises are credited to common stock and additional paid-in capital, as appropriate. The Company uses historical data to estimate pre-vesting option forfeitures. Estimates are adjusted when actual forfeitures differ from the estimate. Stock-based compensation expense is recorded for all equity awards expected to vest. During the year ended December 31, 2020, 0.1 million stock options vested, and 0.6 million stock options were forfeited. No stock options vested or were forfeited during the year ended December 31, 2019.
Stock option activity for the years ended December 31, 2020 and 2019, are as follows
SharesWeighted-Average
Exercise
Price		Weighted-Average
Fair Value
Outstanding as of January 1, 2019— $— $— 
Granted3,000,000 1.93 1.25 
Exercised— — — 
Forfeited— — — 
Outstanding as of January 1, 20203,000,000 
Granted1,327,795 1.12 0.62 
Exercised(111,298)0.92 0.51 
Forfeited(556,497)0.92 0.51 
Outstanding as of
December 31, 20203,660,000 
Vested or expected to vest at
December 31, 20201,111,298 
.
The following table sets forth significant assumptions used in the Monte Carlo model for market-based options to determine the fair value of the options at the date of grant:
Year Ended December 31, 2020Year Ended December 31, 2019
Market-Based OptionsMarket-Based Options
Risk-free interest rate0.12 %1.84 %
Expected volatility of common stock103.50 %71.57 %
Expected life of options in years27
Vesting period in years27
The following table sets forth significant assumptions used in the Black Scholes model for time-vested options to determine the fair value of the options at the date of grant:
Year Ended December 31, 2019
Time-Vested Options
Initial stock price$1.93
Strike price1.93
Term (in years)6.5
Risk-free rate1.8 %
Volatility rate73.6 %
The Company had no time-vested options granted in 2020. At December 31, 2020, the unrecognized compensation cost related to stock options was $3.6 million.

Restricted Stock
The Company grants employees either time-vesting or market-based restricted shares in accordance with terms specified in the Restricted Stock Agreements. During the year ended December 31, 2020, 53% of the restricted shares granted were time-vesting and 47% were performance-based. Grantees of restricted shares retain voting rights for the granted shares.
•Time-vesting restricted shares vest after a stipulated period has elapsed after the date of grant, generally three years. Certain time-vested shares have also been issued with a portion of the shares granted vesting immediately.
•Market-based restricted shares are issued with criteria defined over a designated period and vest only when, and if, the outlined criteria are met.
Restricted stock share activity for the years ended December 31, 2020 and 2019, are as follows:
Restricted Stock SharesSharesWeighted-
Average Fair
Value at Date of
Grant
Non-vested at January 1, 20191,050,372 $3.47 
Granted to employees1,494,022 2.62 
Vested(615,941)3.72 
Forfeited(299,433)3.16 
Non-vested at January 1, 20201,629,020 2.66 
Granted to employees3,114,978 0.83 
Vested(711,988)2.94 
Forfeited(1,236,910)1.65 
Non-vested at December 31, 20202,795,100 $1.00 
The total fair value of restricted stock that vested during the years ended December 31, 2020 and 2019 was $2.1 million and $6.3 million, respectively.
At December 31, 2020, unrecognized compensation expense related to non-vested restricted stock was $1.8 million. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 0.8 years.
Restricted Stock Units
During the year ended December 31, 2020, the Company granted 0.9 million market-based restricted stock units (“RSUs”). The performance period for these RSUs continues until December 22, 2024.
During the year ended December 31, 2019, the Company granted 1.1 million RSUs. The period for these RSUs continues until December 31, 2024.
Restricted stock units activity for the years ended December 31, 2020 and 2019, are as follows:
Restricted Stock Units (1)
UnitsWeighted-
Average Fair
Value at Date of
Grant
RSUs at January 1, 2019301,766 $3.94 
2018 forfeited(272,046)6.39 
2019 granted1,071,530 3.75 
2019 forfeited(62,776)1.66 
RSUs at January 1, 20201,038,474 3.24 
2020 granted922,786 1.19 
2020 forfeited(733,711)3.79 
RSUs at December 31, 20201,227,549 $1.25 
(1) Restricted stock units and performance stock units are disclosed in the preceding table.
At December 31, 2020, unrecognized compensation expense related to restricted stock units was $2.0 million. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.2 years.
Employee Stock Purchase Plan
The Company’s Employee Stock Purchase Plan (“ESPP”) was approved by stockholders in 2012. The Company registered 500,000 shares of its common stock, currently held as treasury shares, for issuance under the ESPP. The purpose of the ESPP is to provide employees with an opportunity to purchase shares of the Company’s common stock through accumulated payroll deductions. The ESPP allows participants to purchase common stock at a purchase price equal to 85% of the fair market value of the common stock on the last business day of a three-month offering period which coincides with calendar quarters. Payroll deductions may not exceed 10% of an employee’s compensation and participants may not purchase more than 1,000 shares in any one offering period. In addition, for each calendar year, an employee may not be granted purchase rights for Flotek Stock valued over $25,000, as determined at the time such purchase right is granted. The fair value of the discount associated with shares purchased under the plan is recognized as stock-based compensation expense and was $0.1 million for each of the years ended December 31, 2020 and 2019. The total fair value of the shares purchased under the plan during each of the years ended December 31, 2020 and 2019 was $0.1 million. The employee payment associated with participation in the plan occurs through payroll deductions. Effective after the third quarter 2018 purchase, the Company suspended the ESPP due to lack of shares. Following shareholder approval for additional shares, the Company resumed the ESPP during the second quarter 2019.
Stock-Based Compensation Expense
Non-cash stock-based compensation expense related to restricted stock, restricted stock unit grants and stock purchased under the Company’s ESPP was $3.2 million and $4.0 million during the years ended December 31, 2020 and 2019, respectively.

401(k) Retirement Plan
The Company maintains a 401(k) retirement plan for the benefit of eligible employees in the U.S. All employees are eligible to participate in the plan upon employment. On January 1, 2015, the Company implemented a new matching program. The Company matches contributions at 100% of up to 2% of an employee’s compensation and, if greater, the Company matches contributions at 50% from 5% to 8% of an employee’s compensation. In April 2020, the Company suspended its matching contribution to employee accounts.
During the years ended December 31, 2020 and 2019, compensation expense included $0.2 million and $0.7 million, respectively, related to the Company’s 401(k) match.