CAPITAL TRANSACTIONS |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CAPITAL TRANSACTIONS | CAPITAL TRANSACTIONS Dividends
No dividends were declared for the year ended December 31, 2022.
On March 10, 2021, we announced a special non-recurring cash dividend of $1.00 per common share in an aggregate amount of $19.9 million that was paid on April 5, 2021, to shareholders of record on March 29, 2021. In accordance with the provisions of our 2012 Stock Incentive Plan (the “2012 Incentive Plan”), as a result of the special dividend we are required to make the participant’s original grant whole by preventing either dilution or enlargement of the benefits or potential benefits intended by the original grant. The 2012 Incentive Plan provides our Compensation Committee with the discretion to meet this requirement. See further discussion in the Share-Based Compensation section of this Note.
The declaration of dividends is subject to the discretion of our Board of Directors and will depend upon various factors, including our earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by our Board of Directors.
Share Repurchase Program
On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the year ended December 31, 2022, we repurchased 909,000 shares of our common stock for $13.6 million. At December 31, 2022, the remaining balance available for repurchases under the program was $24.0 million.
Share-Based Compensation
During the year ended December 31, 2012, our shareholders adopted and approved the 2012 Incentive Plan. The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of common stock were originally authorized for the granting of awards under the 2012 Stock Incentive Plan. In 2015, our shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of Common Stock reserved for issuance by 1,500,000 shares. On May 5, 2021, our shareholders approved the Amended and Restated 2012 Stock Incentive Plan, which among other amendments, increased the number of shares of common stock reserved for issuance by 2,000,000 shares. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.
Stock Options
Our outstanding stock options include time-based stock options, which vest over differing periods ranging from the date of issuance up to 48 months from the option grant date.
Stock option activity for 2022 and 2021 consisted of the following (share amounts in thousands, except for per share information):
Share-based compensation expense from stock options for the years ended December 31, 2022 and 2021, was $0, respectively. As of December 31, 2022 and 2021, the unrecognized share-based compensation cost related to grants described above was $0, respectively. As of December 31, 2022 and 2021, we had no unvested options outstanding.
For the years ended December 31, 2022 and 2021, we issued 29,000 and 54,000 shares of common stock upon the exercise of stock options at an average exercise price of $9.17 and $12.00 per share, respectively. The aggregate intrinsic values of options exercised during the years ended December 31, 2022 and 2021 was $0.3 million and $0.4 million, respectively. For the years ended December 31, 2022 and 2021, we recognized $0.1 million and $0.2 million of tax benefits from the exercise of stock options during the period, respectively.
At December 31, 2022, the aggregate intrinsic value of outstanding and exercisable options to purchase 143,000 shares of common stock was $0. At December 31, 2021, the aggregate intrinsic value of outstanding and exercisable options to purchase 172,000 shares of common stock was $1.1 million.
Restricted Stock Units
Our outstanding restricted stock units (“RSUs”), include time-based RSUs, which vest over differing periods ranging from 12 months up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to EBITDA growth, and/or stock price levels. RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At December 31, 2022 and 2021, there were 94,000 and 88,000 vested RSUs, respectively, granted to members of the Board of Directors that had a restriction period.
Restricted stock unit activity for the years ended December 31, 2022 and 2021 is as follows: (share amounts in thousands, except per share information):
During the year ended December 31, 2022, we granted 881,000 RSUs of common stock under the 2012 Incentive Plan to our board, executive officers and other employees, which are composed of both time-based RSUs and share-price performance-based RSUs. The time-based RSUs were granted with a weighted-average grant date fair value $10.76 per share and vest in 12 monthly installments over a one year period from the grant date or in annual installments over three year period from the grant date. The share-price performance-based RSUs were granted with a weighted-average grant date fair value of $6.01 per share and vest upon achieving share-price targets over a three year period from the grant date.
During the year ended December 31, 2021, we granted 364,000 RSUs of common stock under the 2012 Incentive Plan to our board, executive officers and other employees, which are composed of both time-based RSUs and share-price performance-based RSUs. The time-based RSUs were granted with a weighted-average grant date fair value of $18.05 per share and vest in 12 monthly installments over a one year period from the grant date or in annual installments over a three year period from the grant date. The share-price performance-based RSUs were granted with a weighted-average grant date fair value of $14.14 per share and vest upon achieving share-price targets over a three year period from the grant date.
Except for share-price performance-based RSUs, RSUs are valued at the market value on the date of grant, which is the grant date share price discounted for expected dividend payments during the vesting period. For RSUs with post-vesting restrictions, a Finnerty Model was utilized to calculate a valuation discount from the market value of common shares reflecting the restriction embedded in the RSUs preventing the sale of the underlying shares over a certain period of time. Using assumptions previously determined for the application of the option pricing model at the valuation date, the Finnerty Model discount for lack of marketability is 12.2 percent for a common share.
Share-price performance-based RSUs were estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. Our assumptions include a performance period of three years, expected volatility of 50.1 percent, and a risk free rate of 3.3 percent.
Share-based compensation expense related to time-based RSUs for the period ended December 31, 2022 and 2021 was approximately $1.9 million and $2.1 million, respectively. As of December 31, 2022, and 2021, the unrecognized share-based compensation expense related to the grants described above, excluding incentive awards discussed below, was $3.0 million and $1.6 million, respectively. As of December 31, 2022, the remaining compensation expense is expected to be recognized over the weighted-average period of approximately 1.6 years.
Share-based compensation expense related to performance-based RSUs for the years ended December 31, 2022 and 2021, was approximately $1.0 million and $1.5 million, respectively. Should we attain all of the metrics related to the
performance-based RSU grant, we would recognize up to $5.3 million of potential share-based compensation expense. We currently expect to recognize an additional $2.5 million of that potential share-based compensation expense.
The number of shares issued upon vesting or exercise for restricted stock units granted, pursuant to our share-based compensation plans, is net of shares withheld to cover the minimum statutory withholding requirements that we pay on behalf of our employees, which was 81,000 and 165,000 shares for the years ended December 31, 2022 and 2021, respectively. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting.
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