Quarterly report pursuant to Section 13 or 15(d)

Stock Incentive Plan

v3.20.2
Stock Incentive Plan
9 Months Ended
Sep. 30, 2020
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Incentive Plan
NOTE 17. STOCK INCENTIVE PLAN
Our Amended and Restated 1999 Stock Incentive Plan (the “Plan”) provides for grants of equity-based awards to employees,
non-employee
directors and officers, and advisors of the company (“Eligible Persons”). The Plan is designed to promote the interests of the company using equity investment interests to attract, motivate, and retain individuals.
A maximum of 8,000,000 shares are authorized under the Plan. All awards have restriction periods tied primarily to employment and/or service. The Plan allows for accelerated or continued vesting in certain circumstances as defined in the Plan including death, disability, a change in control, and termination or retirement. Our Board, or a committee appointed by our Board, has discretion subject to limits defined in the Plan, to modify the terms of any outstanding award. Awards granted to
non-employee
directors are made in exchange for their services to the company as directors and therefore, the guidance in FASB ASC Topic
505-50
Equity Based Payments to
Non-Employees
is not applicable.
Under the Plan, our Board, or a committee appointed by our Board, may impose restrictions on the exercise of awards during
pre-defined
blackout periods. Insiders may participate in plans established pursuant to Rule
10b5-1
under the Exchange Act that allow them to exercise awards subject to
pre-established
criteria.
We recognize
non-cash
stock-based compensation expense based on the estimated fair value of awards in accordance with FASB ASC Topic 718
Compensation—Stock Compensation
. Stock-based compensation expense fluctuates over time as a result of the vesting periods for outstanding awards and the number of awards that actually vest. The following table reflects the components of stock-based compensation expense recognized in the Condensed Consolidated Statements of Operations for the three and nine
 months
ended September 30, 2020 and 2019:
 
    
Three Months Ended
September 30,
    
Nine Months Ended

September 30,
 
    
2019
    
2020
    
2019
   
2020
 
    
(Dollars in thousands)
    
(Dollars in thousands)
 
Stock option compensation expense included in unallocated corporate expenses
   $ 43     
$
30
 
   $ 229    
$
122
 
Restricted stock shares compensation expense included in unallocated corporate expenses
     100     
 
—  
 
     523    
 
—  
 
Stock option compensation expense included in broadcast operating expenses
     20     
 
32
 
     88    
 
106
 
Restricted stock shares compensation expense included in broadcast operating expenses
     —       
 
—  
 
     383    
 
—  
 
Stock option compensation expense included in digital media operating expenses
     12     
 
12
 
     58    
 
44
 
Stock option compensation expense included in publishing operating expenses
     2     
 
—  
 
     8    
 
1
 
  
 
 
    
 
 
    
 
 
   
 
 
 
Total stock-based compensation expense,
pre-tax
   $ 177     
$
74
 
   $ 1,289    
$
273
 
  
 
 
    
 
 
    
 
 
   
 
 
 
Tax expense for stock-based compensation expense
     (46   
 
(19
     (335  
 
(71
  
 
 
    
 
 
    
 
 
   
 
 
 
Total stock-based compensation expense, net of tax
   $ 131     
$
55
 
   $ 954    
$
202
 
  
 
 
    
 
 
    
 
 
   
 
 
 
Stock Option and Restricted Stock Grants
Eligible employees may receive stock option awards annually with the number of shares and type of instrument generally determined by the employee’s salary grade and performance level. Incentive and
non-qualified
stock option awards allow the recipient to purchase shares of our common stock at a set price, not to be less than the closing market price on the date of award, for no consideration payable by the recipient. The related number of shares underlying the stock option is fixed at the time of the grant. Options generally vest over a four-year period with a maximum term of five years from the vesting date. In addition, certain management and professional level employees may receive stock option awards upon the commencement of employment.
The Plan also allows for awards of restricted stock that contain transfer restrictions under which they cannot be sold, pledged, transferred or assigned until the period specified in the award, generally from one to five years. Restricted stock awards are independent of option grants and are granted at no cost to the recipient other than applicable taxes owed by the recipient. The awards are considered issued and outstanding from the date of grant.
The fair value of each award is estimated as of the date of the grant using the Black-Scholes valuation model. The expected volatility reflects the consideration of the historical volatility of our common stock as determined by the closing price over a six to
ten-year
term commensurate with the expected term of the award. Expected dividends reflect the amount of quarterly distributions authorized and declared on our Class A and Class B common stock as of the grant date. The expected term of the awards is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rates for periods within the expected term of the award are based on the U.S. Treasury yield curve in effect during the period the options were granted. We have used historical data to estimate future forfeiture rates to apply against the gross amount of compensation expense determined using the valuation model. These estimates have approximated our actual forfeiture rates.
The weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes valuation model were as follows for the three and nine
 
months
 
ended
September 30, 2020 and 2019:
 
    
Three Months Ended
   
Nine Months Ended
   
Three Months Ended
    
Nine Months Ended
 
    
September 30, 2019
   
September 30, 2019
   
September 30, 2020
    
September 30, 2020
 
Expected volatility
  
 
50.45
%
  
 
 
50.07
%
  
 
 
n/a   
 
 
53.96
%
 
Expected dividends
  
 
15.75
%
  
 
 
14.91
%
  
 
 
n/a   
 
 
7.30
%
Expected term (in years)
  
 
7.7   
 
 
7.7   
 
 
n/a   
 
 
7.6
 
Risk-free interest rate
  
 
1.71
%
 
 
1.83
%
 
 
n/a   
 
 
1.14
%
 
Activity with respect to the company’s option awards during the nine
 months
ended September 30, 2020 is as follows:
 
Options
  
Shares
   
Weighted
Average
Exercise Price
    
Weighted Average
Grant Date
Fair Value
    
Weighted Average
Remaining
Contractual Term
    
Aggregate
Intrinsic Value
 
    
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value)
 
Outstanding at January 1, 2020
     1,860,722     $ 4.39      $ 2.37        3.6 years      $ —    
Granted
     743,000       1.37        0.35           —    
Exercised
     —         —          —             —    
Forfeited or expired
     (293,425     5.67        3.85        
$
—    
  
 
 
            
Outstanding at September 30, 2020
  
 
2,310,270
 
 
$
3.26
 
  
$
1.53
 
  
 
4.5 years
 
  
$
—  
 
  
 
 
            
Exercisable at September 30, 2020
  
 
1,199,020
 
 
$
4.52
 
  
$
2.30
 
  
 
2.5 years
 
  
$
—  
 
  
 
 
            
Expected to Vest
  
 
1,055,132
 
 
$
3.29
 
  
$
1.55
 
  
 
4.5 years
 
  
$
—  
 
  
 
 
            
Activity with respect to the company’s restricted stock awards during the nine
 months
ended September 30, 2020 is as follows:
 
Restricted Stock Awards
  
Shares
    
Weighted Average
Grant Date Fair Value
    
Weighted Average
Remaining Contractual Term
  
Aggregate
Intrinsic Value
 
    
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value)
 
Outstanding at January 1, 2020
     107,990      $ 1.85      1.67 years    $ 156  
Granted
     —          —        —        —    
Lapsed
     —          —        —        —    
Forfeited
     —          —        —        —    
  
 
 
          
Outstanding at September 30, 2020
  
 
107,990
 
   $
1.85
 
  
0.92 years
   $
99
 
  
 
 
          
The aggregate intrinsic value represents the difference between the company’s closing price of common stock on September 30, 2020 of $0.92 and the option exercise price of the shares for stock options that were in the money, multiplied by the number of shares underlying such options. The total fair value of options vested during the periods ended September 30, 2020 and 2019 was $0.4 million and $0.7 million, respectively.
As of September 30, 2020, there was $0.1 million of total unrecognized compensation cost related to
non-vested
stock option awards. This cost is expected to be recognized over a weighted-average period of 1.8 years.