Salem Media Group, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock Incentive Plan

Stock Incentive Plan

9 Months Ended

Sep. 30, 2022

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

Stock Incentive Plan

NOTE 15. STOCK INCENTIVE PLAN

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-month periods ended September 30, 2022 and 2021:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2022			2021			2022
	(Dollars in thousands)
Stock option compensation expense included in unallocated corporate expenses	$	23		$	24		$	75		$	60
Restricted stock shares compensation expense included in corporate expenses		—			—			—			54
Stock option compensation expense included in broadcast operating expenses		31			18			92			67
Stock option compensation expense included in digital media operating expenses		24			12			73			47

Total stock-based compensation expense, pre-tax	$	78		$	54		$	240		$	228

Tax expense for stock-based compensation expense		(20	)		(14	)		(62	)		(59	)

Total stock-based compensation expense, net of tax	$	58		$	40		$	178		$	169

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-month periods ended September 30, 2022 and 2021:


	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended
	September 30, 2021			September 30, 2021			September 30, 2022			September 30, 2022
Expected volatility		79.99	%		75.98	%		85.94	%		84.90	%
Expected dividends		0.00	%		0.00	%		0.00	%		0.00	%
Expected term (in years)		8.0			7.8			7.5			9.2
Risk-free interest rate		1.27	%		1.03	%		3.10	%		1.86	%

Activity with respect to our option awards during the nine-month period ended September 30, 2022 is as follows:


Options	Shares			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2022		1,900,417		$	3.01	$	1.37		4.4 years	$	1,310
Granted		120,000			3.11		2.52				—
Exercised		(42,913	)		2.27		1.12				55
Forfeited or expired		(166,164	)		6.10		3.47				—

Outstanding at September 30, 2022		1,811,340			2.76		1.26		4.3 years	$	278

Exercisable at September 30, 2022		1,081,090			3.35		1.40		2.8 years		87

Expected to Vest		693,372			2.78		1.27		4.3 years	$	268

Activity with respect to our restricted stock awards during the nine-month period ended September 30, 2022 is as follows:


Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2022		—		—		—		—
Granted		14,854		3.66		—	$	54
Lapsed		—		—		—		—
Forfeited		—		—		—		—

Outstanding at September 30, 2022		14,854		3.66		1.7	$	26

The aggregate intrinsic value represents the difference between our closing stock price on September 30, 2022 of $1.74 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, 2022 and 2021 was $0.2 million and $0.3 million, respectively.

As of September 30, 2022, there was $0.4 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 2.9 years.