Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.2
Stock-Based Compensation
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

Long-Term Incentive Plan

The LTIP permits the grant of a number of different types of equity, equity-based and cash awards to employees, directors and consultants, including grant options, SARs, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, substitute awards, performance awards or any combination of the foregoing, as determined by the Compensation Committee of the Board (the “Compensation Committee”), in its sole discretion. The purpose of the LTIP is to provide a means to attract and retain qualified employees, directors and consultants by affording such individuals a means to acquire and maintain stock ownership or awards, the value of which is tied to the performance of the Company. The LTIP also provides additional incentives and reward opportunities designed to strengthen such individuals’ concern for the welfare of the Company and their desire to remain in its employ. At the plan’s inception, 7,500,000 shares of Class A Common Stock were reserved for issuance under the LTIP.

The Company has granted restricted stock, restricted stock units and performance share units under the LTIP. Stock-based compensation expense for restricted stock and restricted stock units is recognized on a straight-line basis over the requisite service period for each separately vesting tranche of the award as if the award was, in substance, multiple awards. Stock-based compensation is included in general and administrative expense on the Company’s Condensed Consolidated Statements of Operations and forfeitures are recognized as they occur. The stock-based compensation expense recognized was less than $0.1 million and $1.0 million for the three months ended March 31, 2020 and 2019, respectively. Stock-based compensation expense decreased significantly during the three months ended March 31, 2020 primarily due to forfeitures related to the termination of 52 full-time employees announced on March 26, 2020. As of March 31, 2020, 4,912,178 shares of Class A Common Stock remained available for issuance under the LTIP, subject to adjustment pursuant to the plan. The Company’s Proposed Plan of Reorganization as discussed in Note 20 - Subsequent Events, anticipates that all unvested shares under the LTIP plan will be cancelled and receive no recovery.

Restricted Stock

Restricted stock granted under the LTIP is issued on the grant date, but is restricted as to transferability until vesting. These restricted shares generally vest on the first anniversary of the date of grant. The following table sets forth the restricted stock transactions for the three months ended March 31, 2020:
 
Restricted Stock
 
Weighted-Average Grant Date Fair Value
Nonvested - December 31, 2019
428,984

 
$
3.12

Granted

 

Vested
(403,816
)
 
3.13

Forfeited

 

Nonvested - March 31, 2020
25,168

 
$
2.98



As of March 31, 2020, there was less than $0.1 million of unrecognized compensation cost related to nonvested restricted stock which is expected to be recognized over a weighted-average period of 0.2 years.

Stock-Settled Time-Based Restricted Stock Units

Stock-settled time-based restricted stock units entitle the holder to receive one share of Class A Common Stock for each restricted stock unit when such restricted stock unit vests. These stock-settled time-based restricted stock units generally vest in three substantially equal installments on the first three anniversaries of the date of grant. The following table sets forth stock-settled time-based restricted stock unit transactions for the three months ended March 31, 2020:
 
Restricted Stock Units
 
Weighted-Average Grant Date Fair Value
Nonvested - December 31, 2019
1,360,070

 
$
4.28

Granted

 

Vested
(339,001
)
 
3.96

Forfeited
(374,367
)
 
4.35

Nonvested - March 31, 2020
646,702

 
$
4.40



As of March 31, 2020, there was $1.8 million of unrecognized compensation cost related to nonvested stock-settled time-based restricted stock units which is expected to be recognized over a weighted-average period of 1.7 years.

Market Based Performance Share Units

The Company granted a target number of market based performance share units to certain employees. The market based performance share units will be settled in stock, provided that certain performance criteria are met. The performance criteria applicable to such awards is relative total shareholder return, which measures the Company’s total shareholder return as compared to the total shareholder return of the peer group identified by the Compensation Committee. The Company recognizes compensation expense for the performance share units subject to market conditions regardless of whether it becomes probable that these conditions will be achieved or not and compensation expense is not reversed if vesting does not actually occur. The following table sets forth market based performance share unit transactions for the three months ended March 31, 2020:
 
Performance Restricted Stock Units
 
Weighted-Average Grant Date Fair Value
Nonvested - December 31, 2019
961,055

 
$
5.18

Granted

 

Vested

 

Forfeited
(338,259
)
 
5.40

Nonvested - March 31, 2020
622,796

 
$
5.06



The grant-date fair value was estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility was calculated based on the historical volatility of the Class A Common Stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the three-year vesting period. The following weighted-average assumptions were used to value the market based performance awards:
 
Three Months Ended
March 31, 2019
Expected volatility
68.1
%
Risk-free interest rate
2.2
%
Dividend yield
%
Expected life (years)
2.77



As of March 31, 2020, there was $1.4 million of unrecognized compensation cost related to shares of market based performance units which is expected to be recognized over a weighted average period of 1.3 years.

Cash-Settled Time-Based Restricted Stock Units

The Company grants cash-settled time-based restricted stock units to certain employees. Cash-settled time-based restricted stock units entitle the holder to receive the cash equivalent of one share of Class A Common Stock for each restricted stock unit when such restricted stock unit vests. These cash-settled time-based restricted stock units generally vest in three substantially equal installments on the first three anniversaries of the date of grant. Cash-settled time-based restricted stock units are classified as liabilities and are remeasured at each reporting date until settled. The stock-based compensation expense for cash-settled time-based restricted stock units is recognized on a straight-line basis over the requisite service period for each separately vesting tranche of the award as if the award was, in substance, multiple awards. The following table sets forth cash-settled restricted stock unit transactions for the three months ended March 31, 2020:
 
Cash-Settled Restricted Stock Units
 
Weighted-Average Grant Date Fair Value
Nonvested - December 31, 2019
412,921

 
$
3.47

Granted

 

Vested
(136,730
)
 
3.59

Forfeited
(182,249
)
 
3.40

Nonvested - March 31, 2020
93,942

 
$
3.46



As of March 31, 2020, the Company had a liability for cash-settled time-based restricted stock units of $0.1 million based on a closing price of $0.41 on March 31, 2020. As of March 31, 2020, there was less than $0.1 million of unrecognized compensation cost related to shares of cash-settled time-based restricted stock units which is expected to be recognized over a weighted average period of 1.9 years.

Retirement Benefits

The Company has not maintained, and does not currently maintain, a defined benefit pension plan or nonqualified deferred compensation plan. The Company currently maintains a retirement plan pursuant to which employees are permitted to contribute portions of their base compensation to a tax-qualified retirement account. The Company provided matching contributions equal to 100% of elective deferrals up to 6% of eligible compensation. Matching contributions are immediately fully vested. The Company’s matching contributions under the plan totaled $0.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.