| Share-based Payment Arrangement [Text Block] |
Note 15. Stock-Based Compensation
Successor
The Company rolled forward certain vested options from the Predecessor (see discussion below) to 2,783,479 equivalent vested options in the Successor. No incremental compensation costs were recognized on conversion as the fair value of the options issued were equivalent to the fair value of the vested options of the Predecessor. Exercise prices for those options range from $0.87 to $6.09.
During 2019, pursuant to the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, the Company granted stock-based awards to certain employees in the U.S. and U.K. All awards in the U.S. are restricted stock awards while awards granted to employees in the U.K. are stock options with exercise prices of $0.01. Regardless of where the awards were granted, the awards vested pursuant to one of the following four conditions:
| |
(1) |
Time-based only – Awards vest in equal installments over a five-year period. |
| |
(2) |
$13 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $13.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(3) |
$16 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $16.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(4) |
$19 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $19.00 for 30 consecutive days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
On October 29, 2020 almost all of the then-outstanding stock awards were modified as follows:
| |
(1) |
113 awards for 113 employees accepted a modification to their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-based vesting conditions as follows: |
| |
o |
The price vesting targets of $13.00 per share, $16.00 per share or $19.00 per share were reduced to $6.00 per share, $8.00 per share or $10.00 per share, respectively |
| |
o |
The market-based awards were exchanged on a 2-for-1 exchange ratio. In total 3,816,450 market-based awards were exchanged for 1,908,165 market-based awards |
| |
(2) |
18 awards for 18 employees had their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-based vesting conditions (the same $13/$16/$19 price targets outlined above) modified as follows: |
| |
o |
Each individual's total award was split into the following: (a) 46% of time vesting shares that vested on December 6, 2020, (b) 15% of time vesting shares which will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and (c) the remaining 39% will initially vest based on reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
o |
In the aggregate, 1,381,426 stock awards were modified as follows: |
| |
(a) |
635,455 shares vested on December 6, 2020, |
| |
(b) |
207,215 shares will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and |
| |
(c) |
538,756 shares will vest based on reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share |
As a result of the modifications, and in accordance with ASC 718, the Company updated the fair value of each modified award to be equal to the following:
| |
● |
Unrecognized stock-based compensation expense as of October 29, 2020 immediately before the modification plus |
| |
● |
The greater of $0 or the difference between fair value of new award immediately after modification less the fair value of old award immediately before modification |
The fair values for the above awards were calculated using a Monte Carlo simulation model and the updated fair value of the stock award is expensed over the new service period for the new award. As a result of the modifications, the Company recorded $5.9 million of compensation expense on day 1 of the modification as the requisite service period is zero. Outside of the unrecognized compensation expense for all other awards, no incremental costs are expected to be incurred in the future.
Included in the table below is a summary of the awards outstanding at October 31, 2020, following the modification, including the location, type of award, shares outstanding, unrecognized compensation expense, and the date that expense will be recognized through. In addition, while the table below provides a date through which expense will be recognized on a straight-line basis, if at such time the market-based stock awards vest earlier than the Monte Carlo simulation derived service period, expense recognition will be accelerated.
(in thousands, except shares outstanding and fair value amounts)
| Location |
Type of Award |
|
Shares Outstanding at October 31, 2020 |
|
|
Fair Value |
|
|
Unrecognized Compensation Expense at October 31, 2020 |
|
Date Expense will be Recognized Through (Straight-Line Basis) |
| U.S. |
Time Based Only |
|
|
895,902 |
|
|
$ |
6.67 |
|
|
$ |
4,633 |
|
12/6/2023 |
| U.S. |
Time Based Only |
|
|
707,133 |
|
|
$ |
5.18 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
$6 Market/Time- Based |
|
|
558,956 |
|
|
$ |
3.86 |
|
|
|
3,455 |
|
1/22/2025 |
| U.S. |
$8 Market/Time- Based |
|
|
558,956 |
|
|
$ |
3.46 |
|
|
|
3,054 |
|
5/1/2025 |
| U.S. |
$10 Market/Time- Based |
|
|
558,969 |
|
|
$ |
3.15 |
|
|
|
2,697 |
|
7/9/2025 |
| U.S. |
$6 Market/Time- Based |
|
|
150,697 |
|
|
$ |
6.19 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
$8 Market/Time- Based |
|
|
150,697 |
|
|
$ |
5.47 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
$10 Market/Time- Based |
|
|
150,706 |
|
|
$ |
4.83 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
$13 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.86 |
|
|
|
9 |
|
5/4/2024 |
| U.S. |
$16 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.46 |
|
|
|
7 |
|
8/27/2024 |
| U.S. |
$19 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.15 |
|
|
|
6 |
|
11/19/2024 |
| U.K. |
Time Based Only |
|
|
123,350 |
|
|
$ |
6.66 |
|
|
|
637 |
|
12/6/2023 |
| U.K. |
Time Based Only |
|
|
135,537 |
|
|
$ |
5.17 |
|
|
|
- |
|
10/29/2020 |
| U.K. |
$6 Market/Time- Based |
|
|
77,091 |
|
|
$ |
3.85 |
|
|
|
476 |
|
1/22/2025 |
| U.K. |
$8 Market/Time- Based |
|
|
77,091 |
|
|
$ |
3.45 |
|
|
|
420 |
|
5/1/2025 |
| U.K. |
$10 Market/Time- Based |
|
|
77,102 |
|
|
$ |
3.14 |
|
|
|
371 |
|
7/9/2025 |
| U.K. |
$6 Market/Time- Based |
|
|
28,885 |
|
|
$ |
6.18 |
|
|
|
- |
|
10/29/2020 |
| U.K. |
$8 Market/Time- Based |
|
|
28,885 |
|
|
$ |
5.46 |
|
|
|
- |
|
10/29/2020 |
| U.K. |
$10 Market/Time- Based |
|
|
28,886 |
|
|
$ |
4.82 |
|
|
|
- |
|
10/29/2020 |
| Total |
|
|
4,314,618 |
|
|
|
|
|
|
$ |
15,765 |
|
|
Stock Options
The following tables summarize stock option activity for the year ended October 31, 2020:
| |
|
Options |
|
|
Weighted average exercise price |
|
| Outstanding stock options, October 31, 2019 |
|
|
2,069,398 |
|
|
$ |
1.33 |
|
| Granted |
|
|
7,250 |
|
|
$ |
0.01 |
|
| Forfeited |
|
|
(25,888 |
) |
|
$ |
0.01 |
|
| Exercised |
|
|
(27,660 |
) |
|
$ |
0.01 |
|
| Expired |
|
|
(500 |
) |
|
$ |
0.01 |
|
| Modified |
|
|
(231,284 |
) |
|
$ |
0.01 |
|
| Outstanding stock options, October 31, 2020 |
|
|
1,791,316 |
|
|
$ |
1.54 |
|
The total intrinsic value of stock options exercised for the Successor year ended October 31, 2020 was $0.1 million.
The following table summarizes information about stock options outstanding at October 31, 2020:
| |
|
|
Options Outstanding |
|
|
Options Exercisable |
|
| Exercise price |
|
|
Number of options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual life (yrs) |
|
|
Aggregate Intrinsic Value |
|
|
Number of options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual life (yrs) |
|
|
Aggregate Intrinsic Value |
|
| $0.01 |
|
|
|
580,861 |
|
|
$ |
0.01 |
|
|
|
8.4 |
|
|
$ |
1,870 |
|
|
|
4,034 |
|
|
$ |
0.01 |
|
|
|
8.4 |
|
|
$ |
13 |
|
| $0.87 |
|
|
|
886,382 |
|
|
$ |
0.87 |
|
|
|
4.3 |
|
|
|
2,092 |
|
|
|
886,382 |
|
|
$ |
0.87 |
|
|
|
4.3 |
|
|
|
2,092 |
|
| $6.09 |
|
|
|
324,073 |
|
|
$ |
6.09 |
|
|
|
5.4 |
|
|
|
- |
|
|
|
324,073 |
|
|
$ |
6.09 |
|
|
|
5.4 |
|
|
|
- |
|
| Total |
|
|
|
1,791,316 |
|
|
$ |
1.54 |
|
|
|
- |
|
|
$ |
3,962 |
|
|
|
1,214,489 |
|
|
$ |
2.26 |
|
|
|
4.6 |
|
|
$ |
2,105 |
|
As of October 31, 2020, there was $1.9 million of total unrecognized compensation cost related to stock options that is expected to be recognized as an expense by the Company in the future.
The Company recognized $0.0 million in tax benefits related to exercised stock options for the Successor year ended October 31, 2020.
Restricted Stock Awards
The following table is a summary of Restricted Stock Awards activity for year ended October 31, 2020:
| |
|
Units |
|
|
Weighted average grant-date fair value |
|
| Unvested as of December 6, 2018 |
|
|
- |
|
|
$ |
- |
|
| Granted |
|
|
5,885,809 |
|
|
$ |
4.42 |
|
| Vested |
|
|
- |
|
|
$ |
- |
|
| Forfeited |
|
|
(130,350 |
) |
|
$ |
4.58 |
|
| Unvested as of October 31, 2019 |
|
|
5,755,459 |
|
|
$ |
4.44 |
|
| Granted |
|
|
- |
|
|
$ |
- |
|
| Vested |
|
|
(229,011 |
) |
|
$ |
6.61 |
|
| Forfeited |
|
|
(111,656 |
) |
|
$ |
4.49 |
|
| Modified |
|
|
(1,677,001 |
) |
|
$ |
3.89 |
|
| Unvested as of October 31, 2020 |
|
|
3,737,791 |
|
|
$ |
5.39 |
|
As of October 31, 2020, there was $13.5 million of unrecognized compensation expense related to non-vested restricted stock awards that is expected to be recognized as an expense by the Company in the future.
Predecessor
The Predecessor accounted for share-based awards in accordance with ASC Topic 718 Compensation–Stock Compensation (“ASC 718”), which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at fair value on the date of grant. As a result of the Business Combination, the acceleration clause within the original award agreements was triggered and all unvested awards immediately vested, resulting in an amount of $0.6 million of stock-based compensation expense presented “on the line” (see Note 4 - Business Combinations). Stock-based compensation for the Predecessor period from November 1, 2018 to December 5, 2018 totaled $0.1 million and has been included in general and administrative expenses on the accompanying consolidated statement of income.
|