Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

11. STOCK-BASED COMPENSATION

 

In April 2014, the Company adopted the Medical Transcription Billing, Corp. 2014 Equity Incentive Plan (the “2014 Plan”), reserving 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. During 2017, the 2014 Plan was amended and restated whereby an additional 1,500,000 shares of common stock and 100,000 shares of Preferred Stock were added to the plan for future issuance. The 2014 Plan was amended and restated on April 14, 2017 (the “Amended and Restated Equity Incentive Plan”). During 2018, an additional 200,000 of preferred shares were added to the plan for future issuance. In May 2020, an additional 2,000,000 shares of common stock and 300,000 shares of Preferred Stock were added to the plan for future issuance. As of June 30, 2020, 1,733,756 shares of common stock and 380,354 shares of Preferred Stock are available for grant. Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation Committee of the Board of Directors including unrestricted stock grants.

 

The equity-based RSUs contain a provision in which the units shall immediately vest and become converted into common shares at the rate of one share per RSU, immediately after a change in control, as defined in the award agreement. The preferred stock RSUs contain a similar provision, which vest and convert to Preferred Stock upon a change in control.

 

Common and preferred stock RSUs

 

In January 2020, the Compensation Committee approved executive bonuses to be paid in shares of Preferred Stock, with the number of shares and the amount based on specified criteria being achieved during the year 2020. The actual amount will be settled in early 2021 based on the achievement of the specified criteria. For the six months ended June 30, 2020, an expense of approximately $600,000, was recorded for these bonuses based on the value of the shares at the grant date and recognized over the service period. The portion of the stock compensation expense to be used for the payment of withholding and payroll taxes is included in accrued compensation in the condensed consolidated balance sheets. The balance of the stock compensation expense has been recorded as additional paid-in capital.

 

The following table summarizes the RSU transactions related to the common and preferred stock under the Equity Incentive Plan for the six months ended June 30, 2020 and 2019:

 

    Common Stock     Preferred Stock  
Outstanding and unvested shares at January 1, 2020     451,085       44,000  
Granted     618,879       44,000  
Vested     (326,996 )     (44,000 )
Forfeited     (50,896 )     -  
Outstanding and unvested shares at June 30, 2020     692,072       44,000  
                 
Outstanding and unvested shares at January 1, 2019     929,347       44,800  
Granted     5,000       44,000  
Vested     (319,813 )     (44,800 )
Forfeited     (12,120 )     -  
Outstanding and unvested shares at June 30, 2019     602,414       44,000  

 

Of the total outstanding and unvested common stock RSUs at June 30, 2020, 678,572 RSUs are classified as equity and 13,500 RSUs are classified as a liability. All of the preferred stock RSUs are classified as equity.

 

Stock-based compensation expense

 

The Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award. For stock awards classified as equity, the market price of our common stock or preferred stock on the date of grant is used in recording the fair value of the award and includes the related taxes. For stock awards classified as a liability, the earned amount is marked to market based on the end of period common stock price. The liability for the cash-settled awards was approximately $742,000 and $741,000 at June 30, 2020 and December 31, 2019, respectively, and is included in accrued compensation in the condensed consolidated balance sheets.

 

The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2020 and 2019:

 

Stock-based compensation included in the   Three Months Ended June 30,     Six Months Ended June 30,  
consolidated statements of operations:   2020     2019     2020     2019  
                         
Direct operating costs   $ 258,653     $ 46,207     $ 429,154     $ 96,858  
General and administrative     1,217,298       711,050       2,068,767       1,407,471  
Research and development     177,768       4,353       254,117       9,834  
Selling and marketing     226,987       31,053       435,970       36,025  
Total stock-based compensation expense   $ 1,880,706     $ 792,663     $ 3,188,008     $ 1,550,188