Quarterly report [Sections 13 or 15(d)]

Note 8 - Stock-based Incentive Plans

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Note 8 - Stock-based Incentive Plans
3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

8. STOCK-BASED INCENTIVE PLANS

 

Restricted Stock

 

In 2016, the Company’s stockholders approved the Natural Health Trends Corp. 2016 Equity Incentive Plan (the “2016 Plan”) to replace its 2007 Equity Incentive Plan. The 2016 Plan allows for the grant of various equity awards including incentive stock options, non-statutory options, stock, stock units, stock appreciation rights and other similar equity-based awards to the Company’s employees, officers, non-employee directors, contractors, consultants and advisors of the Company. Up to 2,500,000 shares of the Company’s common stock (subject to adjustment under certain circumstances) may be issued pursuant to awards granted. At March 31, 2025, 1,129,047 shares remained available for issuance under the 2016 Plan.

 

The following table summarizes the Company’s restricted stock activity under the 2016 Plan:

 
   

Shares

   

Wtd. Avg. Price at Date of Issuance

 

Nonvested at December 31, 2024

    28,676     $ 4.84  

Vested

    (7,178 )   $ 4.84  

Nonvested at March 31, 2025

    21,498     $ 4.84  

 

Share-based compensation expense of $34,000 and $37,000 was recognized during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, total unrecognized share-based compensation expense related to non-vested restricted stock was $98,000, which is expected to be recognized over a weighted-average period of 0.5 years.

 

Phantom Equity

 

In 2021, the Company’s Board of Directors approved and adopted a Phantom Equity Plan (the “Phantom Plan”). Under the terms of the Phantom Plan, the Board of Directors' Compensation Committee  may grant to the Company’s employees, officers, directors, contractors, consultants, or advisors awards of phantom shares entitling grantees the right to receive a cash payment equal to the fair market value of an equal number of shares of the Company’s common stock upon the close of a vesting period, subject to any maximum payment value that the Compensation Committee  may set. The vesting of phantom shares is subject to such vesting conditions as the Compensation Committee  may specify in a grantee’s award agreement. Grantees of phantom shares shall not by virtue of their receipt of phantom shares have any ownership rights in shares of the Company’s common stock. The Phantom Plan shall continue for a period of ten years, after which no further phantom shares  may be awarded (although any phantom shares awarded prior to the expiration of such 10-year period shall be unaffected by the termination of the Phantom Plan).

 

On February 7, 2023, the Company granted 212,937 phantom shares to certain of the Company’s employees and its non-employee directors. The phantom shares vested in eight equal three-month vesting increments, subject to the satisfaction of both a time-based vesting condition and a performance vesting condition. Both of these vesting conditions were deemed satisfied on the grant date for the initial vesting increment. In order for the time-based vesting condition to be satisfied for each vesting period, the grantee must have remained continuously employed by, or be otherwise continuously providing services to, the Company through the end of the vesting period, and in order for the performance vesting condition to be satisfied for each performance period, the performance criteria designated by the Compensation Committee must have been satisfied. The initial performance vesting condition was designated by the Compensation Committee and applied to all future performance periods. If either vesting condition was not satisfied for a vesting date, then the phantom shares scheduled to vest on such date were forfeited. These phantom shares were subject to a maximum payment value of $12.00 per phantom share. Of the phantom shares awarded in 2023, 186,320 phantom shares vested and 26,617 were forfeited.

 

The phantom share awards are accounted for as liabilities in accordance with FASB ASC Topic 718,  Compensation –  Stock Compensation since they require cash settlement. The grant date of each vesting increment will be established when the Company and the grantees reach a mutual understanding of the key terms and conditions of an award, which is the date upon which each performance vesting condition is communicated to the grantees. Compensation expense is recognized over the requisite service period if it is probable that the performance vesting condition will be achieved. The fair value of the liability incurred is remeasured at the end of each reporting period with any changes in fair value recognized as compensation expense over the requisite service period. No compensation expense was recognized by the Company related to the cash settlement of such phantom shares during the three months ended March 31, 2024 .