Limbach Holdings, Inc.LMB
Limbach Holdings, Inc. Stock Compensation Disclosure
Management Incentive Plans
The Company initially adopted the Omnibus Incentive Plan on July 20, 2016 for the purpose of: (a) encouraging the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (b) giving participants an incentive for excellence in individual performance; (c) promoting teamwork among participants; and (d) giving the Company a significant advantage in attracting and retaining key employees, directors and consultants. To accomplish such purposes, the Omnibus Incentive Plan, and such subsequent amendments to the Omnibus Incentive Plan, provides that the Company may grant options, stock appreciation rights, restricted shares, RSUs, performance-based awards (including performance-based restricted shares and restricted stock units), other share based awards, other cash-based awards or any combination of the foregoing.
Following the approval of the 2023 Amended and Restated Omnibus Incentive Plan, the Company has reserved 3,050,000 shares of its common stock for issuance. The number of shares issued or reserved pursuant to the Omnibus Incentive Plan will be adjusted by the plan administrator, as they deem appropriate and equitable, as a result of stock splits, stock dividends, and similar changes in the Company’s common stock. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control. All awards are made in the form of shares only.
Service-Based Awards
The Company grants service-based stock awards in the form of RSUs. Service-based RSUs granted to executives and employees vest ratably, on an annual basis, over three years. Service-based RSUs granted to non-employee directors vest ratably over one year. The grant date fair value of the service-based awards was equal to the closing market price of the Company’s common stock on the date of grant. For the years ended December 31, 2024, 2023 and 2022, the Company recognized $2.1 million, $1.5 million and $1.6 million of stock-based compensation expense related to outstanding service-based RSUs, respectively.
The following table summarizes the Company’s service-based RSU activity:
| Awards | Weighted-Average Grant Date Fair Values | ||||||||||
| Unvested at January 1, 2022 | 266,089 | $ | 8.45 | ||||||||
| Granted | 184,941 | 8.97 | |||||||||
| Vested | (146,151) | 7.78 | |||||||||
| Forfeited | (24,604) | 9.43 | |||||||||
| Unvested at December 31, 2022 | 280,275 | $ | 9.06 | ||||||||
| Granted | 164,413 | 11.94 | |||||||||
| Vested | (163,354) | 8.58 | |||||||||
| Forfeited | (42,131) | 10.63 | |||||||||
| Unvested at December 31, 2023 | 239,203 | $ | 11.09 | ||||||||
| Granted | 54,747 | 45.77 | |||||||||
| Vested | (140,248) | 11.62 | |||||||||
| Forfeited | (3,896) | 29.23 | |||||||||
| Unvested at December 31, 2024 | 149,806 | $ | 22.79 | ||||||||
Performance-Based Awards
The Company grants performance-based restricted stock units (“PRSUs”) to executives, employees and former executives under which shares of the Company’s common stock may be earned based on the Company’s performance compared to defined metrics. The number of shares earned under a performance award may vary from zero to 150% of the target shares awarded, based upon the Company’s performance compared to the metrics. The metrics used for the grant are determined by the Company’s Compensation Committee of the Board of Directors and are based on internal measures such as the achievement of certain predetermined adjusted EBITDA and EBITDA margin performance goals generally over a three-year period.
The Company recognizes stock-based compensation expense for these awards over the vesting period based on the projected probability of achievement of the performance conditions as of the end of each reporting period during the performance period and may periodically adjust the recognition of such expense, as necessary, in response to any changes in the Company’s
forecasts with respect to the performance conditions. For the years ended December 31, 2024, 2023 and 2022, the Company recognized $3.6 million and $3.4 million and $1.2 million, respectively, of stock-based compensation expense related to outstanding PRSUs.
The following table summarizes the Company’s PRSU activity:
| Awards | Weighted-Average Grant Date Fair Values | ||||||||||
| Unvested at January 1, 2022 | 280,700 | $ | 9.46 | ||||||||
| Granted | 258,363 | 7.18 | |||||||||
| Vested | — | — | |||||||||
| Forfeited | (41,123) | 8.98 | |||||||||
| Unvested at December 31, 2022 | 497,940 | $ | 8.32 | ||||||||
| Granted | 289,092 | 12.77 | |||||||||
Performance factor adjustment(1) | 32,327 | 4.29 | |||||||||
| Vested | (121,827) | 4.29 | |||||||||
| Forfeited | (116,911) | 9.81 | |||||||||
| Unvested at December 31, 2023 | 580,621 | $ | 10.85 | ||||||||
| Granted | 84,869 | 45.58 | |||||||||
Performance factor adjustment(2) | 54,067 | 12.78 | |||||||||
| Vested | (211,634) | 12.78 | |||||||||
| Forfeited | (11,637) | 22.16 | |||||||||
| Unvested at December 31, 2024 | 496,286 | $ | 15.91 | ||||||||
(1) Performance-based awards covering the three year period ended December 31, 2022 were paid out in the first quarter of 2023 based on the approval of the Company's Compensation Committee. The performance factor during the measurement period used to determine compensation payouts was 136.13% of the pre-defined metric target of 100%, which resulted in a positive performance factor adjustment and the issuance of 32,327 of additional awards associated with the original grant.
(2) Performance-based awards covering the three-year period ended December 31, 2023 were paid out in the first quarter of 2024 based on the approval of the Company's Compensation Committee. The performance factor during the measurement period used to determine compensation payouts was 134.3% of the pre-defined metric target of 100%, which resulted in a positive performance factor adjustment and the issuance of 54,067 shares of the Company's common stock as additional awards associated with the original grant.
Stock-Based Compensation Expense
Total recognized stock-based compensation expense amounted to $5.8 million, $4.9 million and $2.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. The aggregate fair value as of the vest date of RSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $16.9 million, $3.8 million and $1.3 million, respectively. Total unrecognized stock-based compensation expense related to unvested RSUs which are probable of vesting amounted to $4.9 million at December 31, 2024. These costs are expected to be recognized over a weighted average period of 1.69 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.