PIONEER POWER SOLUTIONS, INC. Stock Compensation Disclosure
Stock-Based Compensation
On October 13, 2021, the Company’s board of directors adopted the 2021 Long-Term Incentive Plan (the “2021 Plan”), subject to stockholder approval, which was obtained on November 11, 2021. The 2021 Plan supplemented the 2011 Plan, which expired on May 11, 2021, and which replaced and superseded the 2009 Plan, as noted above. The Company’s outside directors and its employees, including the principal executive officer, principal financial officer and other named executive officers, and certain contractors are all eligible to participate in the 2021 Plan. The 2021 Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and upon such terms as are determined by the Board or a committee of the board that is designated to administer the 2021 Plan. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan is shares plus any increase by any Prior Plan Awards (as defined in the 2021 Plan) eligible for reuse ( shares) as of December 31, 2024, of which one hundred percent (%) may be delivered pursuant to incentive stock options. As of December 31, 2024, there were shares available for future grants under the Company’s 2021 Plan. The 2021 Plan was initially administered by the Company’s board of directors, but it has been administered by the compensation committee following the creation of such committee in the first quarter of 2022.
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Expected term (years) | - | - | ||||||
| Risk-free interest rate | % - | % | % - | % | ||||
| Expected volatility | % - | % | % - | % | ||||
| Expected dividends | % | % | ||||||
| Stock Options | Weighted
average exercise price (1) | Weighted average remaining contractual term | Aggregate intrinsic value | |||||||||||||
| Outstanding as of January 1, 2024 | 706,167 | $ | 3.99 | |||||||||||||
| Granted | 75,146 | 4.28 | ||||||||||||||
| Exercised | (162,837 | ) | 1.69 | |||||||||||||
| Forfeited/expired | (57,000 | ) | 8.71 | |||||||||||||
| Outstanding as of December 31, 2024 | 561,476 | 4.22 | $ | 426 | ||||||||||||
| Exercisable as of December 31, 2024 | 543,498 | 4.18 | 423 | |||||||||||||
| (1) | Exercise prices have been reduced by $ per share as a result of the modification in connection with the special cash dividend declared for all common shareholders of record as of December 17, 2024. |
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Weighted-average fair value of options granted (per share) | $ | 1.48 | $ | 0.97 | ||||
| Intrinsic value gain of options exercised | 453 | 52 | ||||||
| Cash receipts from exercise of options | 519 | 50 | ||||||
| Options outstanding | Options exercisable | |||||||||||
| Outstanding | Weighted average | Exercisable | ||||||||||
| Exercise price | number of | remaining life | number of | |||||||||
| (1) | options | in years | options | |||||||||
| $ | 0.18 | 10,000 | 5.3 | 10,000 | ||||||||
| $ | 1.67 | 11,000 | 7.4 | 11,000 | ||||||||
| $ | 1.81 | 144,667 | 6.4 | 144,667 | ||||||||
| $ | 2.18 | 1,000 | 1.2 | 1,000 | ||||||||
| $ | 2.32 | 1,309 | 0.0 | |||||||||
| $ | 3.75 | 50,000 | 8.4 | 50,000 | ||||||||
| $ | 4.10 | 4,000 | 3.3 | 4,000 | ||||||||
| $ | 4.42 | 70,000 | 9.9 | 70,000 | ||||||||
| $ | 4.60 | 10,000 | 8.7 | 3,333 | ||||||||
| $ | 5.75 | 5,000 | 8.6 | 1,666 | ||||||||
| $ | 5.80 | 236,000 | 2.3 | 236,000 | ||||||||
| $ | 5.99 | 2,500 | 8.5 | 2,500 | ||||||||
| $ | 6.11 | 2,500 | 8.6 | 833 | ||||||||
| $ | 6.77 | 5,000 | 8.5 | 1,666 | ||||||||
| $ | 7.00 | 2,500 | 8.5 | 833 | ||||||||
| $ | 7.48 | 6,000 | 0.3 | 6,000 | ||||||||
| 561,476 | 543,498 | |||||||||||
| (1) | Exercise prices have been reduced by $ per share as a result of the modification in connection with the special cash dividend declared for all common shareholders of record as of December 17, 2024. |
| Weighted-average | Weighted-average | |||||||||||
| grant-date | grant-date | |||||||||||
| Number of units | fair value per share | fair value | ||||||||||
| Unvested restricted stock units as of January 1, 2023 | 250,000 | $ | 4.35 | $ | 1,087 | |||||||
| Units granted | 100,000 | 5.75 | 575 | |||||||||
| Units vested | (225,000 | ) | 4.97 | (1,119 | ) | |||||||
| Units forfeited | ||||||||||||
| Unvested restricted stock units as of January 1, 2024 | 125,000 | 4.35 | 543 | |||||||||
| Units granted | 50,000 | 5.92 | 296 | |||||||||
| Units vested | (175,000 | ) | 4.80 | (839 | ) | |||||||
| Units forfeited | ||||||||||||
| Unvested restricted stock units as of December 31, 2024 | $ | |||||||||||
During the years ended December 31, 2024 and 2023, RSUs vested with an aggregate vest date fair value of $ and $, respectively.
2024
During the year ended December 31, 2024, the Company issued shares of its common stock for consulting services with a fair value of $59.
During the year ended December 31, 2024, the Company issued shares of common stock to its Chief Financial Officer (“CFO”) in connection with the vesting of RSUs on May 1, 2024, and RSUs on December 5, 2024.
During the year ended December 31, 2024, the CFO agreed to surrender shares of common stock to the Company, totaling an aggregate of shares ( shares on June 7, 2024, with a fair value of $ and shares on October 22, 2024, with a fair value of $) in connection with income and payroll tax obligations paid by the Company in connection with the exercising of options and vesting of RSUs. The shares were cancelled and retired by the Company.
On November 12, 2024, the board of directors declared a one-time special cash dividend of $ per share to shareholders of record as of December 17, 2024. All stock options that were outstanding as of the record date were modified to reduce the exercise price pursuant to the nondiscretionary anti-dilution provisions in the Company’s 2021 Plan. There was no incremental compensation expense related to the modification.
Stock based compensation expense recorded for the years ended December 31, 2024, and 2023 was approximately $ and $, respectively. As of December 31, 2024, there was $ of stock-based compensation expense remaining to be recognized in the consolidated statements of operations over a weighted average remaining period of years.
2023
During the year ended December 31, 2023, the Company issued shares of its common stock for consulting services with a fair value of $65.
During the year ended December 31, 2023, the Company issued shares of common stock to its Chief Executive Officer (“CEO”) in connection with the vesting of RSUs on May 11, 2023. The fair value of the RSUs on the date of grant was $, which was recognized immediately.
During the year ended December 31, 2023, the Company issued shares of common stock to its CFO in connection with the vesting of RSUs on May 1, 2022, and RSUs on May 1, 2023. The fair value of the RSUs on the date of grant was $, which was recognized immediately.
During the year ended December 31, 2023, the CEO and CFO each individually agreed to surrender shares of common stock to the Company, totaling an aggregate of shares with a fair value of $ in connection with income and payroll tax obligations paid by the Company in connection with the vesting of the above mentioned RSUs. The shares were cancelled and retired by the Company.
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.