NOTE 16 - STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

Incentive Plan

In October 2020, the Company’s stockholders approved the 2020 Omnibus Incentive Plan (the “2020 Plan”), which is administered by the Compensation Committee of the Board of Directors. The 2020 Plan reserves for issuance a total of 5.5 million shares of common stock to our officers, directors, employees or consultants eligible to receive awards under the 2020 Plan.

The 2020 Plan provides for the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards or a combination of the foregoing, to employees, directors or consultants, provided that only employees may be granted incentive stock options.

As of December 31, 2020, there were approximately 4.1 million shares of common stock available to be granted under the 2020 Plan. The 2020 Plan will terminate ten years after its adoption, unless terminated earlier by the Company’s Board of Directors.

Restricted Stock Units

RSUs were granted to employees and directors in connection with the IPO in October 2020. The RSUs granted to employees vest ratably over two to four years and the RSUs granted to directors vest on the first anniversary of the grant.

The following table shows a summary of the unvested restricted stock under the 2020 Plan as of December 31, 2020 as well as activity during the year:

Compensation costs recognized for these restricted stock grants were approximately $1.0 million for the year ended December 31, 2020. As of December 31, 2020, there was approximately $20.6 million of unrecognized compensation costs related to these restricted stock grants which we expect to recognize over the next 3.7 years.

Defined Contribution Plan

The Company has a 401(k) profit sharing plan covering substantially all employees. Employees may contribute amounts subject to certain Internal Revenue Service and plan limitations. The Company may make discretionary matching and nonelective contributions. For the years ended December 31, 2020 and 2019, the Company contributed $7.6 million and $5.9 million, respectively, for 401(k) contributions and related administrative expenses.

Deferred Compensation Plan

The Company has a deferred compensation plan for executives which was frozen effective December 31, 2007. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability; termination of employment; retirement after attaining age 65 (55 for participants who had an account balance in the plan as of May 1, 2001); or upon termination of the plan.

In 2017, the Company commenced a Non-Qualified Deferred Compensation Plan for certain highly compensated executives and employees that allows the participants to defer a portion of their earnings. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability; termination of employment; retirement; or upon termination of the plan.

Guild Equity Appreciation Rights Plan

In 2013, the Company established the Guild Equity Appreciation Rights (“GEARs”) Plan for certain executives that compensates participants with GEARs that, if vested, will ultimately be settled in cash on the final vesting date. The awards have a five-year vesting period in addition to annual performance vesting conditions. Compensation expense related to the GEARs awards is recognized over the five-year vesting period based on the change in the fair value of the award and the likelihood of achieving the performance vesting criteria.

In 2017, the Company established a new GEARs Plan for certain executives compensated with GEARs that will ultimately be settled in cash at maturity. Maturity is the earlier of (i) a change of control; (ii) the participant’s retirement; (iii) the participant’s death; (iv) the determination that the participant has suffered a disability; or (v) the involuntary termination of the participant’s employment with the Company and its subsidiaries without cause. The awards vest immediately, and compensation related to these GEARs awards is recognized over the participant’s service period based on the change in the fair value of the award.

For the year ended December 31, 2020, the Company recognized $2.6 million as expense, and for the year ended December 31, 2019, the Company recognized $0.1 million as income for both GEARs plans, which is included within salaries, incentive compensation and benefits in the Consolidated Statements of Income. In connection with the Company’s IPO, the GEARs Plans were terminated and frozen. The remaining liability under these plans is $3.5 million and recorded in accrued compensation and benefits in the Consolidated Balance Sheet. This will be paid to the participants twelve months after the IPO date of October 21, 2020.