NOTES TO FINANCIAL STATEMENTS
Note 1 Description of the Plan
General
The Mastech Digital, Inc. 2019 Employee
Stock Purchase Plan (the Plan) became effective on January 1, 2019. The Plan is intended to provide eligible employees of Mastech Digital, Inc. and participating subsidiaries (the Company) with an opportunity to purchase
shares of common stock of the Company at a discount to market value. Eligible employees are individuals who provide services on a full-time basis and who have continuous employment with the Company for two years or more, as of the first day of an
offering period. Offering periods are semi-annual (January 1 through June 30; and July 1 through December 31). The Plan is intended to qualify as an employee stock purchase plan consistent with Section 423 of the Internal Revenue Code of
1986, as amended, (the Code).
Contributions
Eligible Plan participants (Participants) may make contributions to the Plan through payroll deductions (after-tax contributions) of at least 1%,
but not more than 15% of their compensation earned for each payroll period within an offering period for the purpose of purchasing the Companys common stock (Shares). Share purchases are subject to annual maximum payroll deductions
of $21,500 and an annual maximum of shares purchased of 3,000 shares. Participants may change the amount of payroll deductions for subsequent offering periods by giving notice 15-days preceding the first day
of a new offering period. Additionally, a participant may discontinue payroll deductions at any time during an offering period by providing a termination form in accordance with rules established by the Company. Participant contributions are
recorded in the period that the Participants payroll deductions are made. Participant contributions are not subject to vesting and they are fully vested at all times.
Share Purchases
The Plan allows Participants to
purchase Shares at 85% of the lesser of: 1) the fair market value per share on the first day of the offering period (or if such date is not a trading day, then on the next trading day thereafter) or 2) the fair market value per share on the last day
of the offering period (or if such date is not a trading day, then on the trading day immediately preceding the last day of the offering period). Shares purchased under the Plan will be credited to a Participants brokerage account under the
Plan as soon as reasonably practicable following the last day of each offering period.
In 2020, participants purchased 11,735 shares under the Plan
during the offering period ending June 30, 2020 at a purchase price of $8.9675; and purchased 8,724 shares during the offering period ending December 31, 2020 at a purchase price of $13.515 per share. In 2019, participants purchased 25,793
shares under the Plan during the offering period ending June 30, 2019 at a purchase price of $4.0375 per share; and purchased 14,707 shares during the offering period ending December 31, 2019 at a purchase price of $4.233 per share. The
maximum number of shares that will be offered under the Plan is 600,000. As of December 31, 2020, there were 539,041 shares available for future issuance.
Withdrawals and Holding Periods
If a
Participants employment terminates for any reason during an offering period, all amounts credited to such Participants account shall be returned to the Participant.
The Company has established a mandatory one-year holding period with respect to the shares purchased pursuant to the
Plan. However, the holding period will not apply to a Participant who has terminated employment due to of death or disability.
Administration of
the Plan
The Plan is administered by a committee appointed by the Companys Board of Directors. Administrative expenses of the Plan are paid
by the Company.
Amendment and Termination
Although it has not expressed an interest in doing so, the Company has the right under the Plan to amend, suspend or terminate the Plan at any time without
notice, provided that all shares and payroll deductions during an offering period are distributed to the Participants upon any termination and no amendment will affect the Participants right to receive such distributions.
Note 2 Summary of Significant Accounting Policies
Accounting Principles
The financial statements and
accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (U.S.).
Use of Estimates
The preparation of financial
statements in conformity with U.S. generally accepted accounting principles requires the Plan administrator and the Company to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results may
differ from these estimates.
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