Note 11 - Stock Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

11.   STOCK BASED COMPENSATION

As of December 31, 2012, we have the Altair Nanotechnologies Inc. 2005 Stock Incentive Plan (the “Plan”), administered by the Board of Directors, which provides for the granting of options and restricted shares to employees, officers, directors and other service providers of ours.  This Plan is described in more detail below.  

The total number of shares authorized to be granted under the Plan was increased from 125,000 to an aggregate of 375,000 based on the proposal approved at the annual and special meeting of shareholders on May 30, 2007. On June 23, 2011, we held an annual and special meeting of shareholders. The proposal to increase the number of authorized shares under the Plan from 375,000 to 1,208,333 shares was approved at this meeting. The additional 833,333 shares approved by the stockholders are not available for stock option issuance at this time, as the Board of Directors has not authorized the filing of the related Registration Statement on Form S-8.

Prior stock option plans, under which we may not make future grants, authorized a total of 275,000 shares, of which options for 170,038 shares of common stock were granted (net of expirations) and options for 1,146 shares of common stock are outstanding and unexercised at December 31, 2012. Options granted under the plans are granted with an exercise price equal to the fair value of a common share at the date of grant, have five-year or ten-year terms and typically vest over periods ranging from immediately to four years from the date of grant.  The estimated fair value of equity-based awards, less expected forfeitures, is amortized over the awards’ vesting period utilizing the graded vesting method.  Under this method, unvested amounts begin amortizing at the beginning of the month in which the options are granted.

In calculating compensation recorded related to stock option grants for the years ended December 31, 2012 and 2011, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions:

	2012			2011
Weighted average fair value per option	$	2.89		$	6.40
Dividend yield	None			None
Expected volatility		90	%		94	%
Risk-free interest rate		0.83	%		1.02	%
Expected life (years)		7.10			7.10

The computation of expected volatility used in the Black-Scholes Merton option-pricing model is based on the historical volatility of our share price. The expected term is estimated based on a review of historical and future expectations of employee exercise behavior. The risk-free interest rates are based on a yield curve of interest rates at the time of the grant based on the contractual life of the option.

A summary of option activity under our equity-based compensation plans as of December 31, 2012 and 2011, and changes during the year then ended is presented below:

	2012									2011
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value		Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1,		260,730		$	33.49		7.7	$	-		252,244		$	47.56		7.5	$	-
Granted		133,332			2.88						99,999		$	8.04
Exercised
Forfeited/expired		(139,096	)	$	27.61						(91,513	)	$	44.47
Outstanding at December 31,		254,966		$	20.69		7.8	$	-		260,730		$	33.49		7.7	$	-
Exercisable at December 31,		89,254		$	50.81		5.6	$	-		134,536		$	53.44		6.2	$	-

As of December 31, 2012 and 2011 there was $267,000 and $479,000, respectively, of total unrecognized compensation cost related to non-vested options granted under the plans. That cost is expected to be recognized over a weighted average period of three years for 2012 and four years for 2011. The total fair value of options vested during the years ended December 31, 2012 and 2011 was $1,900,000 and $2,200,000 respectively.

No cash was received from stock option exercises for the years ended December 31, 2012 and 2011. The company issues shares from the registered stock incentive plan to satisfy the exercise of stock options and the conversion of stock awards.

Options Fully Vested and/or Expected to Vest

Range of exercise price			Number		Weighted average remaining contractual life		Weighted average exercise price		Intrinsic Value
$2.50	-	$52.00		209,306		8.66	$	22.58	$	-
$52.01	-	$101.5		45,452		4.13		77.61		-
$101.51	-	$151.00		208		2.22		105.60		-
	Total			254,966		7.84	$	50.81	$	-

A summary of the status of non-vested shares at December 31, 2012 and 2011 and changes during the year then ended, is presented below:

	2012					2011
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at January 1,		126,194		$	12.24		140,638		$	31.02
Granted		133,332			2.88		99,999			8.04
Vested		(18,235	)		24.94		(102,895	)		34.25
Forfeited/Expired		(75,579	)		9.67		(11,548	)		34.29
Non-vested shares at December 31,		165,712		$	4.48		126,194		$	12.24

Non-vested shares relating to non-employees reflected in the table above include 519 shares outstanding at January 1, 2012, no shares granted, no shares exercised, 261 shares were vested and no shares were forfeited or expired during the year ended December 31, 2012, resulting in 258 non-vested shares outstanding at December 31, 2012. Non-vested shares relating to non-employees reflected in the table above include 2,862 shares outstanding at January 1, 2011, no shares granted, no shares exercised, 1,303 shares were vested, 1,040 shares were forfeited and no shares were expired during the year ended December 31, 2011, resulting in 519 non-vested shares outstanding at December 31, 2011.