Stock-Based Compensation

2011 Equity Incentive Plan

In 2011, the Company adopted the Comstock Mining Inc. 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan replaced the equity plans previously adopted by the Company, including, without limitation, those adopted in 2005 and 2006. The maximum number of shares of the Company’s common stock that may be delivered pursuant to awards granted under the 2011 Plan is 6,000,000 shares of common stock. The plan provides for the grant of various types of awards, including but not limited to restricted stock (including performance awards), restricted stock units, stock options, and other types of stock-based awards.

Performance-based Restricted Stock

On December 21, 2011, May 31, 2012, September 15, 2012, and September 19, 2013 the Board of Directors granted 4,710,000 shares, 755,000 shares, 525,000 shares, and 659,500 shares respectively, of restricted stock (performance awards) to certain employees under the 2011 Equity Incentive Plan. These awards vest primarily based on specific performance conditions including the validation of both resources (at least measured and indicated and / or proven and probable reserves) at levels of 1,000,000, 1,500,000, 2,000,000, and 3,250,000 of gold equivalent ounces by an independent third party, completing the first pour from the mining operations, and achieving certain annual mining production rates at levels of 15,000, 17,500, and 20,000 of gold equivalent ounces for a period of at least 90 days. Certain of these awards will vest at the latter of the achievement of the aforementioned performance conditions or certain service period requirements, but only if the performance conditions have been met.

The restricted stock fair value was $1.89, $2.02, $2.98, and $1.95 per share, respectively, at the grant dates (with a total grant date fair value of $8,901,900, $1,525,000, $1,564,500, and $1,286,025, respectively). The fair value was determined based on the fair value of the underlying common stock at the grant dates. The unvested restricted stock awards expire five years after the grant date.

Information related to non-vested restricted stock issued under the 2011 Plan is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Balances at January 1, 2013	5,024,400		$	1.99
Grants	659,500		1.95
Vested	(1,141,300	)	2.12
Forfeitures	(915,000	)	2.08
Balances at December 31, 2013	3,627,600		$	1.92

We recognize compensation expense related to these restricted stock grants over the performance period based on a periodic assessment of the probability that the performance criteria will be achieved. At December 31, 2013, the Company has estimated that certain of these performance conditions are probable of being achieved and has therefore recognized compensation expense related to these restricted shares. Additionally, the Company has estimated that certain of these performance conditions are not probable of being achieved and therefore no expense related to those conditions has been recognized.

We recorded stock-based compensation (including restricted stock grants and other common stock grants) as follows:



	Year Ended December 31,
	2013			2012		2011
Costs applicable to mining revenue	$	(155,964	)	$	429,916	$	—
Reclamation and exploration expenses	45,705			1,765,963		203,731
General and administrative	1,028,347			3,644,602		980,000
Hospitality operating costs	25,058			47,112		—
Total	$	943,146		$	5,887,593	$	1,183,731

At December 31, 2013, total unrecognized compensation expense related to non-vested restricted stock award shares that are expected to vest is approximately $0.1 million and should be recognized over a weighted average period of 5 months.

Options

Prior to the 2011 Plan, the Company had previously issued options under prior programs. At December 31, 2013, our Company had 50,000 outstanding and fully vested employee and director options to acquire shares of common stock. The options outstanding at December 31, 2013 have a weighted average remaining contractual life of 4.75 years and a weighted average exercise price of $4.00 per share. During 2013, there were no options granted, exercised, or forfeited.

During 2012, 400,000 options were exercised at an option exercise price of $2.24 using the cashless exercise option resulting in the issuance of 122,848 common shares. The intrinsic value of the options exercised in 2012 was approximately $396,800.

There was no compensation expense recognized for the remaining outstanding options during the years ended December 31, 2013, 2012, and 2011.

Common Stock

During 2011, the outside directors of the Company were granted 300,000 shares of the Company’s common stock valued at $980,000. The shares were immediately vested and the related stock-based compensation has been recorded as $980,000 of general and administrative cost and expenses in the accompanying consolidated statements of operations for the year ended December 31, 2011.