Stock-Based Compensation Expense

6 Months Ended

Jun. 30, 2014

Stock-Based Compensation Expense [Abstract]

Stock-Based Compensation Expense

Note 2 – Stock-Based Compensation Expense

A summary of non-cash, stock-based compensation expense is as follows:

	For the Three Months Ended					For the Six Months Ended
	(in thousands)					(in thousands)
	June 30, 2014		July 1, 2013			June 30, 2014		July 1, 2013
Stock option compensation expense	$	-	$	1		$	-	$	6
Restricted stock compensation expense (credit), net of forfeitures		131		(110	)		299		(11	)
Total non-cash, stock-based compensation expense (credit), net of forfeitures	$	131	$	(109	)	$	299	$	(5	)

As of June 30, 2014, the unrecognized compensation expense related to stock options and restricted shares of common stock granted under the Cosi, Inc. 2005 Omnibus Long-Term Incentive Plan, as amended, (the “2005 Plan”), is approximately $1.0 million and is being recognized on a straight-line basis over the remaining vesting period through fiscal 2018.

Pursuant to the 2005 Plan and in accordance with the terms and conditions prescribed by the Compensation Committee of our Board of Directors, we granted 175,000 shares of restricted common stock to key employees during the second quarter of fiscal 2014, of which 87,500 shares are time-vested (“Time Vested Shares”) and 87,500 are performance-based (“Performance Shares”). During the six months ended June 30, 2014, we granted 1,204,164 shares of restricted common stock to key employees. The vesting of 200,000 of these shares occurs as follows: (i) 50% of the grant vested on the grant date and (ii) the remaining 50% vest in four equal quarterly installments through March 2015 provided that at each such date the employee continues to be employed by the Company. The rest of the shares granted during the six months of fiscal 2014 are subject to the following vesting schedules:

(a)           The Time-Vested Shares vest in four equal installments, with 25% vesting on each of the first, second, third and fourth anniversaries of the date of grant, provided that the employee remains in the continuous employ of the Company through each such vesting date.

(b)           The Performance Shares vest in four equal installments, provided that the employee remains in the continuous employment of the Company from and after the date of award and through the respective vesting dates set forth below and the specified price targets set forth below for the Company’s common stock are achieved:

(i) 25% on the first day on which the closing price of the Company’s common stock shall have exceeded $2.00 for 30 consecutive trading days (as adjusted for stock splits, recapitalizations, reorganizations or similar events);

(ii) 25% on the first day on which the closing price of the Company’s common stock shall have exceeded $2.50 for 30 consecutive trading days (as adjusted for stock splits, recapitalizations, reorganizations or similar events);

(iii) 25% on the first day on which the closing price of the Company’s common stock shall have exceeded $3.00 for 30 consecutive trading days (as adjusted for stock splits, recapitalizations, reorganizations or similar events); and

(iv) 25% on the first day on which the closing price of the Company’s common stock shall have exceeded $4.00 for 30 consecutive trading days (as adjusted for stock splits, recapitalizations, reorganizations or similar events).

The value of the shares for the grants made during the second quarters of fiscal 2014, based on the closing price of our common stock on the date of the grants, was approximately $0.2 million.

We did not grant any shares of common stock to employees in the three months ended July 1, 2013.

In the three months ended June 30, 2014 and July 1, 2013, we issued 1,751 and 44,640 shares, respectively, of our restricted common stock to members of the Board of Directors under the 2005 Plan and pursuant to the Non-Employee Directors Stock Incentive Plan. These shares had immaterial aggregate value in 2014 and approximately $0.1 million in 2013, and vested upon issuance.

During the three months ended June 30, 2014 and July 1, 2013, 100 and 250,000 shares, respectively, of previously issued restricted common stock were forfeited. The value of the forfeited shares, based on the closing price of our common stock on the date of the grants, was immaterial in the second quarter of fiscal 2014 and approximately $0.7 million during the second quarter of fiscal 2013.