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Stock-Based Compensation
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Stock-Based Compensation

NOTE 3. Stock-Based Compensation

The Company has two stock-based compensation plans: the 2006 Equity Incentive Plan (“2006 Plan”) and the 2015 Equity Incentive Plan (“2015 Plan”), both of which were approved by our stockholders. As of September 30, 2018, options to purchase 4,000 and 3,000 shares were outstanding under the 2006 Plan and the 2015 Plan, respectively, and 1,000 options are available for grant under either Plan.  The Company intends to seek shareholder approval at its upcoming Annual Shareholder Meeting to replenish the shares available under the 2015 Plan.

The Company’s stock options vest on an annual or a monthly basis. Stock options generally are exercisable for up to seven years after grant, subject to continued employment or service. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Such amount may change as a result of additional grants, forfeitures, modifications in assumptions and other factors. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. During the three and nine months ended September 30, 2018 and 2017, the Company recorded no compensation expense related to options previously granted. Under current U.S. federal tax law, the Company receives a compensation expense deduction related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference that results in a deferred tax asset and a corresponding deferred tax benefit in our consolidated statements of operations.

During the nine months ended September 30, 2018 and 2017, the Company did not grant any stock options. As of September 30, 2018, because all outstanding stock options were fully vested, there was no unrecognized compensation expense.  During the nine months ended September 30, 2018, options on 26,000 shares expired without being exercised.

As of September 30, 2018, a total of 8,000 fully-vested and exercisable stock options were outstanding with a weighted average exercise price of $29.07 per share and a weighted average remaining contractual life of 2.51 years. 

During the quarter ended June 30, 2018, the Company granted a restricted stock award on 42,000 shares with 17,000 shares vesting on the date of grant and the remaining 25,000 shares vesting in four equal installments on the last day of each calendar quarter beginning June 30, 2018.  The total value of the award was $200,000.  During the quarter ended September 30, 2018, the Company granted a fully vested stock award of 59,000 shares of its common stock valued at $260,000.  Total stock-based compensation expense recorded in three and nine-month periods ended September 30, 2018 amounted to $130,000 and $270,000, respectively.  At September 30, 2018, a total of $190,000 remains in prepaid assets related to these two grants.