23 - STOCK-BASED COMPENSATION

On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. As a result, all share and per share information included for all periods presented in these consolidated financial statements for the Successor Company (except Baltic Trading share information), reflect the reverse stock split.

On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company. In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016. Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos received an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consisted of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90. The acceleration of the vesting of Mr. Georgioupoulos’ restricted shares and warrants resulted in $5,317 of nonvested stock amortization expense during the year ended December 31, 2016 for the Successor Company.

Genco Shipping & Trading — Successor Company

2014 Management Incentive Plan

On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the MIP (as defined in Note 1 — General Information). An aggregate of 9,668,061 shares of Common Stock were available for award under the MIP prior to the Company’s reverse stock split, which is equivalent to approximately 966,806 shares on a post-split basis. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values. The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence common stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) may grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction.

On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 2,380,664, 2,467,009, and 3,709,788 shares. Following the Company’s reverse stock split, these MIP Warrants are exercisable for approximately 238,066, 246,701 and 370,979 shares and have exercise prices of $259.10 (the “$259.10 Warrants”), $287.30 (the “$287.30 Warrants”) and $341.90 (the “$341.90 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $259.10 Warrants, $6.63 for the $287.30 Warrants and $5.63 for the $341.90 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six -year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%. The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vest 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company.

For the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014, the Successor Company recognized amortization expense of the fair value of these warrants, which is included in General and administrative expenses, as follows:


	Successor
	Year		Year		Period from
	Ended		Ended		July 9 to
	December 31,		December 31,		December 31,
	2016		2015		2014
General and administrative expenses	$	14,203	$	25,941	$	13,390

Amortization of the unamortized stock-based compensation balance of $902 as of December 31, 2016 is expected to be expensed during the year ended December 31, 2017. The following table summarizes the warrant activity for the years ended December 31, 2016 and 2015 and for the period from July 9, 2014 to December 31, 2014:


	Successor
	Year Ended December 31,
	2016					2015
		Weighted		Weighted			Weighted		Weighted
	Number of	Average Exercise		Average Fair		Number of	Average Exercise		Average Fair
	Warrants	Price		Value		Warrants	Price		Value
Outstanding at January 1	5,704,974	$	303.12	$	6.36	8,557,461	$	303.12	$	6.36
Granted	—		—		—	—		—		—
Exercisable	(4,991,852)		303.12		6.36	(2,852,487)		303.12		6.36
Exercised	—		—		—	—		—		—
Forfeited	—		—		—	—		—		—

Outstanding at December 31	713,122	$	303.12	$	6.36	5,704,974	$	303.12	$	6.36


	Successor
		Weighted		Weighted
	Number of	Average Exercise		Average Fair
	Warrants	Price		Value
Outstanding at July 9, 2014	—	$	—	$	—
Granted	8,557,461		303.12		6.36
Exercisable	—		—		—
Exercised	—		—		—
Forfeited	—		—		—

Outstanding at December 31, 2014	8,557,461	$	303.12	$	6.36

The following table summarizes certain information about the warrants outstanding as of December 31, 2016:

Warrants Outstanding,

Warrants Exercisable,

December 31, 2016

Weighted

Average

Weighted

Average

Weighted

Average

Remaining

Average

Remaining

Average

Number of

Exercise

Contractual

Number of

Exercise

Contractual

Exercise Price

Warrants

Price

Life

Warrants

Price

Life

303.12

713,122

303.12

3.60

7,844,339

303.12

3.60

The nonvested stock awards granted under the MIP will vest ratably on each of the three anniversaries of August 7, 2014. The nonvested stock awards issued under the MIP have a grant date price which represents the stock price on that date. The table below summarizes the Successor Company’s nonvested stock awards for the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014 that were issued under the MIP:


	Successor
	Year Ended December 31,
	2016			2015
		Weighted			Weighted
	Number of	Average Grant		Number of	Average Grant
	Shares	Date Price		Shares	Date Price
Outstanding at January 1	74,040	$	200.00	111,060	$	200.00
Granted	—		—	—		—
Vested	(64,785)		200.00	(37,020)		200.00
Forfeited	—		—	—		—

Outstanding at December 31	9,255	$	200.00	74,040	$	200.00


	Successor
		Weighted
	Number of	Average Grant
	Shares	Date Price
Outstanding at July 9, 2014	—	$	—
Granted	111,060		200.00
Vested	—		—
Forfeited	—		—

Outstanding at December 31, 2014	111,060	$	200.00

The total fair value of MIP restricted shares that vested during the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014 for the Successor Company was $336, $2,662 and $0, respectively. The 64,785 shares that vested during the year ended December 31, 2016 included 27,765 that were issued to Peter C. Georgioupoulos upon his resignation. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014, the Successor Company recognized nonvested stock amortization expense for the MIP restricted shares, which is included in General and administrative expenses, as follows:


	Successor
	Year		Year		Period from
	Ended		Ended		July 9 to
	December 31,		December 31,		December 31,
	2016		2015		2014
General and administrative expenses	$	5,795	$	10,585	$	5,464

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2016, unrecognized compensation cost of $368 related to nonvested stock will be recognized over a weighted-average period of 0.60 years.

2015 Equity Incentive Plan

On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 4,000,000 shares of common stock, or 400,000 shares following the Company’s reverse stock split (the “2015 Plan”). Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants. Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock. As of December 31, 2016, the Company has awarded restricted stock units and restricted stock under the 2015 Plan which have a grant date price which represents the stock price on that date.

Restricted Stock Units

The Successor Company has issued restricted stock units (“RSUs”) to certain members of the Board of Directors, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. The RSUs generally vest on the date of the Company’s annual shareholders meeting following the date of the grant. As of December 31, 2016 and 2015, 3,138 and 0 shares, respectively, of the Company’s common stock were outstanding in respect of the RSUs. Such shares will only be issued in respect of vested RSUs when the director’s service with the Company as a director terminates.

The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. The table below summarizes the Successor Company’s RSUs for the year ended December 31, 2016 and 2015:


	Successor
	Year Ended December 31,
	2016			2015
		Weighted			Weighted
	Number of	Average Grant		Number of	Average Grant
	RSUs	Date Price		RSUs	Date Price
Outstanding at January 1	5,821	$	71.50	—	$	—
Granted	66,666		5.10	7,440		71.18
Vested	(5,821)		71.50	(1,619)		70.00
Forfeited	—		—	—		—

Outstanding at December 31	66,666	$	5.10	5,821	$	71.50

The total fair value of the RSUs that vested during the years ended December 31, 2016 and 2015 for the Successor Company was $30 and $116, respectively. There were no RSUs that vested during the period from July 9 to December 31, 2014 for the Successor Company. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. On February 17, 2016, the vesting of 23,286 outstanding RSUs, or 2,328 outstanding RSUs on a post-reverse stock split basis, were accelerated upon the resignation of two members on the Company’s Board of Directors.

The following table summarizes certain information of the RSUs unvested and vested as of December 31, 2016:


Unvested RSUs				Vested RSUs
December 31, 2016				December 31, 2016
			Weighted
	Weighted		Average		Weighted
	Average		Remaining		Average
Number of	Grant Date		Contractual	Number of	Grant Date
RSUs	Price		Life	RSUs	Price
66,666	$	5.10	0.38	7,440	$	71.18

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2016, unrecognized compensation cost of $128 related to RSUs will be recognized over a weighted-average period of 0.38 years.

For the years ended December 31, 2016 and 2015 and the period from July 9 to September 30, 2014, the Successor Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:


	Successor
	Year		Year		Period from
	Ended		Ended		July 9 to
	December 31,		December 31,		December 31,
	2016		2015		2014
General and administrative expenses	$	405	$	337	$	—

Restricted Stock

Under the 2015 Plan, grants of restricted common stock issued to executives and Peter C. Georgiopoulos, the Company’s former Chairman of the Board, ordinarily vest ratably on each of the three anniversaries of the determined vesting date. The table below summarizes the Company’s nonvested stock awards for the year ended December 31, 2016 which were issued under the 2015 Plan:


	Successor
		Weighted
	Number of	Average Grant
	Shares	Date Price
Outstanding at January 1, 2016	—	$	—
Granted	61,224		5.20
Vested	(47,619)		5.20
Forfeited	—		—

Outstanding at December 31, 2016	13,605	$	5.20

The total fair value of shares that vested under the 2015 Plan during the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014 for the Successor Company was $285, $0 and $0, respectively. The 47,619 shares that vested during the year ended December 31, 2016 included 40,816 shares that were issued to Peter C. Georgiopoulos upon his resignation. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the years ended December 31, 2016 and 2015 and for the period from July 9 to December 31, 2014, the Successor Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General and administrative expenses, as follows:


	Successor
	Year		Year		Period from
	Ended		Ended		July 9 to
	December 31,		December 31,		December 31,
	2016		2015		2014
General and administrative expenses	$	277	$	—	$	—

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2016, unrecognized compensation cost of $42 related to nonvested stock will be recognized over a weighted-average period of 1.87 years.

Genco Shipping & Trading — Predecessor Company

On July 12, 2005, the Company’s Board of Directors approved the Genco Shipping and Trading Limited 2005 Equity Incentive Plan (the “2005 GS&T Plan”). The aggregate number of shares of common stock that were available for award under the 2005 GS&T Plan was 2,000,000 shares. Additionally, on May 17, 2012, at the Company’s 2012 Annual Meeting of Shareholders, the Company’s shareholders approved the Genco Shipping and Trading Limited 2012 Equity Incentive Plan (the “2012 GS&T Plan”). The aggregate number of shares of common stock that were available for award under the 2012 GS&T Plan was 3,000,000 shares. Under these plans, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors could grant a variety of stock-based incentive awards to employees, directors and consultants who the compensation committee (or other committee or the Board of Directors) believes are key to the Company’s success. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, nonvested stock, unrestricted stock and performance shares. Nonvested stock awards granted under the 2005 and 2012 GS&T Plans have a grant date price which represents the stock price on that date. Under the Plan, on the Effective Date, any unvested shares under the 2005 and 2012 GS&T Plans were deemed vested automatically and Equity Warrants were issued. Refer to “Successor Company Equity Warrant Agreement” section in Note 1 — General Information for further information. The vesting of these shares is included in the $2,403 of nonvested stock amortization expense recorded by the Predecessor Company during the period from January 1 to July 9, 2014 and is included in the table below.

Under the 2005 and 2012 GS&T Plans, grants of nonvested common stock to executives and employees vested ratably on each of the four anniversaries of the determined vesting date. Grants of nonvested common stock issued under the 2005 and 2012 GS&T Plans to directors vested the earlier of the first anniversary of the grant date or the date of the next annual shareholders’ meeting, which were typically held during May. Grants of nonvested common stock issued under the 2005 and 2012 GS&T Plans to the Company’s former Chairman, Peter C. Georgiopoulos, that were not granted as part of grants made to all directors, excluding the grants made on December 13, 2012, December 28, 2011 and December 21, 2010, vested ratably on each of the ten anniversaries of the vesting date.

The table below summarizes the Predecessor Company’s nonvested stock awards for the period from January 1 to July 9, 2014 under the 2005 and 2012 GS&T Plans:


	Predecessor
	Period from
	January 1
	to July 9,
	2014
		Weighted
	Number of	Average Grant
	Shares	Date Price
Outstanding at January 1, 2014	880,465	$	7.77
Granted	—		—
Vested	(880,465)		7.77
Forfeited	—		—

Outstanding at July 9, 2014	—	$	—

The total fair value of shares that vested under the 2005 and 2012 GS&T Plans during the period from January 1 to July 9, 2014 was $691. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the period from January 1 to July 9, 2014, the Predecessor Company recognized nonvested stock amortization expense for the 2005 and 2012 GS&T Plans, which is included in General and administrative expenses, as follows:


	Predecessor
	Period from
	January 1 to
	July 9,
	2014
General and administrative expenses	$	2,403

Baltic Trading Limited

On March 3, 2010, Baltic Trading’s Board of Directors approved the Baltic Trading Limited 2010 Equity Incentive Plan (the “Baltic Trading Plan”). On March 13, 2014, Baltic Trading’s Board of Directors approved an amendment to the Baltic Trading Plan that increased the aggregate number of shares of common stock available for awards from 2,000,000 to 6,000,000 shares. Additionally, on April 9, 2014, at Baltic Trading’s 2014 Annual Meeting of Shareholders, Baltic Trading’s shareholders approved the amendment to the Baltic Trading Plan. Under the Baltic Trading Plan, Baltic Trading’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to officers, directors, and executive, managerial, administrative and professional employees of and consultants to Baltic Trading or the Company whom the compensation committee (or other committee of the Board of Directors) believes are key to Baltic Trading’s success. Awards may consist of restricted stock, restricted stock units, stock options, stock appreciation rights and other stock or cash-based awards. Nonvested stock awards granted under the Baltic Trading Plan have a grant date price which represents the stock price on that date.

When the Merger was completed on July 17, 2015, the 1,941,844 nonvested shares issued under the Baltic Trading Plan vested automatically and received the same consideration in the Merger as holders of Baltic Trading’s common stock. Refer to Note 1 — General Information for further information regarding the Merger. The vesting of these shares is included in the $5,273 of expense recorded during the year ended December 31, 2015.

Grants of restricted stock that were issued to Peter C. Georgiopoulos, former Chairman of the Board of Baltic Trading, and John Wobensmith, President and former Chief Financial Officer of Baltic Trading, made in connection with Baltic Trading’s IPO vested ratably on each of the first four anniversaries of March 15, 2010. Grants of restricted common stock to Baltic Trading’s directors made following Baltic Trading’s IPO (which exclude the foregoing grant to Mr. Georgiopoulos) vested the earlier of the first anniversary of the grant date or the date of Baltic Trading’s next annual shareholders’ meeting. Grants of restricted stock made to executives and the Chairman of the Board not in connection with the Company’s IPO vested ratably on each of the first four anniversaries of the determined vesting date.

The following table presents a summary of Baltic Trading’s nonvested stock awards for the two years ended December 31, 2015 under the Baltic Trading Plan:


	Year Ended December 31,
	2015			2014
	Number			Number
	of Baltic	Weighted		of Baltic	Weighted
	Trading	Average		Trading	Average
	Common	Grant Date		Common	Grant Date
	Shares	Price		Shares	Price
Outstanding at January 1	1,941,844	$	3.80	1,381,429	$	6.03
Granted	—		—	1,086,345		2.61
Vested	(1,941,844)		3.80	(525,930)		7.21
Forfeited	—		—	—		—

Outstanding at December 31	—	$	—	1,941,844	$	3.80

The total fair value of shares that vested under the Baltic Trading Plan during the year ended December 31, 2015 and the period from July 9 to December 31, 2014 for the Successor Company was $2,913 and $1,168, respectively. The total fair value of shares that vested under the Baltic Trading Plan during the period from January 1 to July 9, 2014 was $1,143. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

The Successor Company and the Predecessor Company recognized nonvested stock amortization expense for the Baltic Trading Plan, which is included in General and administrative expenses, as follows:


	Successor				Predecessor
	Year		Period From		Period From
	Ended		July 9 to		January 1 to
	December 31,		December 31,		July 9,
	2015		2014		2014
General and administrative expenses	$	5,273	$	1,551	$	1,949