STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

13 - STOCK-BASED COMPENSATION

2014 Management Incentive Plan

As of June 30, 2020 and December 31, 2019, a total of 8,557,461 of warrants were outstanding under the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”).

The MIP Warrants were issued in three tranches for 238,066, 246,701 and 370,979 shares and have exercise prices, as adjusted for dividends declared during the fourth quarter of 2019 and the first quarter of 2020, of $240.89221, $267.11051 and $317.87359 per whole share, respectively.

For the three and six months ended June 30, 2020 and 2019, there was no amortization expense of the fair value of these warrants. As of June 30, 2020, there was no unamortized stock-based compensation for the warrants and all warrants were vested.

The following table summarizes certain information about the warrants outstanding as of June 30, 2020:

Warrants Outstanding and Exercisable,
June 30, 2020
			Weighted
	Weighted		Average
	Average		Remaining
Number of	Exercise		Contractual
Warrants	Price		Life
8,557,461	$	281.82	0.10

2015 Equity Incentive Plan

Stock Options

On February 25, 2020, the Company issued options to purchase 344,568 of the Company’s shares of common stock to certain individuals with an exercise price of $7.06 per share. One third of the options become exercisable on each of the first three anniversaries of February 25, 2020, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Cox-Ross-Rubinstein pricing formula, resulting in a value of $2.01 per share, or $693 in the aggregate. The assumptions used in the Cox-Ross-Rubinstein option pricing formula are as follows: volatility of 53.91% (representing the Company’s historical volatility), a risk-free interest rate of 1.41%, a dividend yield of 7.13%, and expected life of 4 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data).

For the three and six months ended June 30, 2020 and 2019, the Company recognized amortization expense of the fair value of these options, which is included in General and administrative expenses, as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
General and administrative expenses	$	192	$	229	$	397	$	411

Amortization of the unamortized stock-based compensation balance of $879 as of June 30, 2020 is expected to be expensed $389, $367, $111 and $12 during the remainder of 2020 and during the years ended December 31, 2021, 2022 and 2023, respectively. The following table summarizes the unvested option activity for the six months ended June 30, 2020:

		Weighted		Weighted
	Number	Average		Average
	of	Exercise		Fair
	Options	Price		Value
Outstanding at January 1, 2020 - Unvested	322,279	$	9.41		4.72
Granted	344,568		7.06		2.01
Exercisable	(119,923)		9.87		5.05
Exercised	—		—		—
Forfeited	(3,378)		8.07		3.76
Outstanding at June 30, 2020 - Unvested	543,546	$	7.83	$	2.94

The following table summarizes certain information about the options outstanding as of June 30, 2020:

		Options Outstanding and Unvested,				Options Outstanding and Exercisable,
		June 30, 2020				June 30, 2020
Weighted					Weighted				Weighted
Average			Weighted		Average		Weighted		Average
Exercise Price of			Average		Remaining		Average		Remaining
Outstanding		Number of	Exercise		Contractual	Number of	Exercise		Contractual
Options		Options	Price		Life	Options	Price		Life
$	8.86	543,546	$	7.83	5.22	293,792	$	10.78	3.51

As of June 30, 2020 and December 31, 2019, a total of 837,338 and 496,148 stock options were outstanding, respectively.

Restricted Stock Units

The Company has issued restricted stock units (“RSUs”) under the 2015 Plan to certain members of the Board of Directors and certain executives and employees of the Company, 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. As of June 30, 2020 and December 31, 2019, 373,588 and 326,247 shares of the Company’s common stock were outstanding in respect of the RSUs, respectively. Such shares of common stock will only be issued in respect of vested RSUs issued to directors when the director’s service with the Company as a director terminates. Such shares of common stock will only be issued to executives and employees when their RSUs vest under the terms of their grant agreements and the amended 2015 Plan described above.

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. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors.  The RSUs that have been issued to other individuals vest ratably on each of the

three anniversaries of the determined vesting date. The table below summarizes the Company’s unvested RSUs for the six months ended June 30, 2020:

		Weighted
	Number of	Average Grant
	RSUs	Date Price
Outstanding at January 1, 2020	162,096	$	9.26
Granted	178,385		7.00
Vested	(50,672)		9.45
Forfeited	(1,490)		8.39
Outstanding at June 30, 2020	288,319	$	7.83

The total fair value of the RSUs that vested during the six months ended June 30, 2020 and 2019 was $352 and $230, respectively. 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 following table summarizes certain information of the RSUs unvested and vested as of June 30, 2020:

Unvested RSUs				Vested RSUs
June 30, 2020				June 30, 2020
			Weighted
	Weighted		Average		Weighted
	Average		Remaining		Average
Number of	Grant Date		Contractual	Number of	Grant Date
RSUs	Price		Life	RSUs	Price
288,319	$	7.83	2.04	472,895	$	11.25

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of June 30, 2020, unrecognized compensation cost of $1,274 related to RSUs will be recognized over a weighted-average period of 2.04 years.

For the three and six months ended June 30, 2020 and 2019, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
General and administrative expenses	$	284	$	340	$	560	$	610