Stock-based compensation expense

9 Months Ended

Sep. 30, 2016

Stock-based compensation expense and assumptions

Stock-based compensation expense and assumptions

5. Stock-based compensation expense

Stock-based compensation expense is measured at the grant date based on fair value, and recognized as an expense over the requisite service period, net of an estimated forfeiture rate.

During the first quarter of 2016, 0.8 million stock options were granted to certain employees of the Company, with a grant fair value of $0.7 million. The actual number of shares that will be issued upon exercise of the options is subject to the achievement of service-based vesting conditions.  Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 36 months. 

During the second quarter of 2016, 0.1 million restricted stock awards with a grant fair value of $0.2 million were granted to certain members of the Company’s Board of Directors.  The final number of vested shares is subject to service-based vesting conditions.  Stock-based compensation expense is recorded on a straight line basis from the date of the grant over the requisite service period of 12 months.

During the second quarter of 2016, 0.5 million shares of the 2015 restricted stock awards granted to certain officers of the Company vested.  The market condition was achieved as the Company’s volume weighted average price on NASDAQ was greater than or equal to $3.50 per share for seven consecutive trading days, or any ten trading days over a consecutive thirty-five day period. The market condition was valued at $0.7 million, of which $0.5 million was expensed as of March 31, 2016 and an additional $0.2 million was expensed during the three months ended June 30, 2016.

The following summarizes stock-based compensation expense recognized by income statement classification:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Processing and service costs	$	35,051	$	43,030	$	134,112	$	143,611
Selling, general and administrative expenses		282,408		656,197		1,364,246		1,017,206
Restructuring charges		—		36,924		—		36,924
Total stock-based compensation expense	$	317,459	$	736,151	$	1,498,358	$	1,197,741

The following summarizes stock-based compensation expense recognized by type:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Stock options	$	217,537	$	528,249	$	766,766	$	783,954
Restricted stock awards		99,922		207,902		731,592		413,787
Total stock-based compensation expense	$	317,459	$	736,151	$	1,498,358	$	1,197,741