15. STOCK COMPENSATION

The Company’s 2006 Equity Incentive Plan (“Equity Plan”) provides long-term incentives to the Company’s key employees, including officers, directors, consultants and advisers (“Eligible Participants”) and to align stockholder and employee interests. Under the Equity Plan, the Company may grant incentive stock options, restricted stock awards, restricted stock units, and other stock based awards or any combination thereof to Eligible Participants. The Compensation Committee of the Company’s Board of Directors establishes the terms and conditions of any awards granted under the plans. In January 2011, 5,813,653 shares of the Company’s common stock were added to the shares available for issuance under the Equity Plan. As of December 31, 2011 and 2010, the number of shares of common stock that was authorized and remained available for issuance under the Equity Plan was 15,282,933 and 9,919,665, respectively.

Stock Options

The Company has granted incentive stock options under the Equity Plan. The options generally vest in equal installments over four years and expire in ten years. Non-vested options are generally forfeited upon termination of employment.

The Company recognizes compensation expense for stock option grants based on the fair value at the date of grant using the Black-Scholes option pricing model. The Company uses historical data, among other factors, to estimate the expected price volatility, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the option. The table below summarizes the assumptions for the indicated periods:

	Year Ended December 31,
	2011			2010			2009

Risk-free interest rate		<1 – 2	%		<1	%		<1	%
Expected term of options (years)		1 - 6			4 - 6			2-10
Volatility		80 - 103	%		80	%		60-120	%
Weighted average grant-date fair value	$	0.44		$	1.03		$	0.57

The following table summarizes non-vested stock option activity for the years ended December 31, 2011:

			Weighted Average
	Shares			Exercise Price
Outstanding at January 1, 2011	6,579,930		$	0.98
Granted	4,500,500			0.68
Exercised	(25,000	)		1.28
Forfeited	(1,057,000	)		1.33
Outstanding at December 31, 2011	9,998,430			0.81

Exercisable at December 31, 2011	2,471,449		$	0.99

The following table presents compensation expense related to stock options that was included in cost of services and marketing, general and administrative expenses for the years indicated below (in millions):

	Year Ended December 31,
	2011			2010			2009
Cost of services (includes research and development)	$	—		$	—		$	—
Marketing, general and administrative		1.3			0.7			2.9
Total compensation expense		1.3			0.7			2.9
Income tax benefit		(0.5	)		(0.1	)		(0.3	)
Total compensation expense, net of tax	$	0.8		$	0.6		$	2.6

As of December 31, 2011, there was approximately $1.3 million of unrecognized compensation expense related to non-vested stock options outstanding to be recognized over a weighted-average period of 2.21 years. The Company expects to recognize approximately $0.5 million, $0.5 million and $0.3 million of compensation expense during the years 2012, 2013 and 2014, respectively, for these non-vested stock options outstanding.

The aggregate intrinsic value of outstanding stock options as of December 31, 2011 was $0.4 million. This represents the total intrinsic value (the difference between the Company’s closing stock price on December 31, 2011 and the option price, multiplied by the number of “in-the-money” options) that would have been received by the option holders if all in the money options had been exercised on December 31, 2011.

The total fair value of stock options vested during the year ended December 31, 2011 was $0.8 million.

The Company adjusts its estimates of expected equity awards forfeitures based upon its review of recent forfeiture activity and expected future employee turnover. The effect of adjusting the forfeiture rate is recognized in the period in which the forfeiture estimate is changed.

In October 2011, the Company granted to eligible participants nonstatutory stock options for 2,710,000 shares or common stock and 273,000 restricted shares that vest and become exercisable on the earlier of (i) the first trading day after the Company’s common stock shall have traded on the NASDAQ Stock Market for more than ten consecutive trading days at or above a per-share closing price of $2.50 or (ii) the day that a binding written agreement is signed for the sale of the Company, as determined by the Company’s board of directors in its discretion reasonably exercised.

Restricted Stock

Shares of restricted stock generally vest in equal annual installments over three years. Non-vested shares are generally forfeited upon the termination of employment. Holders of restricted stock are entitled to all rights of a stockholder of the Company with respect to the restricted stock, including the right to vote the shares and receive any dividends or other distributions. Compensation expense associated with restricted stock is measured based on the grant date fair value of the common stock and is recognized on a straight line basis over the vesting period. The table below summarizes the weighted average grant-date fair value of restricted stock for the indicated periods:

	Year Ended December 31,
	2011		2010		2009
Weighted average grant-date fair value	$	0.82	$	1.36	$	0.90

The following is a rollforward of the activity in restricted stock for the year ended December 31, 2011:

				Weighted Average
	Shares			Grant Date Fair Value
Nonvested at January 1, 2011		1,211,334		$	4.57
Granted		1,132,694			0.82
Vested		(1,537,572	)		1.26
Forfeited		(196,682	)		1.33
Nonvested at December 31, 2011		609,774		$	4.05

The following table represents the compensation expense related to restricted stock that was included in cost of services and marketing, general and administrative expenses for the years indicated below (in millions):

	Year Ended December 31,
	2011			2010			2009
Cost of services (includes research and development)	$	0.1		$	(0.2	)	$	2.2
Marketing, general and administrative		0.3			0.4			4.8
Total compensation expense		0.4			0.2			7.0
Income tax benefit		(0.2	)		—			(0.7	)
Total compensation expense, net of tax	$	0.2		$	0.2		$	6.3

As of December 31, 2011, there was approximately $0.2 million of unrecognized compensation expense related to non-vested restricted stock outstanding to be recognized over a weighted-average period of 1.34 years. The Company expects to recognize approximately $0.1 million of compensation expense during each of the years 2012, 2013 and 2014, respectively, for outstanding nonvested restricted stock. The weighted-average remaining vesting term of the non-vested restricted stock was 1.34 and 0.66 years for the years ended December 31, 2011 and 2010, respectively.

Effective August 10, 2007, the board of directors, upon recommendation of the Compensation Committee, approved the concurrent termination of the Company’s Executive Incentive Compensation Plan and awards of restricted stock or restricted stock units under the Company’s 2006 Equity Incentive Plan to five executive officers (the “Participants”). Each award agreement provides that the recipient will receive awards of restricted common stock (or, for the non-U.S. Participant, restricted stock units, which upon vesting, each entitle him to one share of Globalstar common stock). Total benefits per Participant (valued at the grant date) were approximately $6.0 million, which was an increase of approximately $1.5 million in potential compensation compared to the maximum potential benefits under the Executive Incentive Compensation Plan. However, the new award agreements extended the vesting period by up to two years through 2011 and provide for payment in shares of common stock instead of cash, thereby enabling the Company to conserve its cash for capital expenditures for the procurement and launch of its second-generation satellite constellation and related ground station upgrades. These amounts are included in the above tables.

Employee Stock Purchase Plan

In June 2011, the Company adopted an Employee Stock Purchase Plan (the “Plan”) which provides eligible employees of the Company and its subsidiaries with an opportunity to acquire shares of its common stock at a discount. The maximum aggregate number of shares of common stock that may be purchased through the Plan is 7,000,000 shares. The number of shares that may be purchased through the Plan will be subject to proportionate adjustments to reflect stock splits, stock dividends, or other changes in the Company’s capital stock.

The Plan permits eligible employees to purchase shares of common stock during two semi-annual offering periods beginning on June 15 and December 15, unless adjusted by the Board or one of its designated committees (the “Offering Periods”). Eligible employees may purchase shares of up to 15% of their total compensation per pay period, but may purchase no more than the lesser of $25,000 of the fair market value of common stock or 500,000 shares of common stock in any calendar year, as measured as of the first day of each applicable Offering Period. The price an employee pays is 85% of the fair market value of common stock. Fair market value is equal to the lesser of the closing price of a share of common stock on either the first or last day of the Offering Period.

For the year ended December 31, 2011, the Company received $0.2 million related to shares issued under this plan. For the year ended December 31, 2011, the Company recorded compensation expense of approximately $0.2 million, which is reflected in marketing, general and administrative expenses. Additionally, the Company issued approximately 427,833 shares for the year ended December 31, 2011, related to this stock purchase plan.