. Stock-Based Compensation

Stock-Based Compensation Expense

. The Company records stock-based compensation expense during the requisite service period for share-based payment awards granted to employees and non-employees.

The following table sets forth the Company’s stock-based compensation expense (in thousands):

	Year Ended December 31,
	201 9		201 8
Stock options and ESPP awards
Research and development	$	—	$	21
Selling, general and administrative		—		48

Restricted stock awards
Research and development		228		85
Selling, general and administrative		993		417

Stock appreciation rights
Research and Development		66		61
Selling, general and administrative		62		51

Total stock-based compensation	$	1,349	$	683

There were

stock options granted during the years ended

December 31, 2019

2018.

Due to the Company’s limited history of grant activity, the expected life of options granted was estimated using the “simplified method” in accordance with SEC Staff Accounting Bulletin

110,

where the expected life equals the arithmetic average of the vesting term and the original contractual term of the options. The volatility factor was determined based upon management’s estimate using inputs from comparable public companies. The risk-free interest rate assumption is determined based upon observed interest rates appropriate for the expected term of the Company’s employee stock options. The dividend yield assumption is based on the Company’s history of dividend payouts.

An annual forfeiture rate is estimated at the time of grant for all share-based payment awards, and revised, if necessary, in subsequent periods if the actual forfeiture rate differs from the Company’s estimate. Forfeitures have been estimated by the Company based upon historical and expected forfeiture experience. Estimated forfeiture rates used for the periods presented were from

5%.

Stock Option Award Activity

. Stock option activity under the Company’s option plans at

December 31, 2019

and changes during the year ended

December 31, 2019

were as follows.

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Options			Price		(years)		Value

Options outstanding at December 31, 2018		2,313		$	2,358.44		6.87	$	—
Granted		—		$	—
Canceled or forfeited		(752	)	$	5,151.80
Exercised		—		$	—

Options outstanding at December 31, 2019		1,561		$	928.79		6.56	$	—

Options exercisable at December 31, 2019		1,511		$	1,043.47		6.53	$	—

Options vested and expected to vest at December 31, 2019		1,561		$	928.79		6.56	$	—

The aggregate intrinsic values in the table above represent the total pretax intrinsic values (the difference between the closing price of Gevo’s common stock on the last trading day of the

2019

calendar year and the exercise price, multiplied by the number of in-the-money stock option shares) that would have been received by the option holders had all in-the-money outstanding stock options been exercised on

December 31, 2019.

As of

December 31, 2019,

there was

unrecognized compensation cost related to stock options.

There is a maximum contractual term of

ten

years for the share options. The Company settles stock option exercises with newly issued common shares.

tax benefits were realized by the Company in connection with these exercises as the Company maintains net operating loss carryforwards and has established a valuation allowance against the entire tax benefit.

Restricted Stock

. The Company periodically grants restricted stock awards to employees and directors. The vesting period for restricted stock awards granted

may

be based upon a service period or based upon the attainment of performance objectives. The Company recognizes stock-based compensation over the vesting period, generally

two

three

years, for awards that vest based upon a service period. For performance based restricted stock awards, the Company recognizes expense over the requisite service period.

Non-vested restricted stock awards at

December 31, 2019

and changes during the year ended

December 31, 2019

were as follows.

				Weighted-
				Average
	Number of			Grant-Date
	Shares			Fair Value

Non-vested at December 31, 2018		290,300		$	3.45
Granted		1,308,613		$	1.91
Vested		(254,500	)	$	3.45
Canceled or forfeited		(35,800	)	$	3.45

Non-vested at December 31, 2019		1,308,613		$	1.91

The total fair value of restricted stock that vested during the years ended

December 31, 2019

and

2018

was

$0.7

million and

$0.5

million, respectively. As of

December 31, 2019,

the total unrecognized compensation expense, net of estimated forfeitures, relating to restricted stock awards was

$1.8

million, which is expected to be recognized over the remaining weighted-average period of approximately

1.5

years.

Stock Appreciation Rights.

The Company granted

132,566

stock appreciation rights valued at an aggregate of

$0.6

million on the respective dates of grant during the year ended

December 31, 2018.

The vesting period for stock appreciation rights granted are based upon a service period. The stock appreciation rights have the potential to be cash settled in the event there are insufficient shares available from the

2010

Plan and are therefore classified as a liability and remeasured at each reporting period based on the price of the Company's common stock.

The following table sets forth the Black-Scholes option pricing model assumptions and resulting grant date fair value for stock appreciation rights granted during the year ended

December 31, 2018 (

there were

grants of stock appreciation rights during the year ended

December 31, 2019):

	December 31, 2018			Grant Date(1)

Risk-free interest rate		2.54	%		2.84	%
Expected dividend yield		—			—
Expected volatility factor		134.17	%		125.03	%
Expected option life (in years)		5.75			5.75
Weighted average value	$	1.65		$	4.53

(

) Stock appreciation rights were granted on

May 2, 2018

and

August 9, 2018.

The values reported above are the weighted-average grant date value. The weighted-average strike price was

$5.23

per share.