Share-Based Compensation Plans

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

Share-Based Compensation Plans

The Company has two share-based compensation plans, the 2013 Director Smart Bonus Unit Plan and 2013 Smart Bonus Unit Award Plan. These plans provide for the issuance of a cash bonus for stock appreciation. A Committee comprised of members of the Board of Directors approves all awards that are granted under our share-based compensation plan. We classify the awards as a liability as the value of the award will be settled in cash, notes, or stock. The SARs Program vests over a period of three years and have a contractual term of five years. The liability related to these awards is included in other long-term liabilities on our consolidated balance sheets. Share-based compensation expense for the three and nine months ended September 30, 2015 was $12,000 and $(1.2) million, respectively, compared to $544,000 and $941,000 for the three and nine months ended September 30, 2014, respectively. The share-based compensation expense is included in selling, general and administrative expenses on the Company’s consolidated income statements. As of September 30, 2015, total unrecognized compensation cost related to unvested share-based compensation was $201,000, which is expected to be recognized over a three-year period.

On May 22, 2015, the Company’s Board of Directors approved the 2015 Stock Incentive Plan (the “2015 Stock Plan”), which was subsequently approved by the Company’s stockholders on June 23, 2015.  The 2015 Stock Plan allows for the issuance of up to 1,500,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. The exercise price of stock options under the 2015 Stock Plan is determined by the compensation committee of the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period under the 2015 plan shall not exceed 500,000. Options become exercisable over various periods from the date of grant, and generally expire 10 years after the grant date. As of September 30, 2015, there were approximately 1.1 million options issued and outstanding under the 2015 Stock Plan.

On July 30, 2015, the Company entered into separate consulting agreements with two individuals pursuant to which each will provide certain business and financial advisory services to the Company. In connection with the consulting agreements, each consultant was granted options exercisable for 500,000 shares of the Company’s common stock, par value $0.0001 per share under the Company’s 2015 Stock Incentive Plan (for an aggregate of 1,000,000 shares). The options have an exercise price $1.27 and are fully vested on the date of the grant and expire on July 30, 2020. These options are accounted for in equity and are recorded to additional paid in capital on our consolidated balance sheets. Share-based compensation expense for the three and nine months ended September 30, 2015 related to these options was $1.1 million and $1.1 million, respectively. The stock-based compensation expense is included in selling, general and administrative expenses on the Company’s consolidated income statements.

On June 23, 2015, 50,000 options were granted to each of two executive officers of the Company. These options were issued at an exercise price of $1.23, and they vest in equal quarterly installments over the next three years beginning July 1, 2015. In accordance with ASC 718, these options are recognized as equity and expensed over the vesting period of three years. The fair value of the options is approximately $87,000, and Share-based compensation expense for the three and nine months ended September 30, 2015 was $5,000. The stock-based compensation expense is included in selling, general and administrative expenses on the Company’s consolidated income statements. As of September 30, 2015, total unrecognized compensation expense related to unvested share-based compensation was $83,000, which is expected to be recognized over a three-year period.