Stock Incentive Plans

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK INCENTIVE PLANS

6. STOCK INCENTIVE PLANS

In August 2007, the Company adopted the Rubicon Technology Inc. 2007 Stock Incentive Plan, which was amended and restated effective in March 2011 (the “2007 Plan”), and which allowed for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance awards and bonus shares. The maximum number of shares that could be awarded under the 2007 Plan was 440,769 shares. Options granted under the 2007 Plan entitled the holder to purchase shares of the Company’s common stock at the specified option exercise price, which could not be less than the fair value of the common stock on the grant date. On June 24, 2016, the plan terminated with the adoption of the Rubicon Technology, Inc. 2016 Stock Incentive Plan, (the “2016 Plan”). Any existing awards under the 2007 Plan remain outstanding in accordance with their current terms under the 2007 Plan.

In June 2016, the Company’s stockholders approved adoption of the 2016 Plan effective as of March 17, 2016, which allows for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance awards and bonus shares. The Compensation Committee of the Board administers the 2016 Plan. The committee determines the type of award to be granted, the fair value, the number of shares covered by the award, and the time when the award vests and may be exercised.

Pursuant to the 2016 Plan, 281,775 shares of the Company’s common stock plus any shares subject to outstanding awards under the 2007 Plan that subsequently expire unexercised, are forfeited without the delivery of shares or are settled in cash, will be available for issuance under the 2016 Plan. The 2016 Plan will automatically terminate on March 17, 2026, unless the Company terminates it sooner.

The following table summarizes the activity of the stock incentive and equity plans as of September 30, 2020, and changes during the nine months then ended:

	Shares available for grant		Number of options outstanding			Weighted- average option exercise price		Number of restricted stock and board shares issued		Number of RSUs outstanding
At January 1, 2020		281,386		22,839		$	13.48		99,570		54,003
Granted		—		—			—		—		—
Exercised/issued		—		—			—		—		—
Cancelled/forfeited		389		(389	)		196.31		—		—
At September 30, 2020		281,775		22,450		$	10.31		99,570		54,003

The Company’s aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock. Based on the fair value of the common stock at September 30, 2020, there was $46,960 of intrinsic value arising from 20,500 stock options exercisable and outstanding.

The Company uses the Black-Scholes option pricing model to value stock options. The Company uses historical stock price average to determine its volatility assumptions. The assumed risk-free rates were based on U.S. Treasury rates in effect at the time of grant with a term consistent with the expected option lives. The expected term is based upon the vesting term of the Company’s options. The forfeiture rate of 36.13% is based on the history of forfeited options. The expense is allocated using the straight-line method. For the three and nine months ended September 30, 2020, the Company recorded $3,000 and $8,000, respectively, of stock option compensation expense. For the three and nine months ended September 30, 2019, the Company recorded $6,000 and $19,000, respectively, of stock option compensation expense. As of September 30, 2020, the Company had $0.00 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s stock-based plans.

A summary of the Company’s non-vested options during the nine months ended September 30, 2020, is presented below:

	Options		Weighted- average exercise price
Non-vested options at January 1, 2020		4,866	$	6.10
Granted		—		—
Vested		(4,866)		6.10
Cancelled/forfeited		—		—
Non-vested options at September 30, 2020		0	$	0

For the three and nine months ended September 30, 2020, the Company recorded $30,000 and $30,000, respectively, of RSU expense related to Board compensation. For the three months and nine months ended September 30, 2019, the Company recorded $0 and $7,000, respectively, of RSU expense.

A summary of the Company’s RSUs for the nine month period ended September 30, 2020 is presented below:

	RSUs outstanding		Weighted average price at time of grant		Aggregate intrinsic value
Non-vested RSUs as of January 1, 2020		54,003	$	6.56
Granted		—		—
Vested		—		—
Cancelled		—		—
Non-vested RSUs at September 30, 2020		54,003	$	6.56	$	354,250

Every year at the Company’s annual meeting each member of the Board of Directors is issued an RSU and it vests the following year at the next annual meeting. When such RSU vests, it is automatically converted into $10,000 of the Company’s common stock based upon the closing price the day before the annual meeting.

For the three and nine months ended September 30, 2020, the Company recorded $0 and $8,000, respectively, of stock compensation expense related to restricted stock. For the three and nine months ended September 30, 2019, the Company recorded $2,000 and $7,000, respectively, of stock compensation expense related to restricted stock.

The Company recognized an expense of $414,000 during the nine months ended September 30, 2019 for the granting of shares to an officer of the Company as a bonus.