Stock Incentive Plans

3 Months Ended

Mar. 31, 2021

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, as of March 31, 2021 there are 279,505 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 March 31, 2021, and changes during the three 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, 2021		296,105			20,100	$	9.71		99,570		45,003
Granted		(31,550	)		—		—		—		—
Exercised/issued		—			—		—		—		—
Cancelled/forfeited		14,950			—		—		—		—
At March 31, 2021		279,505			20,100	$	9.71		99,570		45,003

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 March 31, 2021, there was $74,775 of intrinsic value arising from 18,250 stock options exercisable or 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 months ended March 31, 2021 and 2020, the Company recorded $0 and $3,000, respectively, of stock option compensation expense. As of March 31, 2021, there was no unrecognized compensation cost related to non-vested stock option awards granted under the Company’s stock-based plans. 

As of December 31, 2020 and March 31, 2021, the Company did not have any non-vested options.

The Company did not record any RSU expense for the three months ended March 31, 2021 and 2020.

A summary of the Company’s RSUs during the three months ended March 31, 2021, is presented below:

	RSUs outstanding		Weighted average price at time of grant		Aggregate intrinsic value
Non-vested RSUs as of January 1, 2021		45,003	$	6.20
Granted		—		—
Vested		—		—
Cancelled		—		—
Non-vested RSUs at March 31, 2021		45,003	$	6.20	$	278,961

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

During the three months ended March 31, 2021, the Company awarded 31,550 shares to an officer of the Company with a fair value of approximately $341,000.

The Company’s board of directors are compensated partially in cash and partially in restricted stock. For the three months ended March 31, 2021 and 2020, no restricted stock shares were issued to our directors. As of March 31, 2021 and December 31, 2020, there were no outstanding non-vested restricted stock shares.