Stock Incentive Plans

3 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

STOCK INCENTIVE PLANS

7. 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, 304,731 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, 2022, 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, 2022		304,731		4,050	$	14.16		99,570		28,030
Granted		0		0		0.00		0		0
Exercised/issued		0		0		0.00		0		0
Cancelled/forfeited		0		0		0.00		0		0
At March 31, 2022		304,731		4,050	$	14.16		99,570		28,030

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, 2022, there was $8,095 of intrinsic value arising from 3,250 in the money 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 stock compensation expense was allocated using the straight-line method. As of September 2020, all options had had been fully expensed. As such, there is no stock compensation expense or unrecognized compensation expense related to stock options as of March 31, 2022 and 2021. As of March 31, 2022, and December 31, 2021, the Company did not have any non-vested options.

The Company used Monte Carlo simulation model valuation technique to determine the fair value of RSUs granted because the awards vest based upon achievement of market price targets. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each RSU. Compensation expense related to the RSUs is recognized by the Company over a service period that was derived from the statistical valuation methods used to estimate the fair value of the RSUs at grant date.

During the three months ended March 31, 2022 and 2021, the Company recorded $18,417 and $0, respectively, in RSU expense related to employee compensation. The Company’s board of directors are compensated partially in cash and partially in RSUs. For the three months ended March 31, 2022 and 2021, the Company recorded $7,500 and $7,500, respectively, of stock compensation expense related to RSUs granted to the board of directors.

A summary of the Company’s RSUs for the three month period ended March 31, 2022 is presented below:

	RSUs outstanding		Weighted average price at time of grant		Aggregate intrinsic value
Non-vested RSUs as of January 1, 2022		28,030	$	9.29
Granted		0		0.00
Vested		0		0.00
Cancelled		0		0.00
Non-vested RSUs at March 31, 2022		28,030	$	9.29	$	260,399

For the three months ended March 31, 2022, the Company did not recognize any expense for the granting of shares to employees of the Company as a bonus. For the three months ended March 31, 2021, the Company awarded approximately 32,000 shares to an officer of the Company with a fair market value of approximately $341,000.