Note 2 - Long-Term Incentive Plans

9 Months Ended

Sep. 30, 2013

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

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

2.             LONG-TERM INCENTIVE PLANS

Pursuant to the 2008 Long-term Incentive Plan (the "Plan"), the Company may grant stock options (non-qualified or incentive), stock appreciation rights, restricted stock, restricted stock units and other share-based awards to employees, directors and other persons who serve the Company. The Plan is overseen by the Compensation Committee of the Board of Directors, which approves the timing and circumstances under which share-based awards may be granted. At September 30, 2013 there were 3.5 million shares available to be granted under the Plan, which includes 3.0 million shares that were approved for issuance under the Plan by the Company's stockholders in May 2013. The Company issues new shares to satisfy the exercise or release of share-based awards. Under the provisions of FASB Accounting Standards Codification ("ASC") Topic 718, Stock Compensation, all share-based payments are required to be recognized in the statement of operations based on their fair values at the date of grant.

The fair value of each option award is estimated using a Black-Scholes option valuation model. Expected volatility is based on the historical volatility of the price of the Company's stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. Options generally have a life of 10 years and have either time-based or performance-based vesting features. Time-based awards generally vest over a three year period, while the performance-based awards vest upon the achievement of specific performance targets. There were no options granted during the three months ended September 30, 2013. The fair values of the options granted during the three months ended September 30, 2012 and the nine months ended September 30, 2013 and 2012, were estimated based on the following weighted average assumptions:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2012			2013			2012
Expected volatility		73.18	%		76.23	%		71.46	%
Risk-free interest rate		0.52	%		1.06	%		0.56	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Expected life (in years)		6.0			6.0			6.0
Estimated fair value per option granted	$	0.55		$	0.87		$	0.70

The following table presents a summary of the Company's stock option activity for the nine months ended September 30, 2013:

	Number of Options
Outstanding at January 1, 2013		4,294,273
Granted		60,000
Exercised		(57,241	)
Forfeited and cancelled		(203,873	)
Outstanding at September 30, 2013		4,093,159

The Company also grants restricted stock units, or RSUs, that entitle the holder to a share of Company common stock. The fair value of an RSU is equal to the market value of a share of common stock on the date of grant.

The following table presents a summary of the Company's RSU activity for the nine months ended September 30, 2013:

	Shares
Nonvested at January 1, 2013		343,161
Granted		329,164
Vested		(672,325	)
Nonvested at September 30, 2013		-

On May 22, 2013 the Business Combination of Chyron and Hego, as discussed in Note 8 to these Consolidated Financial Statements, constituted a change in control under the Company's long-term incentive plans. As a result, at the closing of the Business Combination, all outstanding awards became immediately exercisable and fully vested, without regard to any time and/or performance vesting conditions. As a result, the Company recorded a charge in the three months ended June 30, 2013 of $1.3 million, representing the unamortized expense related to the vesting of such equity awards.

On May 2, 2013 the Company implemented a restructuring plan to reduce operating costs that resulted in the reduction of its workforce by 20 employees. All affected employees were provided with an adjustment in the terms of their stock options and/or RSUs that were outstanding on their termination date. Subject to a properly executed release by the affected employees, the stock option and RSU awards were amended to permit those awards to vest at their termination date regardless of performance conditions if any in the original award, and the expiration date for exercise of the stock options was extended through the end of the original term of the stock option, usually ten years from date of grant, rather than expiring ninety days after the employee's termination date as stated in the original awards. As a result, the Company recorded a charge in the three months ended June 30, 2013 of approximately $0.4 million associated with the modifications of these awards.

In addition, each year the Company adopts a Management Incentive Compensation Plan (the "Incentive Plan") that entitles recipients to a combination of cash and equity awards based on achievement of certain performance and service criteria in the fiscal years for which the Incentive Plan is adopted. During the three and nine months ended September 30, 2013 the Company recorded an expense of $0.4 million and $0.9 million, respectively, associated with the awards under the Incentive Plan of which approximately 65% is payable in common stock. During the nine months ended September 30, 2012 no expense was recorded.

The Company amortizes share-based compensation expense over the vesting period on a straight line basis. The impact on the Company's results of operations of recording share-based compensation expense is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of sales	$	2	$	19	$	30	$	57
Research and development		35		82		189		247
Selling, general and administrative		220		139		2,422		415
	$	257	$	240	$	2,641	$	719