Stock Based Compensation

12 Months Ended

Dec. 31, 2011

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

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

13. Stock Based Compensation

MTI Option Plans

Stock-based incentive awards are provided to employees and directors under the terms of the Company’s 1996 Stock Incentive Plan (1996 Plan), 1999 Employee Stock Incentive Plan (1999 Plan) and 2006 Equity Incentive Plan (2006 Plan), which was amended and restated effective June 30, 2011 and September 16, 2009, (collectively, the Plans). Awards under the Plans have generally included at-the-money options and restricted stock grants.

The 1996 Plan was approved by stockholders during December 1996 and expired during October 2006. The 1996 Plan provided an initial aggregate number of 500,000 shares of common stock to be awarded or issued. The number of shares available to be awarded under the 1996 Plan and awards outstanding were adjusted for stock splits and rights offerings. The total number of shares which may be awarded under the 1996 Plan was 468,352 during 2005. Under the 1996 Plan, the Board of Directors was authorized to issue stock options, stock appreciation rights, restricted stock, and other stock-based incentives to officers, employees and others.

The 1999 Plan was adopted by the Company’s Board of Directors, approved by stockholders on March 18, 1999 and expired during 2009. The 1999 Plan provided an initial aggregate number of 1,000,000 shares of common stock to be awarded or issued. The number of shares to be awarded under the 1999 Plan and awards outstanding were adjusted for stock splits, and during 2005, 2006, and 2007, the total number of shares which could be awarded under the 1999 Plan was 562,500 shares. Under the 1999 Plan, the Board of Directors was authorized to issue stock-based awards to officers, employees and others.

The 2006 Plan was adopted by the Company’s Board of Directors on March 16, 2006 and approved by stockholders on May 18, 2006. The plan was amended and restated by the Board of Directors effective September 16, 2009 and June 30, 2011. The September 16, 2009 Amended and Restated 2006 Equity Incentive Plan increased the initial aggregate number of 250,000 shares of common stock which may be awarded or issued to 600,000, and the June 30, 2011 Amended and Restated 2006 Equity Incentive Plan increased the aggregate number of shares of common stock which may be awarded or issued to 1,200,000. The number of shares which may be awarded under the 2006 Plan and awards outstanding has been adjusted for stock splits and other similar events. Under the 2006 Plan, the Board of Directors is authorized to issue stock options, stock appreciation rights, restricted stock, and other stock-based incentives to officers, employees and others. Until stockholder approval is obtained, the Company may not grant further stock options or stock appreciation rights.

Stock-based compensation expense for the year ended December 31, 2011 was generated from fully vested restricted stock grants and fully vested stock awards. Stock options are awards which allow holders to purchase shares of the Company’s common stock at a fixed price. Stock options issued to employees generally vest 50% immediately, and then quarterly over the next three years. Options issued to non-employee members of the MTI Board of Directors generally vest upon grant. Certain options granted may be fully or partially exercisable immediately, may vest on other than a four year schedule or vest upon attainment of specific performance criteria. Restricted stock awards generally vest one year after the date of grant; however, certain awards may vest immediately or vest upon attainment of specific performance criteria. Option exercise prices are generally equivalent to the closing market value price of the Company’s common stock on the date of grant. Unexercised options generally terminate either seven or ten years after date of grant.

The Company estimates the fair value of stock options using a Black-Scholes valuation model. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

During 2011, the Company granted 483,225 restricted stock units, which immediately vested and the stock was issued to holders. The fair value of these grants was based on the closing market value price of the Company’s common stock on the date of grant. The weighed average exercise prices of these grants was $.62 per share.

There were no stock options granted during 2011 and 2009.

The fair value of each 2010 stock option grant was estimated at the date of grant using a Black-Scholes Option Pricing Model. The following table presents the weighted-average assumptions used for options granted under the Plans:

	2010
Option term (years)		5.03
Volatility		128.3 – 150	%
Risk-free interest rate range		1.46 – 2.04	%
Dividend yield		0	%
Weighted-average fair value per option granted	$	0.54

Share-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, therefore, awards are reduced for estimated forfeitures. The revised accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Total share-based compensation expense, related to all of the Company’s share-based awards, recognized for the years ended December 31, was comprised as follows:

	2011		2010			2009
	(dollars in thousands, except eps)
Unfunded research and product development	$	18	$	21		$	92
Selling, general and administrative		370		226			413
Share-based compensation expense	$	388	$	247		$	505
Impact on basic and diluted EPS	$	0.08	$	(0.05	)	$	(0.11	)

Total unrecognized compensation costs related to non-vested awards as of December 31, 2011 is $104 thousand, and is expected to be recognized over a weighted-average vesting period of approximately 0.87 years.

As a result of the amendments in 2011 and 2009 of the 2006 Plan, 600,000 and 350,000 additional shares were made available for granting, respectively. Presented below is a summary of the Company’s stock option plans’ activity for the years ended December 31:

	2011		2010		2009
Shares under option, beginning	878,986		716,403		780,340
Granted	—		216,000		171,750
Exercised	—		—		—
Canceled/Forfeited	(4,851	)	(8,506	)	(89,799	)
Expired	(76,698	)	(44,911	)	(145,888	)
Shares under option, ending	797,437		878,986		716,403
Options exercisable	719,229		719,623		571,617
Remaining shares available for granting of options	261,601		114,591		316,216

The weighted average exercise price for the Plans is as follows for each of the years ended December 31:

	2011	2010	2009
Shares under option, beginning	11.41	15.97	21.56
Granted	—	0.59	1.31
Exercised	—	—	—
Canceled/Forfeited	3.23	8.85	4.09
Expired	20.73	32.64	35.91
Shares under option, ending	10.56	11.41	15.97
Options exercisable, ending	11.63	13.59	18.72

The following table summarizes information for options outstanding and exercisable for the Plans as of December 31, 2011:

	Outstanding Options				Options Exercisable
		Weighted Average	Weighted			Weighted
Exercise		Remaining	Average			Average
Price Range	Number	Contractual Life	Exercise Price		Number	Exercise Price
$0.00 - $1.15	272,211	8.38	$	0.72	211,569	$	0.75
$1.16 - $3.60	214,554	5.76	$	1.72	197,042	$	1.75
$3.61 - $14.24	103,067	2.32	$	11.74	103,013	$	11.75
$14.25 - $22.64	45,289	2.22	$	19.39	45,289	$	19.39
$22.65 - $33.36	58,248	2.93	$	30.37	58,248	$	30.37
$33.37 - $50.24	104,068	1.63	$	38.47	104,068	$	38.47
	797,437	5.26	$	10.56	719,229	$	11.63

The aggregate intrinsic value (i.e. the difference between the closing stock price and the price to be paid by the option holder to exercise the option) is $0 for the Company’s outstanding options and $0 for the exercisable options as of December 31, 2011. The amounts are based on the Company’s closing stock price of $0.50 as of December 31, 2011.

There were no unvested restricted stock options for the period ended December 31, 2011.

MTI Micro Option Plans

MTI Micro has two plans for issuing MTI Micro stock-based incentive awards; the MTI MicroFuel Cells Inc. 2001 Employee, Director and Consultant Stock Option Plan (2001 MTI Micro Plan) and the MTI MicroFuel Cells Inc. 2009 Stock Plan (2009 Micro Plan), (collectively, the MTI Micro Plans).

The 2001 MTI Micro Plan was approved by MTI Micro’s stockholders in 2001 and provided an initial aggregate number of 1,766,000 shares of MTI Micro common stock to be awarded. The number of shares which may be awarded under the 2001 MTI Micro Plan and awards outstanding have been adjusted for a 2004 reverse stock split, and during 2005, 2006, and 2007, the total number of shares which may be awarded under the 2001 MTI Micro Plan were 3,416,667 shares. Under the 2001 MTI Micro Plan, the MTI Micro Board of Directors was authorized to award stock options to officers, directors, employees and consultants. During 2005, MTI Micro ceased making grants under the 2001 MTI Micro Plan and determined that it would make no new awards under this plan in the future.

The MTI Micro Board of Directors approved the 2009 Micro Plan on December 8, 2009. This plan provided an initial aggregate number of 38,000,000 shares of MTI Micro’s common stock to be awarded. Under the 2009 Micro Plan, the MTI Micro Board of Directors is authorized to award stock options to directors, employees, consultants and advisors of MTI Micro.

There were no stock options granted in 2011 and 2009.

On September 15, 2010, MTI Micro granted 6,330,520 options to its employees from the 2009 Micro Plan. The options vest 50% on the grant date and 50% ratably on a quarterly basis over the next three years. The fair value of these stock options granted was estimated at the date of grant using a Black-Scholes Option Pricing Model.

The key inputs and assumptions used to estimate the fair value of these 2010 stock options were as follows:

Option term	5 years
Volatility		115	%
Risk-free interest rate		1.46	%
Dividend yield		0	%
Fair value per option granted	$	0.07

The amount of expense recognized for this grant was $52 thousand and $187 thousand for 2011 and 2010, respectively. Share-based compensation expense recognized in the Consolidated Statement of Operations is based on awards ultimately expected to vest, therefore, awards are reduced for estimated forfeitures. The accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has assumed a forfeiture rate of 5% for this grant.

On February 10, 2010, MTI Micro granted 28,296,800 options to its employees from the 2009 Micro Plan. The options vest 50% on the grant date and 50% ratably on a quarterly basis over the next three years. The fair value of these stock options granted was estimated at the date of grant using a Black-Scholes Option Pricing Model.

The key inputs and assumptions used to estimate the fair value of these stock options were as follows:

Option term	5 years
Volatility		115	%
Risk-free interest rate		2.39	%
Dividend yield		0	%
Fair value per option granted	$	0.07

The amount of expense recognized for this grant was $221 thousand and $1.01 million for 2011 and 2010, respectively. Share-based compensation expense recognized in the Consolidated Statement of Operations is based on awards ultimately expected to vest, therefore, awards are reduced for estimated forfeitures. The accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has assumed a forfeiture rate of 5% for this grant.

Presented below is a summary of compensation expense, which is included in the summary of the Company’s compensation expense under all share-based awards above, for the MTI Micro Plans:

	2011		2010		2009
	(dollars in thousands)
Stock option compensation expense	$	273	$	1,199	$	—
Total stock-based compensation expense	$	273	$	1,199	$	—

Total unrecognized compensation costs related to non-vested awards as of December 31, 2011 is $233 thousand.

Presented below is a summary of the MTI Micro Plans activity for the years ended December 31:

	2011		2010		2009
Shares under option, beginning	33,050,720		15,001		15,001
Granted	—		34,627,320		—
Exercised	—		—		—
Canceled/Forfeited	(7,926,500	)	(1,591,601	)	—
Shares under option, ending	25,124,220		33,050,720		15,001
Options exercisable	20,040,419		20,131,783		15,001
Remaining shares available for granting of options	12,882,780		4,956,280		38,000,000

The weighted average exercise price for the MTI Micro Plans is as follows for each of the years ended December 31:

	2011		2010		2009
Shares under option, beginning	$	0.07	$	3.89	$	3.89
Granted		—		0.07		—
Exercised		—		—		—
Canceled/Forfeited		0.07		0.09		—
Shares under option, ending		0.07		0.07		3.89
Options exercisable, ending		0.07		0.07		3.89

The weighted average fair value of stock options granted is required to be based on a theoretical statistical model using the preceding Black-Scholes Option Pricing Model assumptions.

The following table summarizes information for options outstanding and exercisable for the MTI Micro Plans as of December 31, 2011:

		Outstanding Options			Options Exercisable
		Weighted Average	Weighted			Weighted
Exercise		Remaining	Average			Average
Price Range	Number	Contractual Life	Exercise Price		Number	Exercise Price
$0.07 - $2.54	25,117,220	8.23	$	0.07	20,033,419	$	0.07
$2.55 - $3.79	2,000	1.25	$	2.55	2,000	$	2.55
$3.80 - $4.65	1,167	0.86	$	3.80	1,167	$	3.80
$4.66 - $4.66	3,833	2.25	$	4.66	3,833	$	4.66
	25,124,220	8.23	$	0.07	20,040,419	$	0.07