7.Stock Incentive Plan

The Company has a stock incentive plan, the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “Plan”), that includes a discretionary grant program, a stock issuance program and an automatic grant program. The plan was established to promote the interests of the Company, by providing eligible persons with the opportunity to acquire a proprietary interest in the Company as an incentive to remain with the organization and to align the employee’s interest with our stockholders.

Under the Plan option awards are generally granted with an exercise price equal to the closing price of the Company’s common stock on the date of grant. Those option awards generally vest based on four years of continuous service and have seven year contractual terms. Option awards that are granted to non-employee Board members under the annual option grant program are granted with an exercise price equal to the closing price of the Company’s common stock on the date of grant, are vested immediately and have seven year contractual terms. At March 31, 2016, there were 16,914,695 shares of common stock reserved for possible future issuance under the Plan, both currently outstanding (7,085,211 shares) and those available to be issued for future grants (9,829,484 shares).

The weighted average fair value at the date of grant for options granted during the nine-month periods ended March 31, 2016 and 2015 were $1.00 and $1.61 per share, respectively. The Company uses historical data to estimate employee forfeitures for employees, executive officers and outside directors. The expected term of options granted represents the period of time that options granted are expected to be outstanding and the expected stock price volatility is based on the Company’s daily stock trading history. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Information concerning options for the nine-month period ended March 31, 2016 is summarized as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Life	Value
					(in 000’s)
Outstanding, July 1, 2015	4,525,340	$	3.48
Granted	607,431	$	2.04
Exercised	(88,250)	$	2.24
Cancelled or forfeited	(89,888)	$	4.16
Outstanding, March 31, 2016	4,954,633	$	3.31	3.30	$	370
Exercisable, March 31, 2016	3,543,479	$	3.32	2.36	$	38

A summary of the Company’s non-vested restricted and performance stock units at March 31, 2016, and changes during the nine-month period ended March 31, 2016 are presented below:


		Weighted-Average
		per Share of
Outstanding Non-Vested		Market Value on
Restricted and Performance Stock Units	Number of Awards	Grant Date
Non-vested at July 1, 2015	706,881	$	4.30
Restricted Units Granted(a)	272,081	$	2.05
Restricted Units Granted – vesting based on certain market conditions(b)	1,500,000	$	2.28	(c)
Vested/Exercised	(348,384)	$	4.30
Non-vested at March 31, 2016	2,130,578	$	2.59

^(a)

For the nine-month period ended March 31, 2016, 198,864 restricted stock units were awarded to the Company’s President and Chief Executive Officer, 15,341 restricted stock units were awarded to the Company’s Chief Financial Officer and 57,876 restricted stock units were awarded to the Company’s Board of Directors.

^(b)

For the nine-month period ended March 31, 2016, 1,500,000 restricted stock units were awarded to the Company’s Chairman, Chief Scientific Officer and Chief Patent Officer.

^(c)

Represents fair value on date of grant determined by using Monte Carlo simulation technique.

The Company has 3,541,732 non-vested options, restricted stock units and performance stock units outstanding as of March 31, 2016. As of March 31, 2016, there was $6.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is being recognized over a weighted-average period of 2.29 years. The Company recorded $0.9 million and $2.8 million for total stock-based compensation expense for employees, executive officers and non-employee Board members for the three and nine-month periods ended March 31, 2016, respectively, as compared to $0.6 million and $2.1 million for the three and nine-month periods ended March 31, 2015, respectively.

Each non-employee Board member who continues to serve on the Board shall receive on the date of the annual stockholders meeting a grant of non-qualified stock options and restricted stock units, each equal in value to $45 thousand. The Company recognizes the related stock-based compensation expense ratably over the fiscal year. In total, the Company recorded $45 thousand and $136 thousand for stock-based compensation expense for these non-employee Board members restricted stock units for each of the three and nine-month periods ended March 31, 2016, respectively, and $44 thousand and $136 thousand during the three and nine-month periods ending March 31, 2015, respectively. Stock-based compensation expense regarding non-qualified stock options for these non-employee Board members become vested and are expensed when issued, during the second quarter of each fiscal year.

On August 20, 2015, the Company awarded an additional 214,205 restricted stock units to certain executive officers of the Company at the closing price on that date ($1.76 per share). These restricted stock units will vest over a four year period. As of March 31, 2016, there was $1.1 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan for these executive officers, excluding performance stock units. The cost is being recognized over a weighted-average period of 2.33 years. The Company recorded $0.2 million and $0.5 million for stock-based compensation expense for restricted stock units for the three and nine-month periods ended March 31, 2016, respectively, and $0.2 million and $0.6 million for the three and nine-month periods ended March 31, 2015, respectively.

As part of the Amended and Restated Employment Agreement with Dr. Goldenberg which became effective July 1, 2015, (see Note 11), Dr. Goldenberg received a grant of 1,500,000 Restricted Stock Units, which shall vest, if at all, after the three (3) year period commencing on the grant date of July 14, 2015, provided the applicable milestones based on achievement of certain market conditions (stock prices) are met and conditioned upon Dr. Goldenberg's continued employment through the vesting period, subject to the terms and conditions of the Restricted Stock Units Notice and the Restricted Stock Units Agreement and such other terms and conditions as set forth in the grant agreement. The Company recorded $0.3 million and $0.8 million for the stock-based compensation for the three and nine-month periods ended March 31, 2016 for this agreement. There is $2.6 million of total unrecognized compensation cost related to these non-vested Restricted Stock Units granted as of March 31, 2016. That cost is being recognized over a remaining weighted-average period of 2.25 years.

During fiscal year 2014 the Company awarded certain executive officers Performance Units (as such term is defined in the Plan) of up to 389,864 units of restricted stock units which are subject to attainment of certain performance milestones as well as certain continued service requirements. All or a portion of the Performance Units vest based upon the level of achievement of the milestones set forth in each agreement, which is expected to be achieved within five years of the grant date. The Performance Units that vest based upon attainment of the performance milestone will be exercisable based on a percentage basis on the attainment of anniversary dates. During the nine-month period ended March 31, 2016, the Company awarded 136,453 of these restricted stock units to the executive officers as a result of achieving two of the four performance milestones. In fiscal year 2015, 116,959 units were awarded from achieving two of the four performance milestones. As of March 31, 2016, all four of the performance milestones have been achieved and there are 136,452 Performance Units available that are based on certain continued service requirements that begin on each performance milestone vesting date. The Company recorded $0.1 million and $0.3 million for the stock-based compensation for the three and nine-month periods ended March 31, 2016 and 2015, respectively. There is $0.2 million of total unrecognized compensation cost related to these non-vested Performance Units granted as of March 31, 2016. That cost is being recognized over a weighted-average period of 2.0 years. The unrecognized compensation cost is subject to modification on a quarterly basis based on review of performance probability and requisite achievement periods.