9.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 on the first anniversary of the date of grant, provided that such Board members remain Board members on such date, and have seven year contractual terms. At September 30, 2017 there were 14,028,257 shares of common stock reserved for possible future issuance under the Plan, both currently outstanding (4,687,745 shares) and those available to be issued for future grants (9,340,512 shares).

The weighted average fair value at the date of grant for options granted during the three-month periods ended September 30, 2017 and 2016 were $4.95 and $1.75 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 three-month period ended September 30, 2017 is summarized as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Life	Value
					(in 000’s)
Outstanding, July 1, 2017	2,893,240	$	3.48
Granted	179,289	$	8.94
Exercised	(166,330)	$	3.68
Cancelled or forfeited	(14,750)	$	3.41
Outstanding, September 30, 2017	2,891,449	$	3.80	3.93	$	29,424
Exercisable, September 30, 2017	2,396,914	$	3.40	3.52	$	25,359

A summary of the Company’s non-vested restricted and performance stock units at September 30, 2017, and changes during the three-month period ended September 30, 2017 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, 2017	1,500,000	$	2.28
Restricted Units Granted(a)	35,366	$	8.46
Non-vested at September 30, 2017	1,535,366	$	2.42

^(a)

For the three-month period ended September 30, 2017, 35,366 restricted stock units were awarded to the Company’s Chief Financial Officer, Chief Business Officer and one member of the Company’s Board of Directors.

The Company has 2,029,901 non-vested options, restricted stock units and performance stock units outstanding as of September 30, 2017. As of September 30, 2017, there was $2.5 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 1.53 years. The Company recorded $0.6 million and $0.8 million for total stock-based compensation expense for employees, executive officers and non-employee Board members for the three-month periods ended September 30, 2017 and 2016, respectively.

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 September 30, 2017, there was $0.2 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 1.47 years. The Company recorded $32 thousand and $0.2 million for stock-based compensation expense for restricted stock units for the three-month periods ended September 30, 2017 and 2016, respectively.

As part of the Amended and Restated Employment Agreement with Dr. Goldenberg, the Company’s Chief Scientific Officer and Chief Patent Officer, which became effective July 1, 2015, (see Note 13), Dr. Goldenberg received a grant of 1,500,000 restricted stock units (the “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 for the stock-based compensation for the three-month periods ended September 30, 2017 and 2016. There is $0.9 million of total unrecognized compensation cost related to these non-vested Restricted Stock Units granted as September 30, 2017. That cost is being recognized over a remaining weighted-average period of 0.79 years. The Company believes that a change in control occurred on or before May 4, 2017, as defined in Dr. Goldenberg's employment agreement, as a result of the new Board of Directors being seated. According to the terms of his employment agreement and notice of award, the Company believes that these 1.5 million restricted stock units did not vest since at the time of the change in control the actual price per share of the common stock had not achieved the specified target price required to trigger the vesting of the Restricted Stock Units. The Company understands that Dr. Goldenberg contests the Company’s interpretation of both the timing of the change in control and the vesting requirements of the Restricted Stock Units upon a change in control. The 1.5 million Restricted Stock Units are the subject of arbitration.