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 March 31, 2018 there were 13,708,991 shares of common stock reserved for possible future issuance under the Plan, both currently outstanding (5,404,013 shares) and those available to be issued for future grants (8,304,978 shares).

The weighted average fair value at the date of grant for options granted during the nine-month periods ended March 31, 2018 and 2017 were $7.78 and $1.85 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, 2018 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	1,215,668	$	12.94
Exercised	265,642	$	3.76
Cancelled or forfeited	15,595	$	3.40
Outstanding, March 31, 2018	4,390,145	$	5.51	4.17	$	35,774
Exercisable, March 31, 2018	2,377,863	$	3.34	3.14	$	26,807

A summary of the Company’s non-vested restricted and performance stock units at March 31, 2018, and changes during the nine-month period ended March 31, 2018 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	35,366	$	8.46
Non-vested at March 31, 2018	1,535,366	$	2.83

The Company has 3,287,996 non-vested options, restricted stock units and performance stock units outstanding as of March 31, 2018. As of March 31, 2018, there was $19.5 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 1.9 years. The Company recorded $2.7 million and $2.6 million for total stock-based compensation expense for employees, executive officers and non-employee Board members for the nine-month periods ended March 31, 2018 and 2017, respectively.

During the nine-month period ended March 31, 2018 the Company awarded 35,366 restricted stock units to certain executive officers of the Company at the closing price on the grant date. The weighted average closing price on those dates was $8.46 per share. These restricted stock units will vest over a period of one to three years. As of March 31, 2018, there was $0.1 million of total unrecognized compensation costs related to the awards, excluding performance stock units. The cost is being recognized over a weighted-average period of 1.20 years. The Company recorded approximately $62 thousand and $168 thousand for stock-based compensation expense for these restricted stock units for the three and nine-month periods ended March 31, 2018, respectively.

As part of the Amended and Restated Employment Agreement with Dr. Goldenberg, the Company’s former 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 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.

During December 2017, we issued 151,678 non-qualified stock options to our Chief Executive Officer (CEO) with a grant date fair value of $1.0 million that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within four years of the date of grant. These non-qualified stock options with market related vesting conditions were valued using a Monte Carlo simulation model. Share-based compensation expense is recognized regardless of the number of awards that are earned based on the market condition and is recognized on a straight-line basis over the service period of four years. In the event that the Company’s underlying public stock achieves the target price of $23.72 per share based on a 15 day consecutive trading days, any remaining unamortized compensation cost will be recognized.

During December 2017, we issued 168,461 non-qualified stock options to our CEO with a grant date fair value of $1.1 million that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within four years of the date of grant. These non-qualified stock options with market related vesting conditions were valued using a Monte Carlo simulation model. Share-based compensation expense is recognized regardless of the number of awards that are earned based on the market condition and is recognized on a straight-line basis over the service period of four years. In the event that the Company’s underlying public stock achieves the target price of $35.58 per share or higher for the prior 15 day consecutive trading days, any remaining unamortized compensation cost will be recognized.