Note 13 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

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

13.   Stock-Based Compensation

On December 19, 1997, the Company’s stockholders approved the Merisel Inc. 1997 Stock Award and Incentive Plan (the “1997 Plan”).  On December 3, 2008, the Company’s stockholders approved the Merisel, Inc. 2008 Stock Award and Incentive Plan (the “2008 Plan”).  Under both the 1997 Plan and the 2008 Plan, incentive stock options and nonqualified stock options as well as other stock-based awards may be granted to employees, directors, and consultants.  The 1997 Plan authorized the issuance of an aggregate of 800,000 shares of Common Stock less the number of shares of Common Stock that remain subject to outstanding option grants under any of the Company’s other stock-based incentive plans for employees after December 19, 1997 and are not either canceled in exchange for options granted under the 1997 Plan or forfeited.  The 2008 Plan authorized the issuance of an aggregate of 500,000 shares of Common Stock, less the same limit for outstanding options.  At September 30, 2012, 51,839 shares were available for grant under the 1997 Plan, and 400,000shares were available for grant under the 2008 Plan.  The grantees, terms of the grant (including option prices and vesting provisions), dates of grant and number of shares granted under the plans are determined primarily by the Board of Directors or the committee authorized by the Board of Directors to administer such plans, although incentive stock options are granted at prices which are no less than the fair market value of the Company's Common Stock at the date of grant.

Stock Option Grants

On January 11, 2012, the Company modified 100,000 of its Chief Executive Officer’s 300,000 fully vested stock options.  The modified options originally had an exercise price of $12.00 and an expiration date of November 22, 2014.  The modified options now have an exercise price of $1.35 per share and an expiration date of November 22, 2016.  Compensation expense of $48 was recorded during the three month period ended March 31, 2012, to reflect the excess of the fair value of the modified options over the fair value of the original options at the date of the exchange.  No expense associated with these options was incurred in the current quarter.

On January 11, 2012, the Company granted 150,000 stock options to its other executive officers under the Stock Award and Incentive Plan.  The options have an exercise price of $1.35 and an expiration date of January 11, 2022. The options vest 25% on the grant date, 25% on December 31, 2012, 25% on December 31, 2013, and 25% on December 31, 2014. Compensation expense, measured by the options fair value at the grant date, will be recorded over the related vesting period starting in January 2012. Compensation expense related to these grants was $7 and $62 for the three and nine months ended September 30, 2012.  50,000 of these options were cancelled during the quarter ended September 30, 2012 upon the termination of an executive officer and 100,000 of these options held by the other executive officer remain outstanding as of September 30, 2012.

The fair value of each option granted during 2012 was estimated on the date of grant using the Black-Scholes option pricing model.

As of September 30, 2012, 400,000 options remain outstanding under the Stock Award and Incentive Plan. A summary of the Company’s stock option activity and weighted average exercise price is as follows:

	Options			Weighted Average Exercise Price
Outstanding at December 31, 2011		300,000		$	8.33
Granted		150,000		$	1.35
Exercised		-			N/A
Cancelled/forfeited		(50,000	)	$	1.35
Outstanding at September 30, 2012		400,000		$	3.93
Options exercisable at September 30, 2012		325,000		$	4.52

The weighted average grant date fair value of options granted during the period is $0.96.

As of September 30, 2012 and 2011, there was $54 and $0 of unrecognized compensation cost related to stock options, respectively.