Note 10 - Stock-Based Compensation Plans and Warrants

12 Months Ended

Dec. 31, 2013

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

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

NOTE 10 – STOCK-BASED COMPENSATION PLANS AND WARRANTS

The Company has issued options and has granted stock awards pursuant to its 2003 Management Equity Incentive Plan, 2007 Management Equity Incentive Plan, and 2009 Equity Incentive Plan. The Company also has granted stock awards pursuant to its 2009 Equity Incentive Plan and Outside Director Compensation Plan, as described below.

2003 Management Equity Incentive Plan 

In December 2003, concurrently with the completion of the Company’s then current financing arrangements with ING, the Company’s board of directors authorized the adoption of a Management Equity Incentive Plan. As of December 31, 2013, a total of 315,000 common stock options remain outstanding under this plan.

Outside Director Compensation Plan

The Cadiz Inc. Outside Director Compensation Plan was approved by the Company’s stockholders in November 2006. Under the plan, each outside director receives $30,000 of cash compensation and receives a deferred stock award consisting of shares of the Company’s common stock with a value equal to $20,000 on June 30 of each year. The award accrues on a quarterly basis, with $7,500 of cash compensation and $5,000 of stock earned for each fiscal quarter in which a director serves. The deferred stock award vests automatically on the January 31 that first follows the award date.

2007 Management Equity Incentive Plan

The 2007 Management Equity Incentive Plan was approved by stockholders at the 2007 Annual Meeting. In November 2013, unexercised options to purchase 10,000 shares were forfeited and became available for future awards under the terms of the 2007 Management Equity Incentive Plan. As of December 31, 2013, no common stock options remain outstanding under this plan.

2009 Equity Incentive Plan

The 2009 Equity Incentive Plan was approved by stockholders at the 2009 Annual Meeting. The plan provides for the grant and issuance of up to 850,000 shares and options to the Company’s employees and consultants. The plan became effective when the Company filed a registration statement on Form S-8 on December 18, 2009. All options issued under the 2009 Equity Incentive Plan have a ten-year term with vesting periods ranging from issuance date to 24 months. Under the plan, a total of 537,500 common stock purchase options have been issued. In November 2013, unexercised options to purchase 10,000 shares were forfeited and became available for future awards under the terms of the 2009 Management Equity Incentive Plan. As of December 31, 2013, 527,500 common stock options remain outstanding under this plan.

All options that have been issued under the above plans have been issued to officers, employees and consultants of the Company. In total, options to purchase 842,500 shares were unexercised and outstanding on December 31, 2013, under the three equity incentive plans.

For consultants of the Company, the fair value of each option granted under the 2009 Equity Incentive Plan is estimated at each reporting period using the Black-Scholes option pricing model and recorded as a liability until the award is settled.

For officers and employees of the Company, the fair value of each option granted under the plans was estimated on the date of grant using the Black-Scholes option pricing model based on the following weighted-average assumptions:

Risk-free interest rate	3.90	%
Expected life (years)	9.4
Expected volatility	52	%
Expected dividend yield	0.0	%

The risk-free interest rate is assumed to be equal to the yield of a U.S. Treasury bond of comparable maturity, as published in the Federal Reserve Statistical Release for the relevant date. The expected life estimate is based on an analysis of the employees receiving option grants and the expected behavior of each employee. The expected volatility is derived from an analysis of the historical volatility of the trading price per share of the Company’s common stock on the NASDAQ Global Market. The Company does not anticipate that it will pay dividends to common stockholders in the future.

The Company recognized stock option related compensation costs of $43,000, $284,000, and $1,245,000 in the years ended December 31, 2013, 2012, and 2011, respectively, relating to these options. No stock options were exercised during 2013.

A summary of option activity under the plans as of December 31, 2013, and changes during the year ended are presented below:

Options	Shares			Weighted- Average Exercise Price		Average Remaining Contractual Term		Aggregate Intrinsic Value ($000’s)
Outstanding January 1, 2013		862,500		$	11.92		5.5	$	7,499
Granted		-		$	-		-		-
Exercised		-		$	-		-		-
Forfeited or expired		(20,000	)	$	15.25		4.2		175
Outstanding at December 31, 2013		842,500		$	11.84		4.5		7,316
Exercisable at December 31, 2013		842,500		$	11.84		4.3	$	7,316

The weighted-average grant-date fair value of options granted during the year ended December 31, 2011 was $7.28 per share. No options were granted in 2013 and 2012. The following table summarizes stock option activity for the periods noted:

	Amount			Weighted- Average Exercise Price
Outstanding at January 1, 2011		727,500		$	11.86
Granted		135,000		$	12.23
Expired or canceled		-		$	-
Exercised		-		$	-
Outstanding at December 31, 2011		862,500		$	11.92
Granted		-		$	-
Expired or canceled		-		$	-
Exercised		-			-
Outstanding at December 31, 2012		862,500		$	11.92
Granted		-		$	-
Expired or canceled		20,000			15.25
Exercised		-			-
Outstanding at December 31, 2013		842,500	(a)	$	11.84
Options exercisable at December 31, 2012		842,500		$	11.84
Weighted-average years of remaining contractual life of options outstanding at December 31, 2013		4.5

(a) Exercise prices vary from $9.88 to $13.95, and expiration dates vary from May 2015 to December 2021.

Stock Awards to Directors, Officers, Consultants and Employees

The Company has granted stock awards pursuant to its 2007 Management Equity Incentive Plan, 2009 Equity Incentive Plan and Outside Director Compensation Plan.

Under the 2007 Management Equity Incentive Plan 250,000 shares were issued. A 150,000-share award was issued that vested in three equal installments on January 1, 2008, January 1, 2009 and January 1, 2010. Of the remaining 100,000 shares reserved under the 2007 Management Equity Incentive Plan, 10,000 were issued as options as described above, and 90,000 were issued as shares that vested in May 2009 consistent with the terms of the agreements pursuant to which those executives provided services to the Company.

Of the total 850,000 shares reserved under the 2009 Equity Incentive Plan, 115,000 restricted shares of common stock were granted on January 14, 2010, and 140,000 restricted shares of common stock were granted on January 10, 2011, consistent with the terms of the agreements pursuant to which those executives provide services to the Company and which contemplate that such executives will participate in the Company’s long-term incentive plans. The recipients of these restricted shares have a contractual agreement not to sell any of these shares for a period of three years following the effective date. Of the remaining 595,000 shares reserved under the 2009 Equity Incentive Plan, 42,265 shares of common stock were awarded to directors, 527,500 were issued as options as described above and 25,235 are available for future distribution.

Under the Outside Director Compensation Plan, 92,265 shares have been awarded for the plan years ended June 30, 2006, through June 30, 2013. Of the 92,782 shares awarded, 19,483 shares were awarded for service during the plan year ended June 30, 2013, became effective on that date and vested on January 31, 2014.

The accompanying consolidated statements include approximately $100,000, $99,000 and $1,130,000 of stock-based compensation expense related to stock awards in the years ended December 31, 2013, 2012 and 2011, respectively.

A summary of stock awards activity under the plans during the years ended December 31, 2013 and 2012 is presented below:

	Shares			Weighted- Average Grant-date Fair Value
				($000’s)
Nonvested at December 31, 2011		9,420		$	102
Granted		13,795			99
Forfeited or canceled		-			-
Vested		(9,420	)		(102	)
Nonvested at December 31, 2012		13,795			99
Granted		19,483			90
Forfeited or canceled		-			-
Vested		(13,795	)		(99	)
Nonvested at December 31, 2013		19,483		$	90

Stock Purchase Warrants Issued to Non-Employees

The Company accounts for equity securities issued to non-employees in accordance with the provisions of ASC 505.

On November 30, 2011, the Company raised $6 million with a private placement of 666,667 shares of Common Stock at a price of $9 per share. For every three (3) shares of Common Stock issued, the Company issued one (1) Common Stock purchase warrant entitling the holder to purchase, commencing 90 days from the date of the issuance and prior to December 8, 2014, one (1) share of Common Stock at an exercise price of $13 per share.

On October 30, 2012, the Company increased the capacity of its existing Term Loan facility with an additional $5 million facility. Concurrently with the funding of the facility, the Company issued warrants to the lenders to purchase an aggregate of 250,000 shares of its common stock. These warrants have an exercise price of $10 per share and must be exercised not later than two years from the date of issuance.

As of December 31, 2013, 472,222 warrants remain outstanding.