7. STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2016

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

7. STOCK-BASED COMPENSATION

The Yuma Co. 2011 Stock Option Plan (the “Yuma Co. Plan”) was adopted on June 21, 2011.  On September 10, 2014, the shareholders of Pyramid adopted the 2014 Long-Term Incentive Plan (the “2014 Plan”).  Under these plans, the Board of Directors is authorized to grant stock options, stock awards (including restricted stock and restricted stock unit awards) and performance awards to officers, directors, employees and consultants.  At March 31, 2016, 4,307,672 shares of the 8,900,000 shares of Yuma common stock originally authorized under active share-based compensation plans remained available for future issuance.  The Company generally issues new shares to satisfy awards under employee share-based payment plans.  The number of shares available is reduced by awards granted.

Restricted Stock – The Company granted restricted stock awards (“RSAs”) under the Yuma Co. Plan and the 2014 Plan in 2013, 2014 and 2015.  These restricted stock awards granted to officers, directors and employees generally vest in one-third increments over a three-year period, and are contingent on the recipient’s continued employment.  Prior to vesting, all restricted stock recipients have the right to vote such stock and receive dividends thereon.  The non-vested shares are not transferable and are held by the Company’s transfer agent.

A summary of the status of the RSAs for employees and non-employees and changes for the period ended March 31, 2016 is presented below.

	Number of			Weighted average
	unvested			grant-date
	RSA shares			fair value
Unvested shares as of January 1, 2016		2,514,434		$0.87 per share
Vested on January 1, 2016		(76,744	)	$3.02 per share
Unvested shares as of March 31, 2016		2,437,690		$0.80 per share

At March 31, 2016, total unrecognized RSA compensation cost of $927,518 is expected to be recognized over a weighted average remaining service period of 1.35 years.

Stock Appreciation Rights – In 2015, the Company also granted Stock Appreciation Rights (“SARs”) to employees and non-employees under the 2014 Plan.  A summary of the status of these SARs and changes for the three months ended March 31, 2016 is presented below.

			Weighted
	Number of		average
	unvested		grant-date
	SARs		fair value
Unvested shares as of January 1, 2016		1,912,419	$0.30 per share
Vested, forfeited, or other changes		-
Unvested shares as of March 31, 2016		1,912,419	$0.30 per share

Weighted average assumptions used to estimate fair value for employees were expected life of five years, 61.17% volatility, 1.60% risk-free rate, and zero annual dividends.

Stock compensation cost for consultants is adjusted at the end of each reporting period to reflect the cost based on the closing stock price at the end of that reporting period.  That price was $0.21 at March 31, 2016 and was used to compute a new fair value of $0.03 per share.  Weighted average assumptions used to estimate fair value were expected option life of .66 years, 134% volatility, 0.59% risk-free interest rate, and zero expected dividend rate.

At March 31, 2016, total unrecognized SAR compensation cost of $311,864 is expected to be recognized over a weighted average remaining service period of 1.5 years.

The SARs in the tables above have a weighted average exercise price of $.605 and an aggregate intrinsic value of zero.  The Company intends to settle these SARs in equity, as opposed to cash.

Stock Options – Pyramid Oil Company issued stock options as compensation for non-employee members of its board of directors under the Pyramid Oil Company 2006 Equity Incentive Plan.  The options vested immediately, and are exercisable for a five-year period from the date of the grant.

The following is a summary of the Company’s stock option activity.

					Weighted-
			Weighted-		average
			average		remaining		Aggregate
			exercise		contractual		intrinsic
	Options		price		life (years)		value
Outstanding at December 31, 2015		105,000	$	5.17		2.65	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding at March 31, 2016		105,000	$	5.17		2.41	$	-
Vested at March 31, 2016		105,000	$	5.17		2.41	$	-
Exercisable at March 31, 2016		105,000	$	5.17		2.41	$	-

As of March 31, 2016, there were no unvested stock options or unrecognized stock option expenses.

The following table summarizes the information about stock options outstanding and exercisable at March 31, 2016.

		Options Outstanding						Options Exercisable
				Weighted-		Weighted				Weighted
				average		average				average
Exercise		Number of		remaining		exercise		Number of		exercise
price		shares		life (years)		price		shares		price
$	5.40		5,000		.17	$	5.40		5,000	$	5.40
$	5.16		100,000		2.52	$	5.16		100,000	$	5.16
			105,000						105,000

Restricted Stock Units – On April 1, 2013, the Company granted 163 Restricted Stock Units or “RSUs” to employees. Based on the exchange ratio of the merger, the RSUs converted into 123,446 RSUs.  Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting.  In order to vest, an employee must have continuous service with the Company from time of the grant through April 1, 2016, the vesting date.  The RSUs may be settled in cash and do not require the eventual issuance of common stock (although it is an election available to the Company); consequently, the awards are liability-based and the booked valuation will change as the market value for common stock changes.  At March 31, 2016, the RSUs were valued at the closing price of the common stock of the Company on that date.  Compensation expense was recognized over the three-year vesting period.  The RSUs vested on April 1, 2016 and were settled in cash for $16,858.

A summary of the status of the unvested RSUs and changes during the three months ended March 31, 2016 is presented below.

			Weighted
	Number of		average
	unvested		grant-date
	RSUs		fair value
Unvested shares as of January 1, 2016		80,278	$2.72 per share
Granted, forfeited, or other changes		-
Unvested shares as of March 31, 2016		80,278	$2.72 per share