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Stock-Based Compensation
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

 

 

 

Note I: Stock-Based Compensation

 

We compensate officers, directors, key employees and consultants with stock-based compensation under stock option and incentive plans approved by our shareholders and administered under the supervision of our Board of Directors. Stock option awards are granted at exercise prices equal to the closing price of our stock on the day before the date of grant. Generally, options vest proportionally over periods of three to five years from the dates of the grant, beginning one year from the date of grant, and have a contractual term of nine to ten years.

 

Performance stock options are time based; however, the final number of awards earned and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately vest ranges from 90% to 100% of the targeted amount if the minimum performance target is achieved.  For performance stock awards granted in 2015, the performance target was operating income. We evaluate the likelihood of meeting the performance target at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each performance target.

 

Compensation expense, net of estimated forfeitures, is recognized ratably over the vesting period. Stock-based compensation expense included in general and administrative expense for the three-month periods ended September 30, 2016 and 2015 was $100,000 and $33,000, respectively.  Stock-based compensation expense included in general and administrative expense for the nine-month periods ended September 30, 2016 and 2015 was $160,000 and $184,000, respectively.  At September 30, 2016, 326,635 shares were available for grant under the Company's stock option and incentive plan.

 

Stock Options

 

A summary of the option activity for the first nine months of 2016 is as follows:

 

 

Number of Shares

  

Weighted Average Exercise Price per Share

  

Weighted Average Remaining Contractual Term (in years)

  

Aggregate Intrinsic Value

Options outstanding at December 31, 2015

          307,750

 

 $        5.96

 

6.30

  

 $               46

Granted

                    -  

 

 $            -  

 

                        -  

 

 $               -  

Exercised

                    -  

 

 $            -  

 

                        -  

 

 $               -  

Expired

             (8,000)

  

 $      12.50

 

                        -  

 

 $               -  

Forfeited

         (142,250)

  

 $        4.94

 

                        -  

 

 $               31

               

Options outstanding at September 30, 2016

          157,500

 

 $        6.54

 

4.47

  

 $               -  

Options exercisable at September 30, 2016

          129,000

 

 $        6.94

 

3.80

  

 $               -  

               

 

 

 

There were no options exercised during the three and nine-month periods ended September 30, 2016 and September 30, 2015. As of September 30, 2016, there was $52,000 of total unrecognized compensation cost related to non-vested stock options. The weighted average period over which the compensation cost is expected to be recognized is 1.4 years.

 

Restricted Stock Awards and Stock Awards

 

We issue restricted stock awards to executive officers and key consultants.  These awards may contain certain performance conditions or time based vesting criteria.  Executive officers vest in the restricted stock awards if the various performance or time-based metrics are met.  Performance restricted stock awards are valued based on the market value of the shares at the date of grant with the compensation expense recognized over the vesting periods.

 

We issue stock awards as a portion of the annual retainer for each director on a quarterly basis.  The stock awards are fully vested at the time of issuance. Compensation expense related to employee stock awards is determined on the grant date based on the publicly quoted fair market value of our common stock and is charged to earnings on the grant date.  Stock awards to consultants are recognized over the performance period based on the stock price on the date when the consultant's performance is complete.  

 

A summary of the restricted stock awards and stock award activity for the first nine months of 2016 is as follows:

 

Number of Shares

  

Weighted Average Remaining Contractual Term (in years)

  

Aggregate Intrinsic Value

Awards outstanding at December 31, 2015

                    -  

 

                        -  

 

 $               -  

Granted

           150,806

 

                        -  

 

 $             427

Exercised

           (41,168)

  

                        -  

 

 $             130

Forfeited

           (99,638)

  

                        -  

 

 $             235

           

Awards outstanding at September 30, 2016

             10,000

 

0.24

  

 $               39

Awards exercisable at September 30, 2016

                    -  

 

                        -  

 

 $               -