Equity Incentive Plan
|12 Months Ended|
Dec. 31, 2019
|Equity Incentive Plan|
|Equity Incentive Plan||
Note 9 — Equity Incentive Plan
On May 17, 2013, the Company adopted the 2013 Equity Incentive Plan (the “Plan”) and reserved shares of common stock for issuance under the Plan. The Plan is administered by the Compensation Committee of the Company’s Board of Directors.
On April 4, 2019, the Company entered into Award Forfeiture Agreements ("Forfeiture Agreements") with certain of the Company's executives and members of its Board. Pursuant to the Forfeiture Agreements, these individuals voluntarily forfeited their equity award grants with a grant date prior to January 1, 2018. The forfeitures included 49,584 stock options and 11,900 performance stock units ("PSUs") issued under the Plan, and 25,000 stock options not issued under the Plan. In April 2019, the Company accelerated the recognition of $80,492 of stock compensation expense in connection with the unvested, forfeited awards.
At December 31, 2019, there were 22,663 shares of common stock available for issuance under the Plan.
During the year ended December 31, 2019, the Company granted 23,400 stock options to Board members, 94000 stock options to executives and 1,000 stock options to an employee under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $253,074, of which $76,808 was recognized during the year ended December 31, 2019.
During the year ended December 31, 2018, the Company granted 12,206 stock options to Board members and 30,000 immediately vested stock options to an executive under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $330,713, all of which was recognized during the year ended December 31, 2018.
During the year ended December 31, 2018, the Company granted 11,750 restricted stock units (“RSUs”) and 1,200 PSUs to employees. The estimated fair value of these awards, calculated based on the closing stock price on the dates of grant, was $158,110, of which $37,880 was forfeited and $45,467, net of a reversal of $6,481, was recognized during the year ended December 31, 2018. The RSUs vest in four equal installments over a two-year vesting period.
For the year ended December 31, 2018, 6,000 PSUs vested and 6,000 PSUs were canceled as the related performance condition was not met.
A summary of the Company’s RSU and PSU activity is as follows:
As permitted by SAB 107, management utilizes the simplified approach to estimate the expected term of stock options, which represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. treasury yield in effect at the time of grant. The volatility is estimated based on the historical volatilities of comparable companies. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.
The assumptions used in the Black-Scholes model are as follows:
A summary of the Company’s stock option activity and related information is as follows:
The following table sets forth additional information about stock options outstanding at December 31, 2019:
Stock options granted under the Plan have ten-year terms and generally vest annually over a three-year or four-year vesting period except for option grants to independent directors that generally vest quarterly over a one-year vesting period.
The estimated aggregate pretax intrinsic value (the difference between the Company’s stock price on the last day of the year ended December 31, 2019 and the exercise prices, multiplied by the number of vested in-the-money options) is $0. This amount changes based on the fair value of the Company’s stock.
As of December 31, 2019, there was $176,266 of unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 1.5 years.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef