Note 11 – General & Administrative Expenses

General and Administrative Expenses:

(Dollars in thousands)	2019		2018		2017
Total Compensation to Employees and Directors	$	10,331	$	11,289	$	11,655
Office and Administrative Expenses		2,633		2,449		2,147
Audit, Legal and Consultancy		1,826		1,314		3,377
Total General and Administrative Expenses	$	14,789	$	15,052	$	17,180

Stock Compensation

The Company currently maintains the 2019 Incentive Compensation Plan (the “2019 Plan”) for the benefit of directors and senior management. Different awards may be granted under the 2019 Plan, including stock options, restricted shares/restricted stock units and cash incentive awards.

Stock Options

The exercise price for options cannot be less than the fair market value of a common stock on the date of grant.

Restricted shares

Restricted shares can neither be transferred nor assigned by the participant.

Vesting conditions

Awards issued vest subject to continued employment or office, except that if a member of the board of directors ceases service on the board of directors prior to the applicable vesting date for any reason, his or her restricted stock will immediately vest in full. The awards have graded vesting. For some of the awards there is an additional vesting condition requiring certain market conditions to be met.

The Plan may allow for different criteria for new grants.

Stock Compensation Series

	Number of shares/options		Vesting Period	Fair value at grant date
(1) Granted October 2005, stock options		965	10 years	$	144.00
(2) Granted March 2012, restricted shares		14,515	3 years		13.80
(3) Granted June 2013, restricted shares		155,000	4 years		4.15
(4) Granted June 2013, stock options		155,000	5 years		1.31
(5) Granted June 2013, stock options		155,000	5 years		0.97
(6) Granted February 2014, restricted shares		29,333	3 years		6.92
(7) Granted February 2014, restricted shares		29,333	3 years		6.33
(8) Granted February 2014, restricted shares		29,333	3 years		5.63
(9) Granted February 2014, restricted shares		88,000	3 years		7.61
(10) Granted June 2014, restricted shares		95,666	3 years		6.41
(11) Granted June 2014, restricted shares		95,666	3 years		5.74
(12) Granted June 2014, restricted shares		95,666	3 years		5.13
(13) Granted June 2014, restricted shares		287,000	3 years		7.15
(14) Granted January 2015, restricted shares		850,000	3 years		8.81
(15) Granted January 2016, restricted shares		824,000	2 years		6.65
(16) Granted January 2017, restricted shares		900,000	2 years		4.61
(17) Granted January 2018, restricted shares		355,000	1 year		3.92
(18) Granted January 2018, restricted shares		212,000	3 years		2.30
(19) Granted January 2019, restricted shares		360,000	3 years		4.25
(20) Granted January 2019, restricted shares		200,000	3 years		3.04
(21) Granted March 2019, restricted shares		210,000	1 year	$	4.60

The following reconciles the number of outstanding restricted common stock and share options:

	Restricted common stock		Share options		Weighted average exercise price **

Outstanding at December 31, 2016		1,376,820		310,000		9.64
Granted		900,000
Exercised*		1,132,988
Forfeited		57,501
Outstanding at December 31, 2017		1,086,331		310,000	$	9.64

Outstanding at December 31, 2017		1,086,331		310,000		9.64
Granted		567,000
Exercised*		1,085,331
Forfeited		22,500		310,000		9.64
Outstanding at December 31, 2018		545,500		-	$	-

Outstanding at December 31, 2018		545,500		-		-
Granted		770,000
Exercised*		755,500
Forfeited		-
Outstanding at December 31, 2019		560,000		-	$	-

*Does not include shares in lieu of dividends

**To be adjusted for dividends declared and paid subsequent to the respective grant dates.

Stock Compensation Expense

(Dollars in thousands)		2019				2018				2017
Expense recognized from stock compensation			2,532				2,458				4,806

The fair value on the vesting date for shares that vested in 2019 was $4.61 for 281,094 shares, $3.92 for 80,101 shares, $2.30 for 212,823 shares, $3.04 for 206,118 shares and $4.60 for 10,435 shares. The fair value on the vesting date for shares that vested in 2018 was $3.38 for 891,136 shares, $3.50 for 264,000 shares and $4.30 for 20,000 shares. The fair value on the vesting date for shares that vested in 2017 was $4.83 for 1,189,100 shares and $3.68 for 70,108 shares. All share-based compensation is equity-settled and no payments were made for the vested shares. The average contractual life for the outstanding stock compensation series was 0.87 years as of December 31, 2019.

Valuation of Stock Compensation

For the year 2018, a total of 560,000 shares of restricted stock was awarded to management in January 2019, vesting in equal amounts in January 2020, January 2021 and January 2022, respectively, subject to continued employment or office, as applicable. The calculated fair value at grant date was equal to the share price at grant date. The remaining 200,000 shares vested subject to certain market conditions in May 2019 and the calculated fair value was $3.04 per share. For the year 2018, a total of 210,000 shares of restricted stock were awarded to the board of directors in March 2019. The calculated fair value at grant date was equal to the share price at grant date and the shares will vest in June 2020. For the year 2017, a total of 567,000 shares of restricted stock were awarded to management and the board of directors in January 2018, of which 264,000 shares vested in February 2018 and 78,500 shares vested in February 2019, while 12,500 shares were forfeited in October 2018. The remaining 202,000 shares vested subject to certain market conditions in May 2019, while 10,000 shares were forfeited in October 2018. The above vesting was subject to continued employment or office, as applicable, as of the relevant vesting date, except that if a member of the board of directors ceases service on the board of directors prior to the applicable vesting date for any reason, his or her restricted stock will immediately vest in full. The estimated fair value at grant date was equal to the share price at grant date for 355,000 shares and $2.30 for 212,000 shares. The grants of restricted stock to management and the board of directors described above were generally granted in the beginning of the year following the year to which they relate.

Compensation of Directors and Executives

Remuneration of Directors and Executives as a group:

(Dollars in thousands)	2019		2018		2017
Cash compensation	$	3,518	$	3,989	$	4,171
Pension cost		36		202		155
Share compensation*		2,003		2,250		4,107
Total remuneration	$	5,556	$	6,441	$	8,433

*Share compensation reflects the expense recognized.

Shares held by Directors and Executives:

		2019				2018				2017
Directors and Executives as a group*			3,615,221				3,155,503				2,729,680

*Includes 440,000 (2018: 465,000, 2017: 906,666) shares of restricted stock subject to vesting conditions.

In connection with termination of an Executive’s employment, the Executives of the Company may be entitled to an amount equal to 18 months’ base salary and any unvested equity awards may become fully vested in certain circumstances.