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Note 11 - Share-based Compensation | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
1 1 . | Stock-Based Compensation
Stock Compensation Plans Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs: During 2013, we adopted the 2013 Performance Incentive Plan (the “2013 Plan”), which allows us to grant options or restricted stock units to all employees, including executive officers, outside consultants and non-employee directors. An aggregate of 3.1 million shares of common stock were initially reserved for issuance under the 2013 Plan. In May 2017, the shareholders approved an increase in the number of shares available for issuance to 4.1 million shares. As of December 31, 2019, there were outstanding options to purchase 2.1 million shares of Company common stock and 553,000 unvested restricted stock awards outstanding under the 2013 Plan. The Company also issued, outside any approved compensation plans, non-incentive stock options. As of December 31, 2019, there were 188,000 such options outstanding which were fully vested prior to 2018. Issuance of Shares When options and warrants are exercised, it is the Company’s policy to issue new shares. Stock Option Activity Service Vesting-Based Stock Options The following is a summary of service vesting-based stock option activity for 2019 and 2018, and the status of service vesting-based stock options outstanding at December 31, 2019 and 2018:
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |
|  |  |  |  |  | Wtd. Avg. |  |  |  |  |  |  | Wtd. Avg. |
|  |  |  |  |  | Exercise |  |  |  |  |  |  | Exercise |
|  | Shares |  |  | Price |  |  | Shares |  |  | Price |
Outstanding at beginning of year |  |  | 2,043,402 |  |  | $ | 1.91 |  |  |  | 2,390,012 |  |  | $ | 1.85 |
Granted |  | –– |  |  | –– |  |  | –– |  |  | –– |
Exercised |  |  | (469,510 | ) |  |  | 1.72 |  |  |  | (330,983 | ) |  |  | 1.36 |
Forfeited |  |  | (3,437 | ) |  |  | 5.69 |  |  |  | (15,627 | ) |  |  | 4.34 |
Expired - vested |  | –– |  |  | –– |  |  | –– |  |  | –– |
Outstanding at end of year |  |  | 1,570,455 |  |  | $ | 1.96 |  |  |  | 2,043,402 |  |  | $ | 1.91 |
Stock options exercisable at year end |  |  | 1,465,599 |  |  | $ | 1.94 |  |  |  | 1,661,999 |  |  | $ | 1.87 |
We recognized stock compensation expense related to performance-based options of $370,000 and $509,000 during the year ended December 31, 2018. None was recognized in the year ended December 31, 2019 and 2018. As of December 31, 2019, there was $22.3 million of aggregate intrinsic value of outstanding service vesting-based stock options, including $20.9 million of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. This amount will change based on the fair market value of the Company’s stock. Intrinsic value of service vesting-based awards exercised during the years ended December 31, 2019 and 2018 was $7.1 million and $3.8 million, respectively. There were no service based-vesting options granted during the years ended December 31, 2019 and 2018. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable at December 31, 2019 is 5.0 years and 5.4 years, respectively. Total unrecognized compensation cost of service vesting-based stock options at December 31, 2019 of $148,000 is expected to be recognized over a weighted average period of 1.1 years. The following table summarizes information about service vesting-based stock options outstanding at December 31, 2019:
Range of Exercise Prices |  |  | Number Outstanding at December 31, 2019 |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price |
$0.49 | - | 1.00 |  |  |  | 3,571 |  |  |  | 1.91 |  |  | $ | 0.49 |
$1.01 | - | 1.50 |  |  |  | 175,199 |  |  |  | 1.32 |  |  | $ | 1.24 |
$1.51 | - | 2.50 |  |  |  | 1,328,367 |  |  |  | 5.46 |  |  | $ | 1.94 |
$2.51 | - | 8.60 |  |  |  | 63,318 |  |  |  | 5.71 |  |  | $ | 4.42 |
|  |  |  |  |  | 1,570,455 |  |  |  | 5.00 |  |  | $ | 1.96 |
Performance-based Stock Options The Company’s Board of Directors implemented a Management Performance Bonus Plan for 2017. Based on achieving varying levels of specified revenue for the year ending December 31, 2017, up to 1,000,000 options to purchase shares of the Company’s common stock may be vested. The options have an exercise price of $1.64, and if revenue levels for 2017 were met. If the minimum performance targets are not achieved, no options will vest. On February 27, 2018, the Company’s Board of Directors determined that the specified revenue target had been achieved. Accordingly, 999,997 options to purchase shares of the Company’s common stock vested in 2017 and 2018. The following is a summary of performance-based stock option activity under our stock option plans for 2019 and 2018, and the status of performance-based stock options outstanding at December 31, 2019 and 2018:
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |
|  |  |  |  |  | Wtd. Avg. |  |  |  |  |  |  | Wtd. Avg. |
|  |  |  |  |  | Exercise |  |  |  |  |  |  | Exercise |
|  | Shares |  |  | Price |  |  | Shares |  |  | Price |
Outstanding at beginning of year |  |  | 964,997 |  |  | $ | 1.64 |  |  |  | 999,997 |  |  | $ | 1.64 |
Granted |  | –– |  |  | –– |  |  | –– |  |  | –– |
Exercised |  |  | (227,500 | ) |  |  | 1.64 |  |  |  | (35,000 | ) |  |  | 1.64 |
Outstanding at end of year |  |  | 737,497 |  |  | $ | 1.64 |  |  |  | 964,997 |  |  | $ | 1.64 |
Stock options exercisable at year end |  |  | 737,497 |  |  | $ | 1.64 |  |  |  | 465,001 |  |  | $ | 1.64 |
We recognized stock compensation expense related to performance-based options of $509,000 during the year ended December 31, 2018. None was recognized in the year ended December 31, 2019. As of December 31, 2019, there was $10.7 million of aggregate intrinsic value outstanding and exercisable performance-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. This amount will change based on the fair market value of the Company’s stock. Intrinsic value of performance-based awards exercised during the years ending December 31, 2019 and 2018 was $3.7 million and $285,000, respectively. The weighted average remaining contractual life of performance-based options outstanding and exercisable at December 31, 2019, is 2.0 years. There were no stock options granted to employees and non-employee directors in the year ending December 31, 2019 and 2018. Restricted Stock Service vesting-based restricted stock The following is a summary of service vesting-based restricted stock activity for the year ended December 31, 2019 and 2018, and the status of unvested service vesting-based restricted stock outstanding at December 31, 2019 and 2018:
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |
|  |  |  |  |  | Wtd. Avg. |  |  |  |  |  |  | Wtd. Avg. |
|  |  |  |  |  | Grant Date |  |  |  |  |  |  | Grant Date |
|  | Shares |  |  | Fair Value |  |  | Shares |  |  | Fair Value |
Outstanding at beginning of year |  |  | 279,919 |  |  | $ | 5.00 |  |  |  | 237,926 |  |  | $ | 1.79 |
Granted |  |  | 309, 218 |  |  |  | 17.15 |  |  |  | 181,268 |  |  |  | 7.02 |
Vested |  |  | (125,818 | ) |  |  | 4.57 |  |  |  | (116,647 | ) |  |  | 1.81 |
Forfeited |  |  | (33,920 | ) |  |  | 12.88 |  |  |  | (22,628 | ) |  |  | 3.95 |
Non-vested at end of year |  |  | 429,399 |  |  | $ | 13.25 |  |  |  | 279,919 |  |  | $ | 5.00 |
The aggregate fair value of the service vesting-based awards granted during the years ended December 31, 2019 and 2018 was $5.3 million and $1.3 million, respectively, which represents the market value of BioLife common stock on the date that the restricted stock awards were granted. The aggregate fair value of the service vesting-based awards that vested during the years ended December 31, 2019 and 2018 was $1.9 million and $1.1 million, respectively. We recognized stock compensation expense of $1.2 million and $413,000 related to service vesting-based awards during the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, there was $4.9 million in unrecognized compensation costs related to service vesting-based awards. We expect to recognize those costs over 3.3 years. Market-based restricted stock On February 25, 2019 the Company granted 94,247 shares and on April 1, 2019 granted 29,604 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2019 through December 31, 2020 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 69%, 0% dividend yield and a risk-free interest rate of 2.5%. The historical volatility was based on the most recent 2 -year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2 -year term associated with the market condition of the award. The fair value of this award will be expensed on a straight-line basis over the grant date to the vesting date of December 31, 2020. For the period ended December 31, 2019, the aggregate grant date fair value of the market-based restricted stock awards was $3.3 million. We recognized stock compensation expense of $1.5 million for the year ended December 31, 2019 related to market-based restricted stock awards. As of December 31, 2019, there was $1.8 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over 1 year. Total Stock Compensation Expense We recorded total stock compensation expense for the years ended December 31, 2019 and 2018, as follows:
|  | Year Ended December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Research and development costs |  | $ | 571 |  |  | $ | 260 |
Sales and marketing costs |  |  | 711 |  |  |  | 269 |
General and administrative costs |  |  | 1,584 |  |  |  | 809 |
Cost of product revenue |  |  | 177 |  |  |  | 181 |
Total |  | $ | 3,043 |  |  | $ | 1,519 |

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