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STOCK BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2011
STOCK BASED COMPENSATION |
STOCK BASED COMPENSATION |
NOTE 9 STOCK BASED COMPENSATION Effective March 17, 1989, the Company's Board of Directors adopted the U.S. Gold Corporation Non-Qualified Stock Option and Stock Grant Plan, or the "US Gold Plan." On October 3, 2005, the Board of Directors amended the US Gold Plan to provide for an increase in the number of authorized shares from 3.5 million to 5 million. The stockholders approved this amendment on November 14, 2005. On October 19, 2006, the Board of Directors approved the amendment and restatement to the US Gold Plan to: (1) provide for the grant of incentive options under Section 422 of the Internal Revenue Code (the "Code"), which provide potential tax benefits to the recipients compared to non-qualified options; (2) increase the number of shares of common stock reserved for issuance under the US Gold Plan by 4 million, for a total of 9 million shares; (3) specify that no more than 1 million shares may be subject to grants of options to an individual in a calendar year; (4) provide that awards under the US Gold Plan can be granted to employees, consultants, advisors, and directors as the Board of Directors or committee administering the plan determines in its discretion and to provide that the committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and advisors; (5) provide the grant of restricted stock; and (6) change the name of the US Gold Plan to US Gold Equity Incentive Plan. The amendment and restatement of the US Gold Incentive Plan was approved at the Company's annual meeting of shareholders on November 30, 2006. Under the Plan, as amended by shareholders on November 30, 2006, a total of 9 million shares of common stock are reserved for issuance thereunder. On January 19, 2012, shareholders approved the amended and restated US Gold Equity Incentive Plan to increase the number of authorized shares from 9 million to 13.5 million (see Note 16). The fair value of the options granted under the Plan was estimated at the date of grant, using the Black-Scholes Option Valuation Model, with the following weighted-average assumptions;
|  | 2011 |  | 2010 |  | 2009
--- | --- | --- | --- | --- | --- | ---
Risk-free interest rate |  | 1.74% to 2.33% |  | 2.18% to 2.97% |  | 1.93% to 3.70%
Dividend yield |  | n/a |  | n/a |  | n/a
Volatility factor of the expected market price of common stock |  | 90% to 100% |  | 87% to 94% |  | 103% to 110%
Weighted-average expected life of option |  | 6.6 years |  | 6.4 years |  | 6.6 years
Weighted-average grant date fair value |  | $4.86 |  | $2.84 |  | $0.81
During the period ended December 31, 2011, the Company recorded stock option expense of $2.7 million (December 31, 2010—$1.6 million; December 31, 2009—$1.3 million). The following table summarizes information about stock options under the Plan outstanding at December 31, 2011:
|  | Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (Years) |  | Intrinsic Value |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands, except per share and year data) |
Balance at December 31, 2008 |  |  | 1,494 |  | $ | 3.32 |  |  | 8.2 |  |  |  |
Granted |  |  | 1,277 |  | $ | 0.91 |  |  |  |  |  |  |
Exercised |  |  | (67 | ) | $ | 2.12 |  |  |  |  | $ | 5 |
Forfeited |  |  | (72 | ) | $ | 5.22 |  |  |  |  |  |  |
Balance at December 31, 2009 |  |  | 2,632 |  | $ | 2.13 |  |  | 8.1 |  |  |  |
Granted |  |  | 726 |  | $ | 2.51 |  |  |  |  |  |  |
Exercised |  |  | (109 | ) | $ | 1.86 |  |  |  |  | $ | 225 |
Forfeited |  |  | (100 | ) | $ | 8.30 |  |  |  |  |  |  |
Expired |  |  | (63 | ) | $ | 2.71 |  |  |  |  |  |  |
Balance at December 31, 2010 |  |  | 3,086 |  | $ | 2.02 |  |  | 7.6 |  |  |  |
Granted |  |  | 947 |  | $ | 7.10 |  |  |  |  |  |  |
Exercised |  |  | (163 | ) | $ | 2.52 |  |  |  |  | $ | 864 |
Balance at December 31, 2011 |  |  | 3,870 |  | $ | 3.24 |  |  | 7.3 |  | $ | 4,520 |
Exercisable at December 31, 2011 |  |  | 2,044 |  | $ | 2.10 |  |  | 6.2 |  | $ | 3,092 |
Stock options have been granted to key employees, directors and others under the Plan. Options to purchase shares under the Plan were granted at or above market value as of the date of the grant. During 2011, the Company issued 0.2 million shares of common stock (2010—0.1 million) on the exercise of stock options under the Plan, at a weighted average exercise price of $2.52 (2010—$1.86) per share for proceeds of $0.4 million (2010—$0.2 million). During 2011, the Company also issued 0.1 million shares on the exercise of stock options assumed by the Company from the 2007 acquisitions, at a weighted average exercise price of $5.15 per share for proceeds of $0.4 million. During 2011, the Company granted stock options to certain employees for aggregate of 0.9 million (2010—0.7 million, 2009—1.3 million) shares of common stock at an exercise price of $7.10 (2010—$2.51, 2009—$0.91) per share. The options vest equally over a three year period if the employee remains affiliated with the Company (subject to acceleration of vesting in certain events) and are exercisable for a period of 10 years from the date of issue. At December 31, 2011, there was $2.3 million of unrecognized compensation cost related to 1.8 million unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 1.5 years.

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