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STOCK-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2016
STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION | 18 - STOCK-BASED COMPENSATION On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. As a result, all share and per share information included for all periods presented in these condensed consolidated financial statements reflect the reverse stock split. On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company. In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016. Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos is to receive an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consist of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90. The Company is currently evaluating the effect on its consolidated financial statements during the three months ended December 31, 2016. 2014 Management Incentive Plan On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 9,668,061 shares of Common Stock were available for award under the MIP prior to the Company’s reverse stock split, which is equivalent to approximately 966,806 shares on a post-split basis. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values. The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence Common Stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) may grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction. On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 2,380,664, 2,467,009 and 3,709,788 shares. Following the Company’s reverse stock split, these MIP warrants are exercisable for approximately 238,066, 246,701, and 370,979 shares and have exercise prices of $259.10 (the “$259.10 Warrants”), $287.30 (the “$287.30 Warrants”) and $341.90 (the “$341.90 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $259.10 Warrants, $6.63 for the $287.30 Warrants and $5.63 for the $341.90 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six -year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%. The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vest 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company. For the three and nine months ended September 30, 2016 and 2015, the Company recognized amortization expense of the fair value of these warrants, which is included in the Company’s Condensed Consolidated Statements of Operations as a component of General, administrative and management fees, as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
General, administrative and management fees |  | $ | 2,442 |  | $ | 5,646 |  | $ | 9,973 |  | $ | 22,134 |
Amortization of the unamortized stock-based compensation balance of $5,132 as of September 30, 2016 is expected to be expensed $1,523 and $3,609 during the remainder of 2016 and during the year ending December 31, 2017, respectively. The following table summarizes the warrant activity for the nine months ended September 30, 2016:
|  |  |  | Weighted |  | Weighted |
|  | Number of |  | Average Exercise |  | Average Fair |
|  | Warrants |  | Price |  | Value |
Outstanding at January 1, 2016 |  | 5,704,974 |  | $ | 303.12 |  | $ | 6.36 |
Granted |  | — |  |  | — |  |  | — |
Exercisable |  | (2,852,487) |  |  | 303.12 |  |  | 6.36 |
Exercised |  | — |  |  | — |  |  | — |
Forfeited |  | — |  |  | — |  |  | — |
Outstanding at September 30, 2016 |  | 2,852,487 |  | $ | 303.12 |  | $ | 6.36 |
The following table summarizes certain information about the warrants outstanding as of September 30, 2016:
|  |  | Warrants Outstanding, |  | Warrants Exercisable, |
|  |  | September 30, 2016 |  | September 30, 2016 |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  | Weighted |
|  |  |  |  | Weighted |  | Average |  |  |  | Weighted |  | Average |
Weighted |  |  |  | Average |  | Remaining |  |  |  | Average |  | Remaining |
Average |  | Number of |  | Exercise |  | Contractual |  | Number of |  | Exercise |  | Contractual |
Exercise Price |  | Warrants |  | Price |  | Life |  | Warrants |  | Price |  | Life |
$ | 303.12 |  | 2,852,487 |  | $ | 303.12 |  | 3.86 |  | 5,704,974 |  | $ | 303.12 |  | 3.86 |
The nonvested stock awards granted under the MIP will vest ratably on each of the three anniversaries of August 7, 2014. The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2016 which were issued under the MIP:
|  |  |  | Weighted |
|  | Number of |  | Average Grant |
|  | Shares |  | Date Price |
Outstanding at January 1, 2016 |  | 74,040 |  | $ | 200.00 |
Granted |  | — |  |  | — |
Vested |  | (37,020) |  |  | 200.00 |
Forfeited |  | — |  |  | — |
Outstanding at September 30, 2016 |  | 37,020 |  | $ | 200.00 |
The total fair value of MIP restricted shares that vested during the nine months ended September 30, 2016 and 2015 was $190 and $2,662, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the MIP restricted shares, which is included in General, administrative and management fees, as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
General, administrative and management fees |  | $ | 996 |  | $ | 2,304 |  | $ | 4,069 |  | $ | 9,031 |
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $2,094 related to nonvested stock will be recognized over a weighted-average period of 0.85 years. 2015 Equity Incentive Plan On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 4,000,000 shares of common stock, or 400,000 shares following the Company’s reverse stock split (the “2015 Plan”). Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants. Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock. As of September 30, 2016, the Company has awarded restricted stock units and restricted stock under the 2015 Plan. Restricted Stock Units The Company has issued restricted stock units (“RSUs”) under the 2015 Plan to certain members of the Board of Directors, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. The RSUs generally vest on the date of the Company’s annual shareholders meeting following the date of the grant. As of September 30, 2016 and December 31, 2015, 3,138 and 0 shares, respectively, of the Company’s common stock were outstanding in respect of the RSUs. Such shares will only be issued in respect of vested RSUs when the director’s service with the Company as a director terminates. The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. The table below summarizes the Company’s RSUs for the nine months ended September 30, 2016:
|  |  |  | Weighted |
|  | Number of |  | Average Grant |
|  | RSUs |  | Date Price |
Outstanding at January 1, 2016 |  | 5,821 |  | $ | 71.50 |
Granted |  | 66,666 |  |  | 5.10 |
Vested |  | (5,821) |  |  | 71.50 |
Forfeited |  | — |  |  | — |
Outstanding at September 30, 2016 |  | 66,666 |  | $ | 5.10 |
The total fair value of the RSUs that vested during the nine months ended September 30, 2016 and 2015 was $30 and $116, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. On February 17, 2016, the vesting of 23,286 outstanding RSUs, or 2,328 outstanding RSUs on a post-reverse stock split basis, were accelerated upon the resignation of two members on the Company’s Board of Directors. The following table summarizes certain information of the RSUs unvested and vested as of September 30, 2016:
Unvested RSUs |  | Vested RSUs |
September 30, 2016 |  | September 30, 2016 |
|  |  |  | Weighted |  |  |  |  |
|  | Weighted |  | Average |  |  |  | Weighted |
|  | Average |  | Remaining |  |  |  | Average |
Number of |  | Grant Date |  | Contractual |  | Number of |  | Grant Date |
RSUs |  | Price |  | Life |  | RSUs |  | Price |
66,666 |  | $ | 5.10 |  | 0.63 |  | 7,440 |  | $ | 71.18 |
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $213 related to RSUs will be recognized over a weighted-average period of 0.63 years. For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General, administrative and management fees as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
General, administrative and management fees |  | $ | 86 |  | $ | 235 |  | $ | 320 |  | $ | 235 |
Restricted Stock Under the 2015 Plan, grants of restricted common stock issued to executives and Peter C. Georgiopoulos, the Company’s former Chairman of the Board, vest ratably on each of the three anniversaries of the determined vesting date. The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2016 which were issued under the 2015 Plan:
|  |  |  | Weighted |
|  | Number of |  | Average Grant |
|  | Shares |  | Date Price |
Outstanding at January 1,2016 |  | — |  | $ | — |
Granted |  | 61,224 |  |  | 5.20 |
Vested |  | — |  |  | — |
Forfeited |  | — |  |  | — |
Outstanding at September 30, 2016 |  | 61,224 |  | $ | 5.20 |
There were no shares that vested under the 2015 Plan during the nine months ended September 30, 2016 and 2015. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General, administrative and management fees, as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
General, administrative and management fees |  | $ | 60 |  | $ | — |  | $ | 150 |  | $ | — |
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $168 related to nonvested stock will be recognized over a weighted-average period of 2.13 years. Baltic Trading Limited On March 13, 2014, Baltic Trading’s Board of Directors approved an amendment to the Baltic Trading Limited 2010 Equity Incentive Plan (the “Baltic Trading Plan”) that increased the aggregate number of shares of common stock available for awards from 2,000,000 to 6,000,000 shares. Additionally, on April 9, 2014, at Baltic Trading’s 2014 Annual Meeting of Shareholders, Baltic Trading’s shareholders approved the amendment to the Baltic Trading Plan. When the Merger was completed on July 17, 2015, the 1,941,844 nonvested shares issued under the Baltic Trading Plan vested automatically and received the same consideration in the Merger as holders of Baltic Trading’s common stock. Refer to Note 1 — General Information for further information regarding the Merger. The total fair value of shares that vested under the Baltic Trading Plan during the nine months ended September 30, 2015 was $2,913. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the Baltic Trading Plan, which is included in General, administrative and management fees, as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
General, administrative and management fees |  | $ | — |  | $ | 3,665 |  | $ | — |  | $ | 5,273 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51659978&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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