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Stock-Based Compensation

12 Months Ended

Dec. 31, 2015

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 10—Stock-Based Compensation

Stock-Based Compensation Plan

The Company’s 2011 Stock Option and Incentive Plan is intended to provide incentives to executives, employees, directors and consultants of the Company. Incentives available under the 2011 Stock Option and Incentive Plan may include stock options, stock appreciation rights, limited rights, deferred stock units, and restricted stock. The plan is administered by the Compensation Committee of the Company’s Board of Directors. On May 5, 2015, the Company’s stockholders approved an amendment and restatement to the Company’s 2011 Stock Option and Incentive Plan that increased the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional 180,000 shares. At December 31, 2015, the Company had 1.3 million shares of Class B common stock reserved for award under its 2011 Stock Option and Incentive Plan and 0.2 million shares were available for future grants.

Restricted Stock

The fair value of restricted shares of the Company’s Class B common stock is determined based on the closing price of the Company’s Class B common stock on the grant date. Share awards generally vest on a graded basis over three years of service following the grant.

A summary of the status of the Company’s grants of restricted shares of Class B common stock is presented below:

		Number of Non- vested Shares (in thousands)			Weighted- Average Grant Date Fair Value
Non-vested shares at December 31, 2014		73			$	9.83
Granted		38				9.95
Vested		(57	)			8.18
Forfeited		(2	)			10.01
NON-VESTED SHARES AT DECEMBER 31, 2015		52			$	11.72

At December 31, 2015, there was $9.0 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, including $8.5 million relating to the shares purchased by Howard S. Jonas (see Note 9). The total unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.6 years. The total grant date fair value of shares vested in the years ended December 31, 2015, 2014 and 2013 was $0.5 million, $2.5 million and $3.3 million, respectively. The Company recognized compensation cost related to the vesting of the restricted stock of $3.6 million, $6.6 million, and $2.0 million in the years ended December 31, 2015, 2014, and 2013, respectively. The compensation cost related to the vesting of the restricted stock included $2.8 million and $5.7 million relating to the shares purchased by Howard S. Jonas in the years ended December 31, 2015 and 2014, respectively.

Effective December 12, 2013, the Company issued 63,917 restricted shares of its Class B common stock to the President of the Company. The restricted shares vest in three years that began in January 2014. The fair value of the restricted shares on the date of the grant was $0.7 million, which is being recognized on a straight-line basis over the vesting period.

Effective January 6, 2014, the Company issued 29,126 restricted shares of its Class B common stock to Michael Stein, Executive Vice President of the Company, and son-in-law of Howard S. Jonas. The restricted shares vest in three equal annual installments commencing on January 5, 2015. The fair value of the restricted shares on the date of the grant was $0.3 million, which is being recognized on a straight-line basis over the vesting period.

Stock Options

Option awards are generally granted with an exercise price equal to the market price of the Company’s stock on the date of grant. Option awards generally vest on a graded basis over three years of service and have ten-year contractual terms. Expected volatility is based on historical volatility of the Company’s Class B common stock and other factors. The Company uses historical data on exercise of stock options, post vesting forfeitures and other factors to estimate the expected term of the stock-based payments granted. The risk free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of stock options was estimated on the date of the grant using a Black-Scholes valuation model and the assumptions in the following table. No option awards were granted in the year ended December 31, 2014.

		Year ended December 31,
		2015			2013
ASSUMPTIONS
Average risk-free interest rate		0.93	%		2.07	%
Expected dividend yield		—			—
Expected volatility		61.0	%		65.6	%
Expected term		5.5 years			6.5 years

A summary of stock option activity for the Company is as follows:

		Number of Options (in thousands)			Weighted- Average Exercise Price			Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2014		438			$	6.85		6.3		$	—
Granted		6				0.01
Exercised		(25	)			6.85
Cancelled / Forfeited		(5	)			6.85
OUTSTANDING AT DECEMBER 31, 2015		414			$	6.74		5.6		$	1,825
EXERCISABLE AT DECEMBER 31, 2015		268			$	6.80		5.4		$	1,167

The weighted-average grant date fair value of options granted by the Company during the years ended December 31, 2015 and 2013 was $9.67 and $6.42, respectively. The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $12,000, $12,000 and $29,000, respectively. At December 31, 2015, there was $0.8 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 1.9 years. The Company recognized compensation cost related to the vesting of the options of $0.3 million, $2.5 million and $0.4 million in the years ended December 31, 2015, 2014 and 2013, respectively.

Grants of Equity of Subsidiaries

On May 5, 2015, the Compensation Committee of the Company’s Board of Directors approved the grant of deferred stock units in GRE to certain of the Company’s officers and employees. Howard S. Jonas was granted deferred stock units representing 2.8% of the outstanding equity in GRE, Avi Goldin, the Company’s Chief Financial Officer and Executive Vice President - Finance was granted deferred stock units representing 0.2% of the outstanding equity in GRE, Michael Stein, the Company’s Executive Vice President and the Chief Executive Officer and a Director of GRE was granted deferred stock units representing 0.3% of the outstanding equity in GRE, and other employees were granted deferred stock units representing an aggregate of 0.6% of the outstanding equity in GRE. The deferred stock units vest in equal amounts on the first, second and third anniversaries of the date of grant. The fair value of the GRE deferred stock units on the date of grant was $3.3 million, which is being recognized on a straight-line basis over the vesting period. At December 31, 2015, the unrecognized compensation cost relating to these grants was $2.7 million, which is expected to be recognized over a weighted-average period of 1.4 years. The Company recognized aggregate compensation cost related to the vesting of the GRE deferred stock units and other subsidiary equity interests that were granted in prior years of $1.4 million, $1.6 million and $1.8 million in the years ended December 31, 2015, 2014 and 2013, respectively.

In 2014 and 2013, the Company elected to exchange vested deferred stock units of IDT Energy previously granted to employees and directors of the Company for shares of the Company’s Class B common stock upon the vesting of the deferred stock units based on the relative fair value of the shares exchanged. Accordingly, in August 2014 and 2013, the Company issued 137,738 and 133,758 shares of the Company’s Class B common stock in exchange for 23.6 and 23.6 vested deferred stock units of IDT Energy, respectively. In August 2015, the Company elected to pay cash of $1.2 million for the remaining 23.6 deferred stock units of IDT Energy that vested in June and July 2015 based on the estimated fair value of the deferred stock units of IDT Energy.