XML 40 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stock Option Plans
 6 Months Ended
Jun. 30, 2012
Stock Option Plans [Abstract]  
Stock Option Plans
Note 5:
Stock Option Plans
 
The Company established the 2004 Stock Incentive Plan and the 2009 Stock Incentive Plan (collectively, the "Plans") under which 3,000,000, and 6,500,000 shares, respectively, were reserved for the issuance of stock options, stock appreciation rights, restricted stock, stock grants and other equity awards. In May 2012, the total number of shares of Delcath common stock reserved for issuance under the 2009 Stock Incentive Plan was increased by 2,300,000 shares, from 4,200,000 to 6,500,000 upon a favorable vote by the Company's stockholders. A stock option grant allows the holder of the option to purchase a share of the Company's common stock in the future at a stated price. The Plans are administered by the Compensation and Stock Option Committee of the board of directors which determines the individuals to whom awards shall be granted as well as the type, terms and conditions of each award, the option price and the duration of each award.
 
During 2004 and 2009, respectively, the 2004 and 2009 Stock Incentive Plans became effective. Options granted under the Plans vest as determined by the Company's Compensation and Stock Option Committee and expire over varying terms, but not more than ten years from the date of grant. Stock option activity for the six month period ended June 30, 2012 is as follows:

 
Stock Option Activity under the Plans
 
 
Stock Options
 
 
Exercise
Price per
Share
 
 
Weighted
Average
Exercise Price
 
 
Weighted
Average
Remaining
Life (Years)
 
Outstanding at December 31, 2011
 
 
4,129,749
 
 
$1.23-$15.54
 
 
$
5.09
 
 
 
6.38
 
Granted
 
 
1,088,280
 
 
$1.43 - $4.60
 
 
 
3.99
 
 
 
 
 
Expired
 
 
(400,000
)
 
$3.90 - $5.85
 
 
 
4.95
 
 
 
 
 
Forfeited
 
 
(84,320
)
 
$2.26 - $9.18
 
 
 
4.75
 
 
 
 
 
Outstanding at June 30, 2012
 
 
4,733,709
 
 
$1.23-$15.54
 
 
$
4.86
 
 
 
7.20
 

For the three and six months ended June 30, 2012, the Company recognized compensation expense of approximately $0.3 million and $0.8 million, respectively, relating to options granted in previous years and $0.4 million and $0.6 million, respectively, relating to options granted during 2012.
 
The Company uses an option pricing model to determine the fair value of stock options awarded to employees on the date of grant. The Company has expensed its stock-based compensation for share-based payments granted under the ratable method, which treats each vesting tranche as if it were an individual grant.
 
The Company accounts for stock-based compensation expense for non-employees using the fair-value method which requires the award to be re-measured at each reporting date until the award is vested. The Company estimates the fair value using an option pricing model. The Company has expensed its share-based compensation for non-employees under the ratable method.
 
The assumptions used in the option pricing model to determine the fair value of stock options awarded to employees are as follows:
 
 
Six Months Ended June 30,
 
 
2012
 
 
2011
 
Dividend yield
 
None
 
 
None
 
Expected volatility
 
77.37% - 80.3%
 
 
73.90% - 79.11%
 
Weighted average volatility
 
78.91%
 
 
74.40%
 
Risk-free interest rates
 
0.78% - 1.49%
 
 
1.9% - 2.54%
 
Expected life (in years)
 
6.0
 
 
6.0
 
 

 
No dividend yield was assumed because the Company has never paid a cash dividend on its common stock. Volatilities were developed using the Company's historical volatility.  The risk-free interest rate was developed using the U.S. Treasury yield for periods equal to the expected life of the stock options on the grant date. The expected holding period was developed based on the mid-point between the vesting date and the expiration date of each respective grant as permitted under FASB ASC 718. This method of determining the expected holding period was utilized because the Company does not have sufficient historical experience from which to estimate the period.

Restricted stock activity for the six month period ended June 30, 2012 is as follows:

 
Restricted Stock Activity
 
 
Restricted Stock
 
 
Weighted
Average Grant
Date Fair Value
 
Non-vested at December 31, 2011
 
 
193,532
 
 
 
5.84
 
Granted
 
 
427,970
 
 
 
1.54
 
Vested
 
 
(79,843
)
 
 
6.14
 
Forfeited
 
 
(13,786
)
 
 
4.15
 
Outstanding at June 30, 2012
 
 
527,873
 
 
 
3.40
 

For the three and six months ended June 30, 2012, the Company recognized compensation expense of $0.1 million and $0.3 million, respectively, relating to restricted stock granted in previous years. For the three and six months ended June 30, 2012, the Company recognized approximately $0.1 million and $0.2 million, respectively, relating to restricted stock granted during 2012.