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Stock Option Plans
 9 Months Ended
Sep. 30, 2012
Stock Option Plans [Abstract]  
Stock Option Plans
Note 6:
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.
 
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 nine month period ended September 30, 2012 is as follows:
 

Stock Option Activity under the Plans
Stock Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Life (Years)
 
Outstanding at December 31, 2011
4,129,749
$
5.09
6.38
 
Granted
1,203,452
3.81
 
Expired
(400,000
)
4.95
 
Forfeited
(99,148
)
4.98
 
Outstanding at September 30, 2012
4,834,053
4.78
7.11
 

For the three and nine months ended September 30, 2012, the Company recognized compensation expense of approximately $0.3 million and $1.1 million, respectively, relating to options granted in previous years and $0.5 million and $1.0 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:
 
 
Nine Months ended September 30,
2012
2011
Dividend yield
None
None
Expected volatility
77.37% - 84.47%
72.16% - 75.35%
Weighted average volatility
79.87%
73.62%
Risk-free interest rates
0.78% - 1.49%
1.45% - 3.11%
Expected life (in years)
6.0
5.0 - 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 nine month period ended September 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
428,920
2.84
Vested
(91,910
)
5.85
Forfeited
(15,431
)
4.19
Non-vested at September 30, 2012
515,111
3.38

For the three and nine months ended September 30, 2012, the Company recognized compensation expense of $0.1 million and $0.4 million, respectively, relating to restricted stock granted in previous years. For the three and nine months ended September 30, 2012, the Company recognized approximately $0.2 million and $0.4 million, respectively, relating to restricted stock granted during 2012.