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Stock-Based Incentive Plan
 6 Months Ended
Dec. 31, 2012
Stock-Based Incentive Plan  
Stock-Based Incentive Plan

Note 6—Stock-Based Incentive Plan

 

We may grant option awards to purchase common stock (the “Stock Options”), restricted common stock awards (“Restricted Stock”), and unrestricted fully vested common stock, to employees, directors, and consultants of the Company and its subsidiaries under the Natural Gas Systems Inc. 2003 Stock Plan (the “2003 Stock Plan”) and the Evolution Petroleum Corporation Amended and Restated 2004 Stock Plan (the “2004 Stock Plan” or together, the “EPM Stock Plans”).  Option awards for the purchase of 600,000 shares of common stock were issued under the 2003 Stock Plan.  The 2004 Stock Plan authorized the issuance of 6,500,000 shares of common stock.  No shares are available for grant under the 2003 Stock Plan and 800,914 shares remain available for grant under the 2004 Stock Plan as of December 31, 2012. We have not issued option awards since September of 2008.

 

We have also granted common stock warrants, as authorized by the Board of Directors, to employees in lieu of cash bonuses or as incentive awards to reward previous service or provide incentives to individuals to acquire a proprietary interest in the Company’s success and to remain in the service of the Company (the “Incentive Warrants”).  These Incentive Warrants have similar characteristics of the Stock Options.  A total of 1,037,500 Incentive Warrants have been issued, with Board of Directors approval, outside of the EPM Stock Plans.  We have not issued Incentive Warrants since the listing of our shares on the NYSE MKT (formerly, the American Stock Exchange) in July 2006.

 

Stock Options and Incentive Warrants

 

As of August 31, 2012, all compensation costs attributable to Stock Options and Incentive Warrants had been recognized.

 

For the three months ended December 31, and 2012 stock-based compensation expense was $- and  $59,410, respectively.  For the six months ended December 31, 2012 and 2011, such expense was $26,274 and $232,139, respectively.

 

There were no Stock Options granted during the six months ended December 31, 2012 and 2011.

 

The following summary presents information regarding outstanding Stock Options and Incentive Warrants as of December 31, 2012, and the changes during the fiscal year:

 

 

 

Number of Stock
Options
and Incentive
Warrants

 

Weighted Average
Exercise Price

 

Aggregate
Intrinsic Value
(1)

 

Weighted
Average
Remaining
Contractual
Term (in
years)

 

 

 

 

 

 

 

 

 

 

 

Stock Options and Incentive Warrants outstanding at July 1, 2012

 

5,372,820

 

$

1.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

—

 

—

 

 

 

 

 

Exercised

 

(30,000

)

$

4.10

 

 

 

 

 

Cancelled or forfeited

 

—

 

—

 

 

 

 

 

Expired

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Options and Incentive Warrants outstanding at December 31, 2012

 

5,342,820

 

$

1.82

 

$

33,707,830

 

2.9

 

 

 

 

 

 

 

 

 

 

 

Vested or expected to vest at December 31, 2012

 

5,342,820

 

$

1.82

 

$

33,707,830

 

2.9

 

 

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2012

 

5,342,820

 

$

1.82

 

$

33,707,830

 

2.9

 

 

 

(1) Based upon the difference between the market price of our common stock on the last trading date of the period ($8.13 as of December 31, 2012) and the Stock Option or Incentive Warrant exercise price of in-the-money Stock Options and Incentive Warrants.

 

There were 30,000 Stock Options exercised during the six months ended December 31, 2012 with an aggregate intrinsic value of $131,700.

 

A summary of the status of our unvested Stock Options and Incentive Warrants as of December 31, 2012 and the changes during the six months ended December 31, 2012, is presented below:

 

 

 

Number of
Stock
Options
and Incentive
Warrants

 

Weighted
Average Grant-
Date Fair Value

 

 

 

 

 

 

 

Unvested at July 1, 2012

 

18,922

 

$

2.45

 

 

 

 

 

 

 

Granted

 

—

 

—

 

 

 

 

 

 

 

Vested

 

(18,922

)

$

2.45

 

 

 

 

 

 

 

Forfeited

 

—

 

—

 

 

 

 

 

 

 

Unvested at December 31, 2012

 

—

 

$

—

 

 

During the six months ended December 31, 2012 and 2011, there were 18,922 and 109,039 Stock Options and Incentive Warrants that vested with a total grant date fair value of $46,359 and $216,987, respectively.

 

As of August 31, 2012 all compensation costs attributable to Stock Options and Incentive Warrants had been recognized.

 

Restricted Stock

 

Stock-based compensation expense related to Restricted Stock grants for the three months ended December 31, 2012 and 2011 was $393,579 and $295,461, respectively.  For the six months ended December 31, 2012 and 2011, such compensation expense was $721,095 and $539,427, respectively.

 

The following table sets forth the Restricted Stock transactions for the six months ended December 31, 2012:

 

 

 

Number of
Restricted
Shares

 

Weighted
Average
Grant-Date
Fair Value

 

 

 

 

 

 

 

Unvested at July 1, 2012

 

452,600

 

$

5.16

 

 

 

 

 

 

 

Granted

 

211,197

 

$

7.88

 

 

 

 

 

 

 

Vested

 

(154,523

)

$

5.27

 

 

 

 

 

 

 

Forfeited

 

—

 

—

 

 

 

 

 

 

 

Unvested at December 31, 2012

 

509,274

 

$

6.25

 

 

For the 211,197 shares awarded above, the grant date fair value reflects the stock’s closing price on the first trading day before the grant date.  See Note 5.   At December 31, 2012, unrecognized stock compensation expense related to Restricted Stock grants totaled $3,062,390.  Such unrecognized expense will be recognized over a weighted average period of  2.5 years.