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Stock-Based Compensation and Stock Options | 12 Months Ended
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Dec. 31, 2019
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation and Stock Options | Stock-Based Compensation and Stock Options The Company accounts for its employee stock options under the fair value method, which requires stock-based compensation to be estimated using the fair value on the date of grant using an option-pricing model. The value of the portion of the award that is expected to vest is recognized on a straight-line basis as expense over the related employees’ requisite service periods in the Company’s consolidated statements of income. In January 2012, the Company granted certain executives stock options to purchase 100,000 shares of common stock with an exercise price of $28.98, of which 25,000 options vest and become exercisable annually starting on January 23, 2013. The options expire in January 2022. During 2014, 25,000 options were canceled and 25,000 options were forfeited upon the departure of an executive. During 2019, the remaining 50,000 options were canceled upon the departure of an executive. Stock-based compensation related to these options was fully expensed. In September 2015, the Company granted an executive stock options to purchase 400,000 shares of common stock with an exercise price of $8.07, of which 50,000 options became exercisable quarterly starting March 31, 2016. The options expire in September 2025. As of December 31, 2019, 400,000 options were vested and outstanding. In March 2016, the Company granted certain executives stock options to purchase 150,000 shares of common stock with an exercise price of $8.55, of which 37,500 options vest and become exercisable annually starting on March 7, 2017. The options expire in March 2026. In 2017, 37,500 options were forfeited and 12,500 options were canceled upon the departure of an executive and the compensation expense of $19,000 was reversed. In 2018, 50,000 options were forfeited upon the departure of an executive and the compensation expense of $59,000 was reversed. During 2019, the remaining 50,000 options were net exercised for 4,000 shares of common stock. In October 2017, the Company granted an executive stock options to purchase 400,000 shares of common stock with an exercise price of $6.95, of which 50,000 shares are exercisable quarterly starting March 31, 2018 and ending on December 31, 2019. The options expire in October 2027. During 2019, 250,000 options were exercised. As of December 31, 2019, 150,000 options were vested and outstanding. Total stock-based compensation related to these option grants was $573,000 for 2019. Stock-based compensation related to these options was fully expensed as of December 31, 2019. In April 2018, the Company granted an employee stock options to purchase 50,000 shares of common stock with an exercise price of $10.50. The options vest in twelve equal installments. The first installment vested on April 26, 2018, and the remaining eleven installments vest from June 30, 2018 to December 31, 2020. During 2019, the Company recognized $34,000 stock-based compensation and canceled the 50,000 options upon the departure of the employee. In May 2018, the Company granted an employee options to purchase 50,000 shares of common stock with an exercise price of $14.70, of which 12,500 options will vest and become exercisable annually starting on May 2019. As of December 31, 2019 , 50,000 options were outstanding and 12,500 of these options was vested. As of December 31, 2019, there was approximately $213,000 of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over 2.4 years. In June 2018, the Company granted a nonemployee consultant options to purchase 100,000 shares of common stock with an exercise price of $17.75, of which 20,000 options vested and became exercisable on June 8, 2018, 30,000 shares vest no later than July 31, 2018 if certain performance targets were met, and 50,000 shares vest no later than June 30, 2019 if certain performance targets are met. The Company used the contractual life when determining the value of this option. The performance targets for the 30,000 share options were not met by July 31, 2018 and the nonemployee consultant ceased to provide services to the Company. As a result, 80,000 unvested shares of options were forfeited and 20,000 vested options were canceled in 2018. In June 2018, the Company granted an employee options to purchase 50,000 shares of common stock with an exercise price of $16.65, of which 12,500 options will vest and become exercisable annually starting on June 2019. As of December 31, 2019, 50,000 options were outstanding and 12,500 of these options was vested. As of December 31, 2019, there was approximately $206,000 of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over 2.5 years. In May 2019, the Company granted an employee options to purchase 100,000 shares of common stock with an exercise price of $19.28, of which 10,000 options vested and became exercisable in May 2019, 15,000 options vested and become exercisable in September 2019, and the remaining 75,000 will vest in three equal installments starting on May 20, 2021 and ending on May 20, 2023. As of December 31, 2019, 100,000 options were outstanding and 25,000 of these options were vested. As of December 31, 2019, there was approximately $420,000 of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over 3.4 years. The Company recorded $993,000 and $915,000 of stock-based compensation in general and administrative expenses for fiscal years 2019 and 2018, respectively. The Company utilized the Black-Scholes option pricing model to value the stock options. The Company used an expected life as defined under the simplified method, which is using an average of the contractual term and vesting period of the stock options. The risk-free interest rate used for the award is based on the U.S. Treasury yield curve in effect at the time of grant. The Company accounted for forfeitures as they occur. The historical volatility was calculated based upon implied volatility of the Company's historical stock prices. The fair value of 2019 and 2018 stock options was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
| 2019 |  | 2018
Weighted-average fair value of options granted per share | $ | 8.78 |  |  | $ | 6.63 |
Historical volatility | 60 | % |  | 46 | %
Risk-free interest rate | 2.10 | % |  | 2.84 | %
Dividend yield | — |  |  | — |
Expected life in years | 3.6 |  |  | 5.7 |
As of December 31, 2019, there was approximately $419,000 of unrecognized stock-based compensation expense related to outstanding 2019 stock options, expected to be recognized over 3.4 and approximately $418,000 of unrecognized stock-based compensation expense related to outstanding 2018 stock options, expected to be recognized over 2.4 years. There was no unrecognized stock-based compensation expense relating stock options granted prior to 2018. Option activities during the years ended December 31, 2018 and 2019 were as follows:
| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life |  | Aggregate Intrinsic Value
|  |  |  |  |  |  | (In thousands)
Outstanding at January 1, 2018 | 950,000 |  |  | $ | 8.75 |  |  | 8.48 years |  |
Option Granted | 250,000 |  |  | $ | 15.47 |  |  |  |  |
Options forfeited and canceled | (150,000 | ) |  | $ | 14.68 |  |  |  |  |
Outstanding at December 31, 2018 | 1,050,000 |  |  | $ | 9.50 |  |  | 7.53 years |  |
Option Granted | 100,000 |  |  | $ | 19.28 |  |  |  |  |
Exercised options | (300,000 | ) |  | $ | 7.22 |  |  |  |  |
Options forfeited and canceled | (100,000 | ) |  | $ | 19.74 |  |  |  |  |
Outstanding at December 31, 2019 | 750,000 |  |  | $ | 10.35 |  |  | 6.01 years |  | $ | 1,615 |
Exercisable and fully vested at December 31, 2019 | 600,000 |  |  | $ | 8.57 |  |  | 6.22 years |  | $ | 1,615 |
Outstanding at December 31, 2019 and expected to vest thereafter | 150,000 |  |  | $ | 17.48 |  |  | 5.15 years |  | $ | — |
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of years ended December 31, 2019 and 2018 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2019 and 2018. This amount changes based on the fair value of the Company’s stock. The Company’s policy is to issue shares from the authorized shares to fulfill stock option exercises. Outstanding options at December 31, 2019 were as follows:
Exercise Price |  | Options Outstanding |  | Options Outstanding Weighted-Average Remaining Contractual Life |  | Weighted-Average Exercise Price |  | Options Outstanding and Exercisable |  | Options Exercisable Weighted-Average Remaining Contractual Life
$ | 8.07 |  |  | 400,000 |  |  | 5.75 years |  | $ | 8.07 |  |  | 400,000 |  |  | 5.75 years
$ | 6.95 |  |  | 150,000 |  |  | 7.84 years |  | $ | 6.95 |  |  | 150,000 |  |  | 7.84 years
$ | 14.70 |  |  | 50,000 |  |  | 8.37 years |  | $ | 14.70 |  |  | 12,500 |  |  | 8.37 years
$ | 16.65 |  |  | 50,000 |  |  | 3.47 years |  | $ | 16.65 |  |  | 12,500 |  |  | 3.47 years
$ | 19.28 |  |  | 100,000 |  |  | 4.39 years |  | $ | 19.28 |  |  | 25,000 |  |  | 4.39 years
|  | 750,000 |  |  |  |  |  |  | 600,000 |  |  |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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