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Share-Based Compensation | 6 Months Ended
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Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-Based Compensation | 12. SHARE-BASED COMPENSATION On April 11, 2014, HC2’s Board of Directors adopted the HC2 Holdings, Inc. 2014 Omnibus Equity Award Plan (the “Omnibus Plan”), which was approved by our stockholders at the annual meeting of stockholders held on June 12, 2014. The Omnibus Plan provides that no further awards will be granted pursuant to HC2’s Management Compensation Plan, as amended (the “Prior Plan”). However, awards that had been previously granted pursuant to the Prior Plan will continue to be subject to and governed by the terms of the Prior Plan. As of June 30, 2014, there were 472,002 shares of HC2 common stock underlying such outstanding awards. The Compensation Committee (the “Committee”) of the Board of Directors of HC2 administers HC2’s Omnibus Plan and the Prior Plan and has broad authority to administer, construe and interpret the plans. The Management Compensation Plan provides for the grant of awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock based awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing (collectively, “awards”). HC2 typically issues new shares of common stock upon the exercise of stock options, as opposed to using treasury shares. The Omnibus Plan authorizes the issuance of up to 5,000,000 shares of HC2 common stock, subject to adjustment as provided in the Omnibus Plan. The Company follows guidance which addresses the accounting for share-based payment transactions whereby an entity receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The guidance generally requires that such transactions be accounted for using a fair-value based method and share-based compensation expense be recorded, based on the grant date fair value, estimated in accordance with the guidance, for all new and unvested stock awards that are ultimately expected to vest as the requisite service is rendered. There were 1,577,385 and 40,000 options granted during the six months ended June 30, 2014 and 2013, respectively. Of the 1,577,385 options granted during the six months ended June 30, 2014, 1,568,864 of such options were granted to Philip Falcone on May 21, 2014, in connection with his appointment as Chairman, President and Chief Executive Officer of HC2. These options were issued pursuant to a standalone option agreement with Mr. Falcone and not pursuant to the Omnibus Plan. The weighted average fair value at date of grant for options granted during the six months ended June 30, 2014 was $1.39 per option. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions shown as a weighted average for the year:
|  | Six Months Ended June 30,
|  | 2014 |  | 2013
Expected option life |  | 6 years |  | 5.75 years
Risk-free interest rate |  | 2.31% – 2.73% |  | 1.32%
Expected volatility |  | 36.74% – 37.20% |  | 35.55%
Dividend yield |  | 0% |  | 0%
Total share-based compensation expense recognized by the Company during the three months ended June 30, 2014 and 2013 was $0.8 million and $1.0 million, respectively. Total share-based compensation expense recognized by the Company during the six months ended June 30, 2014 and 2013 was $1.0 million and $1.5 million, respectively. Most of HC2’s stock awards vest ratably during the vesting period. The Company recognizes compensation expense for equity awards, reduced by estimated forfeitures, using the straight-line basis. Restricted Stock Units (RSUs) A summary of HC2’s RSU activity during the six months ended June 30, 2014 is as follows:
|  | Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested – December 31, 2013 |  |  | 22,500 |  |  | $ | 13.59 |
Granted |  |  | 4,261 |  |  | $ | 3.60 |
Vested |  |  | (20,000 | ) |  | $ | 13.82 |
Forfeitures |  |  | — |  |  | $ | — |
Unvested – June 30, 2014 |  |  | 6,761 |  |  | $ | 6.67 |
As of June 30, 2014, the unvested RSUs represented $40,000 of compensation expense that is expected to be recognized over the weighted average remaining vesting period of 1.1 years. The number of unvested RSUs expected to vest is 6,761. Stock Options A summary of HC2’s stock option activity during the six months ended June 30, 2014 is as follows:
|  | Shares |  |  | Weighted Average Exercise Price |
Outstanding – December 31, 2013 |  |  | 589,859 |  |  | $ | 3.17 |
Granted |  |  | 1,577,385 |  |  | $ | 4.55 |
Exercised |  |  | (230,300 | ) |  | $ | 2.43 |
Forfeitures |  |  | (229,901 | ) |  | $ | 4.47 |
Outstanding – June 30, 2014 |  |  | 1,707,043 |  |  | $ | 4.47 |
Eligible for exercise |  |  | 644,799 |  |  | $ | 4.33 |
The following table summarizes the intrinsic values and remaining contractual terms of HC2’s stock options:
|  | Intrinsic Value |  |  | Weighted Average Remaining Life in Years |
Options outstanding – June 30, 2014 |  | $ | 82,973 |  |  |  | 9.7 |
Options exercisable – June 30, 2014 |  | $ | 77,887 |  |  |  | 9.5 |
During the six months ended June 30, 2014, the intrinsic value of the exercised options was $0.3 million. As of June 30, 2014, the Company had 1,062,244 unvested stock options outstanding of which $1.5 million of compensation expense is expected to be recognized over the weighted average remaining vesting period of 1.9 years. The number of unvested stock options expected to vest is 1,062,244 shares, with a weighted average remaining life of 9.9 years, a weighted average exercise price of $4.55, and an intrinsic value that was immaterial.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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