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Employee Stock Compensation Plans
 12 Months Ended
Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Employee Stock Compensation Plans

9. Employee stock compensation plans:

 

a.)     The 2006 Plan

 

          On June 27, 2006, Solitario's shareholders approved the 2006 Stock Option Incentive Plan (the "2006 Plan"). Under the terms of the 2006 Plan, the Board of Directors may grant up to 2,800,000 options to Directors, officers and employees with exercise prices equal to the market price of Solitario's common stock at the date of grant.

 

          Solitario accounts for its stock options under the provisions of ASC 718 “Compensation – Stock Compensation.” Pursuant to ASC 718, as of January 1, 2011, Solitario classifies its stock options as equity options in accordance with ASU 2010-13. Previously, Solitario had classified its stock options as liabilities as they are priced in Canadian dollars and Solitario’s functional currency is United States dollars and Solitario’s common stock trades on both the NYSE MKT and the Toronto Stock Exchange (“TSX”). Prior to January 1, 2011, Solitario recorded a liability for the fair value of the vested portion of outstanding options based upon a Black-Scholes option pricing model.

 

          During the year ended December 31, 2011, options for 150,600 shares were exercised at prices between Cdn$1.55 and Cdn$2.40 per share for cash proceeds of $247,000. During 2012 there were no shares exercised from the 2006 Plan. There were no options forfeited during 2012 or 2011.

 

b.)     Stock option compensation

 

          Solitario’s outstanding options on the date of grant have a five-year term, and vest 25% on date of grant and 25% on each of the next three anniversary dates. Solitario recognizes stock option compensation expense on the date of grant for 25% of the grant date fair value, and subsequently, based upon a straight line amortization of the unvested grant date fair value of each of its outstanding options. The following table shows the grant date fair value of Solitario’s options grants as of the date of grant.

 

Grant date fair value

Grant Date 12/16/12 5/5/10 5/19/09
Option – grant date price (Cdn$) $1.49 $2.40 $1.55
Options outstanding 165,000 2,065,000 519,000
Expected life yrs. 5.0 5.0 5.0
Expected volatility 68% 56% 56%
Risk free interest rate 0.7% 2.2% 1.9%
Weighted average fair value $0.84 $1.19 $0.65
Grant date fair value $139,000 $2,449,000 $339,000

 

          Solitario recorded $732,000 and $697,000, respectively, of stock option expense during 2012 and 2011 included in general and administrative expense, for the amortization of grant date fair value with a credit to additional paid-in capital.

 

c.)     Stock option activity

 

          The following table summarizes the activity for stock options outstanding under the 2006 Plan as of December 31, 2012, with exercise prices equal to the stock price, as defined, on the date of grant and no restrictions on exercisability after vesting:

 

          The activity in the 2006 Plan for the years ended December 31, 2012 and 2011 is as follows:

  2012 2011
    Weighted     Weighted  
    Average Aggregate   Average Aggregate
    Exercise intrinsic   Exercise intrinsic
  Options Price (Cdn$) value(1) Options Price (Cdn)$ Value(1)
2006 Plan            
Outstanding, beginning of year 2,433,400 $2.27   2,584,000 $2.23  
Granted 165,000 $1.49   -      
Exercised -   -     (150,600) $1.60  
Cancelled -   -     -   -    
Forfeited -   -     -   -    
Outstanding, end of year 2,598,400 $2.22 $1,650 2,433,400 $2.27 $-  
Exercisable, end of year 1,958,400 $2.22 $   413 1,271,150 $2.24 $-  

 

(1)The intrinsic value at December 31, 2012 and 2011 based upon the quoted market price of Cdn $1.50 and Cdn $1.36, respectively, per share for our common stock on the TSX and an exchange ratio of 1.0312 and 0.9804, respectively, Canadian dollars per United States dollar.