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STOCK BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2013
STOCK BASED COMPENSATION |
STOCK BASED COMPENSATION | 6. STOCK BASED COMPENSATION Our stock based compensation programs consist of stock option and restricted stock grants made to employees and directors. 2013 Omnibus Incentive Plan In June 2013, the Company’s stockholders and Board approved the 2013 Omnibus Incentive Plan (“2013 OIP”) that governs all future share-based awards. A total of approximately 1 million shares are available to be issued under the 2013 OIP. Stock Compensation Expense Stock compensation expense for the nine months ended September 30, 2013 and 2012 was $299,000 and $374,000, respectively. Stock compensation expense is recorded as a component of general and administrative expenses for each period. The Company did not recognize a tax benefit from the stock compensation expense because the Company considers it is more likely than not that the related deferred tax assets, which have been reduced by a full valuation allowance, will not be realized. On January 16, 2013, the Company granted to a newly appointed non-employee director stock options to purchase 5,000 common shares of the Company. The fair value for this issuance was $3.30. On March 12, 2013, the Company granted 25,000 restricted shares of the Company’s common stock to the new President and Chief Executive Officer, subject to service and performance vesting criteria over a three-year period. The fair value for this issuance was $2.73. On March 12, 2013, the Company also granted to the new President and Chief Executive Officer stock options to purchase 55,000 common shares of the Company, subject to service and performance vesting criteria over a three-year period. The fair value for this issuance was $1.98. On March 12, 2013, the Company granted 25,000 restricted shares of the Company’s common stock to a former executive of the Company in connection with a separation agreement signed with the executive. The Company recognized stock compensation expense for the restricted share grants of $43,000 in the first half of 2013 in connection with this issuance. In addition, the Company extended the exercise period for certain previously issued stock options for this former executive and recognized stock compensation expense for this modification of $134,000 in the first half of 2013. On June 4, 2013, the Compensation Committee approved a grant of 100,000 shares of restricted stock units under the 2013 OIP to the President and Chief Executive Officer, subject to specific vesting criteria over a three-year period. The fair value for this issuance was $2.83. On June 4, 2013, the Board also approved a grant of a total of 100,000 restricted stock units under the 2013 OIP to the Company’s non-employee Directors, subject to specific vesting criteria over a three-year period. The fair value for this issuance was $2.83. On July 30, 2013, the Compensation Committee approved a grant of 80,000 shares of restricted stock units under the 2013 OIP to the Vice President-Finance and Chief Financial Officer, subject to specific vesting criteria over a three-year period. The fair value for this issuance was $4.50. The fair value of stock options granted to employees and directors was estimated on the dates of the grants using the Black-Sholes option pricing model with the following assumptions used for the grants made during the period:
Risk free rate | 1.40% - 2.16% |
Expected life | 5.7 — 7.8 years |
Expected volatility | 84% - 89% |
Expected dividend yield | 0.0% |
The total estimated unrecognized compensation cost from the unvested stock options and restricted grants at September 30, 2013 was approximately $1,058,000, which is expected to be recognized over the weighted average vesting period of the individual grants which range from 1-3 years. Stock Options for the Nine Months Ended September 30, 2013 The following table summarizes stock options outstanding and changes during the nine-month period ended September 30, 2013:
|  | Outstanding Options |
|  | Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value |
Options outstanding at January 1, 2013 |  | 317,270 |  | $ | 24.62 |  |  |  |  |
Granted |  | 60,000 |  | 2.85 |  |  |  |  |
Exercised |  | — |  | — |  |  |  |  |
Canceled or forfeited |  | (72,791 | ) | 25.90 |  |  |  |  |
Options outstanding at September 30, 2013 |  | 304,479 |  | $ | 20.02 |  | 4.1 |  | $ | — |
Options exercisable at September 30, 2013 |  | 226,980 |  | $ | 25.57 |  | 2.3 |  | $ | — |
Shares available for grant under the Company’s stock option plans as of September 30, 2013 were 907,914. Stock options outstanding and currently exercisable at September 30, 2013 are as follows:
|  | Outstanding Options |  | Options Exercisable |
Stock Option Plan |  | Number of Options Outstanding |  | Weighted Average Remaining Contractual Life (in years) |  | Weighted Average Exercise Price |  | Number of Options Exercisable |  | Weighted Average Exercise Price |
1995 Stock Incentive Plan |  | 145,906 |  | 0.9 |  | $ | 13.46 |  | 145,906 |  | $ | 13.46 |
2004 Stock Incentive Plan |  | 85,241 |  | 7.8 |  | 13.92 |  | 29,408 |  | 34.74 |
2004 Director’s Plan |  | 73,332 |  | 6.1 |  | 40.19 |  | 51,666 |  | 54.57 |
|  | 304,479 |  | 4.1 |  | $ | 20.02 |  | 226,980 |  | $ | 25.57 |

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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 Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: 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 6: 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 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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