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STOCK BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2013
STOCK BASED COMPENSATION |
STOCK BASED COMPENSATION | 8. 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. As of December 31, 2013, a total of 1,045,721 shares are available for future issuances. Stock Compensation Expense Employee Stock Options and Restricted Stock Units Stock compensation expense for the year ended December 31, 2013 and 2012 was $381,000 and $427,000, respectively, and was recorded to general and administrative expenses. The Company has not recognized 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 per share. 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 per share. 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 per share. 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 no incremental expense for this modification. 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 per share. 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 per share. 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 per share. On December 27, 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 $2.66 per share. 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 2013:
Risk free rate |  | 1.40% - 2.63%
Expected life |  | 5.7 - 7.8 years
Expected volatility |  | 84% - 111%
Expected dividend yield |  | 0.0%
The Company has two stock Incentive Plans for Employees, both of which were approved by the Company's shareholders. Under the 1995 Stock Incentive Plan (the "1995 Plan") all available and outstanding options have been granted and are currently exercisable. Under the Company's 2004 Stock Incentive Plan (the "2004 Plan") a total of 175,000 shares may be issued upon exercise of options granted under the 2004 Plan. Employee stock options generally vest ratably over a 3 or 4 year time frame and have a contractual term of 10 years. 2004 Directors' Plan—Options In June 2010, the Directors' Stock Option Plan was amended and restated ("Amended 2004 Directors' Plan") to allow for the directors to be issued stock options or restricted common shares as determined by the Company and increased the available shares to be granted to 250,000 shares. Each non-employee Director elected or appointed to the Board of Directors for the first time will be granted an option to purchase 2,500 shares of common stock and each Non-Employee Director shall be granted an option to purchase 2,500 shares either, (a) upon his or her re-election at an annual meeting of the Company's stockholders or (b) in any calendar year in which an annual meeting of shareholders is not held, on June 1 of such year. In September 2012, Terence J. Cryan assumed the duties of the Company's Interim President and CEO. In connection with this Mr. Cryan was granted options under the Amended 2004 Directors' Plan to purchase 20,000 shares of the Company's common stock at an exercise price of $4.10 per share. The stock options vest ratably 25% at the 6, 12, 18 and 24 month anniversary date of the date of grant. The following table summarizes stock options outstanding and changes during the year ended December 31, 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 |  |  | 65,000 |  |  | 2.86 |  |  |  |  |  |  |
Exercised |  |  | — |  |  | — |  |  |  |  |  |  |
Canceled or forfeited |  |  | (72,791 | ) |  | 25.90 |  |  |  |  |  |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Options outstanding at December 31, 2013 |  |  | 309,479 |  | $ | 19.75 |  |  | 3.91 |  | $ | 16,700 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Options exercisable at December 31, 2013 |  |  | 226,980 |  | $ | 25.57 |  |  | 2.01 |  | $ | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock options outstanding and currently exercisable at December 31, 2013 are as follows:
|  | Outstanding Options |  |  |  |  |
--- | --- | --- | --- | --- | --- | --- | ---
|  | Options Exercisable |
|  |  |  | Weighted Average Remaining Contractual Life (in years) |  |  |
Stock Option Plan |  | Number of Options Outstanding |  | Weighted Average Exercise Price |  | Number of Options Exercisable |  | Weighted Average Exercise Price |
1995 Stock Incentive Plan |  |  | 145,906 |  |  | 0.6 |  | $ | 13.46 |  |  | 145,906 |  | $ | 13.46 |
2004 Stock Incentive Plan |  |  | 85,241 |  |  | 7.5 |  |  | 13.92 |  |  | 29,408 |  |  | 34.74 |
2004 Director's Plan |  |  | 78,332 |  |  | 6.1 |  |  | 37.81 |  |  | 51,666 |  |  | 54.57 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 309,479 |  |  | 3.9 |  | $ | 19.75 |  |  | 226,980 |  | $ | 25.57 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total estimated unrecognized compensation cost from unvested stock options as of December 31, 2013 was approximately $182,000, which is expected to be recognized over a weighted average period of approximately 1 to 2 years. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are expected stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire). Expected volatility was calculated based upon actual historical stock price movements through the measurement date of the stock option grant. Expected pre-vesting forfeitures and option terms were estimated based on actual historical pre-vesting forfeitures. The exercise price for the options granted under the plans is the fair market value of the common stock on the date granted. The terms of the options are determined by the Board of Directors upon grant; however, no options may be exercised after a period of ten years. Using the Black-Scholes option pricing model, the assumptions for grants in 2012: fair market value: $6.70 per share and $5.20 per share; expected volatility of 72% and 84%; and risk-free interest rate of 0.5% and 3.5%. An expected life of 1.0 years and 7.7 years was used for the options granted. The weighted average fair value of the options granted in 2012 was $6.00 per share. Restricted Stock Plans 2007 Plan In 2007, the Board of Directors adopted and the shareholders approved the 2007 Restricted Stock Plan (the "2007 Plan"). The 2007 Plan permits the Company to make Restricted Stock grants of shares of common stock to management personnel and other key employees of the Company. Unless otherwise specified by the Committee, the term of the restricted period for any Restricted Stock grant under the 2007 Plan shall not be less than five years from the date of grant. Employee participants who receive Restricted Stock grants will have all of the rights of a stockholder, including the right to vote the shares of Restricted Stock that are the subject of the grant and the right to receive any regular cash dividends paid out of current earnings. The Company may issue an aggregate maximum of 150,000 shares of common stock under the 2007 Plan. The total estimated unrecognized compensation cost from the unvested restricted grants at December 31, 2013 was approximately $816,000, which is expected to be recognized over the weighted average vesting period of 1.5 years. A summary of the status of non-vested restricted shares for the years ended December 31, 2013 and 2012 is presented below:
|  | Number of Shares |  | Weighted Average Grant Date Fair Value |
--- | --- | --- | --- | --- | ---
Non-vested at December 31, 2011 |  |  | 33,315 |  | $ | 12.00 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Granted |  |  | 40,727 |  | $ | 7.44 |
Vested |  |  | (33,172 | ) | $ | 10.10 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-vested at December 31, 2012 |  |  | 40,870 |  | $ | 9.10 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Granted |  |  | 330,000 |  | $ | 3.22 |
Forfeited |  |  | (4,220 | ) | $ | 12.74 |
Vested |  |  | (32,499 | ) | $ | 4.85 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-vested at December 31, 2013 |  |  | 334,151 |  | $ | 3.66 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Restricted stock grants are valued using the fair market value of the stock on the date of grant.

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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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