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Share-based compensation | 6 Months Ended
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Jun. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-based compensation | 9. Share-based compensation As of June 30, 2018, the Company maintains three share-based incentive plans: the 2008 Share Incentive Plan (the “2008 Plan”) and the Cogint, Inc. 2015 Stock Incentive Plan (the “2015 Plan”) which, combined, authorized the issuance of 13,500,000 shares of common stock, and the Fluent, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), which authorizes the issuance of ten percent of the Company’s issued and outstanding shares of common stock, as may be adjusted from time to time. The 2018 Plan was approved by the board of directors in April 2018 and subsequently approved by shareholders at the annual meeting of stockholders held on June 6, 2018. The primary purpose of the 2018 Plan is to attract, retain, reward, and motivate certain individuals by providing them with an opportunity to acquire or increase an ownership interest in the Company. As of June 30, 2018, there were 310,568, 303,074 and 7,650,090 shares of common stock reserved for issuance under the 2008 Plan, the 2015 Plan and the 2018 Plan, respectively. Shares issued outside of the equity plans The following RSUs were issued outside of the aforementioned equity plans: Pursuant to a business consulting agreement effective October 14, 2014 (the “Business Consulting Agreement”), Marlin Capital Investments, LLC (“Marlin Capital”), a company which Michael Brauser, the Company’s Executive Chairman prior to the Spin-off, owns 50% and is one of two managers, held RSUs representing the right to receive 2,000,000 shares of the Company’s common stock, for consulting services provided by Marlin Capital. These RSUs were to vest annually beginning from October 13, 2015 only if certain performance goals of the Company were met. The shares underlying such RSUs would not have been delivered until October 13, 2018, unless there was a change of control of the Company, termination of the agreement by the Company without cause, or termination of the agreement by Marlin Capital for good reason. The Company determined the performance goals were met as of December 31, 2015. On March 12, 2018, the Company terminated the Business Consulting Agreement. The unvested 500,000 shares were accelerated and related share-based compensation expense of $906 was recognized fully in loss on disposal of discontinued operations during the first quarter of 2018. Effective November 16, 2015, the Company entered into an employment agreement with Michael Brauser (the “Brauser Employment Agreement”) relating to his service as Executive Chairman of the Board of Directors, pursuant to which, Mr. Brauser would receive an annual base salary of $25 payable in accordance with the Company’s general payroll practices and RSUs outside of the 2008 Plan and 2015 Plan representing the right to receive 5,000,000 shares of common stock. These RSUs were to vest ratably over a four-year period; provided, however, that no portion of the RSUs were to vest unless and until the Company had met certain vesting conditions during the vesting period. In addition, such RSUs were to vest in full upon a Company change in control, termination of Mr. Brauser without cause, termination by Mr. Brauser for good reason, or Mr. Brauser’s death or disability. Effective March 14, 2017, the Company determined that the performance vesting conditions were met. Effective June 23, 2017, the Brauser Employment Agreement was terminated. Mr. Brauser continued to serve as Chairman of the Board of Directors prior to the Spin-off. On September 6, 2017, the Company entered into a consulting services agreement with Mr. Brauser, effective June 23, 2017, for a term of four years (the “Consulting Agreement”). In consideration for Mr. Brauser’s services, the Consulting Agreement provided for continued vesting of all outstanding RSUs previously granted to Mr. Brauser. Among the total 5,000,000 shares granted pursuant to the RSUs, 1,250,000 shares were delivered in December 2017 and 1,250,000 shares were delivered in January 2018, and on March 12, 2018, the unvested 2,500,000 shares were accelerated and related share-based compensation expense of $6,468 was recognized in loss on disposal of discontinued operations during the first quarter of 2018. On December 8, 2015, when Dr. Phillip Frost joined the Board of Directors of the Company as Vice Chairman, Frost Gamma was granted 3,000,000 RSUs, outside of the 2008 Plan and 2015 Plan. These grants were fully vested on December 8, 2015, but Frost Gamma elected to defer delivery of any vested RSUs until Dr. Phillip Frost’s separation from service from the Company or death or disability. Dr. Phillip resigned as Vice Chairman effective on March 8, 2018 and the 3,000,000 shares were delivered during the first quarter of 2018. Spin-off of red violet On March 8, 2018, the Company’s Compensation Committee approved the acceleration (the “Acceleration”) of shares of stock options, RSUs and restricted stock held by certain employees, consultants, and directors, including only those employees who were to continue with red violet upon completion of the Spin-off, subject to such employees still being employed or providing services on March 12, 2018 (the “Acceleration Date”). An aggregate of 5,157,998 shares, including 47,500 shares of stock options, 4,960,498 RSUs (inclusive of 500,000 shares to Marlin Capital and 2,500,000 to Michael Brauser, as discussed above), and 150,000 shares of restricted stock, were accelerated. Share-based compensation expense of $14,667 resulting from the Acceleration was recognized in loss on disposal of discontinued operations during the first quarter of 2018. In connection with the Spin-off of red violet, an aggregate of 304,000 shares of common stock awards were granted to certain employees of red violet (“Spin-off Grants”) during the first quarter of 2018, and the related share-based compensation expense of $881 was recognized in loss on disposal of discontinued operations. In addition, an aggregate of 2,041,000 shares of common stock, subject to deferred delivery over a three-year period, were granted to certain Fluent employees as a result of the Spin-off (“Transaction Grants”), and related share-based compensation expense of $5,409 was recognized in costs and expenses as part of spin-off transaction costs during the first quarter of 2018. In total, share-based compensation expense of $15,548 resulting from the Acceleration and Spin-off Grants in connection with the Spin-off was recognized in loss on disposal of discontinued operations during the first quarter of 2018. See Note 3, “Discontinued operations,” for details. Stock options Details of share options activity during the six months ended June 30, 2018 were as follows:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term |  | Aggregate intrinsic value |
Outstanding as of December 31, 2017 |  |  | 222,000 |  |  | $ | 12.59 |  |  | 5.4 years |  | $ | - |
Expired |  |  | (85,000 | ) |  | $ | 9.15 |  |  |  |  |  |  |
Outstanding as of June 30, 2018 |  |  | 137,000 |  |  | $ | 14.72 |  |  | 2.8 years |  | $ | - |
Options vested and expected to vest as of June 30, 2018 |  |  | 137,000 |  |  | $ | 14.72 |  |  | 2.8 years |  | $ | - |
Options exercisable as of June 30, 2018 |  |  | 137,000 |  |  | $ | 14.72 |  |  | 2.8 years |  | $ | - |
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock on June 29, 2018 of $2.45 and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date. The unvested balance of options is shown below for the six months ended June 30, 2018:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term |
Unvested as of December 31, 2017 |  |  | 47,500 |  |  | $ | 8.96 |  |  | 7.9 years |
Vested (1) |  |  | (47,500 | ) |  | $ | 8.96 |  |  |  |  |
Unvested as of June 30, 2018 |  |  | - |  |  | $ | - |  |  |  | - |
(1) | As discussed in “Spin-off of red violet” above, the vesting of 47,500 shares of stock options was accelerated as a result of the Spin-off of red violet.
Compensation expense for these stock options of $0 and $30 during the three months and $243 and $60 during the six months ended June 30, 2018 and 2017, respectively, was recognized and recorded in discontinued operations in the condensed consolidated statements of operations. As of June 30, 2018, there was no unrecognized share-based compensation with respect to outstanding stock options. Restricted stock units, common stock grants and restricted stock Details of unvested RSUs, common stock grants and restricted stock activity during the six months ended June 30, 2018 were as follows:
|  | Number of units |  |  | Weighted average grant-date fair value |
Unvested as of December 31, 2017 |  |  | 8,150,905 |  |  | $ | 9.27 |
Granted (1) |  |  | 4,368,125 |  |  | $ | 2.65 |
Vested and delivered (2) |  |  | (11,455,574 | ) |  | $ | 7.63 |
Withheld as treasury stock (3) |  |  | (872,562 | ) |  | $ | 6.05 |
Vested not delivered (4) |  |  | 3,761,068 |  |  | $ | 9.86 |
Forfeited |  |  | (201,959 | ) |  | $ | 5.13 |
Unvested as of June 30, 2018 |  |  | 3,750,003 |  |  | $ | 8.14 |
(1) | As discussed in “Spin-off of red violet” above, among the RSUs granted during the six months ended June 30, 2018, there were an aggregate of 304,000 shares of Spin-off Grants that vested and were delivered in the first quarter of 2018, and an aggregate of 2,041,000 shares of Transaction Grants that vested but were subject to deferred delivery over a three-year period.
(2) | Among the shares vested and delivered during the six months ended June 30, 2018, there were 6,273,318 shares that were vested but deferred from prior periods. See (4) below.
(3) | As discussed in Note 8, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during the first quarter of 2018. As of June 30, 2018, there were 1,225,085 outstanding shares withheld as treasury stock.
(4) | Vested not delivered represent vested RSUs or common stock grants with delivery deferred to a future time. During the six months ended June 30, 2018, there was a net decrease of 3,761,068 shares included in “vested not delivered,” as a result of the delivery of common stock underlying RSUs included in “vested not delivered” in prior periods. As of June 30, 2018, there were 2,914,917 outstanding shares of RSUs or common stock grants included in “vested not delivered.”
The Company recognized compensation (included in sales and marketing expenses, general and administrative expenses, and discontinued operations in the condensed consolidated statements of operations, and intangible assets in the condensed consolidated balance sheets) for RSUs, common stock grants and restricted stock of $2,738 and $9,624 for the three months and $25,196 and $17,152 for the six months ended June 30, 2018 and 2017, respectively. The fair value of the RSUs and restricted stock was estimated using the market value of the Company’s common stock on the dates of grant, which were equivalent to the closing prices of the common stock on the grant dates. As of June 30, 2018, unrecognized share-based compensation expense associated with the granted RSUs amounted to $12,966, which is expected to be recognized over a weighted average period of 1.9 years. The share-based compensation for the Company’s stock options, RSUs, common stock grants and restricted stock were allocated to the following accounts in the condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017:
|  |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
(In thousands) |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Sales and marketing expenses |  |  | $ | 709 |  |  | $ | 792 |  |  | $ | 1,475 |  |  | $ | 1,404 |
General and administrative expenses |  |  |  | 1,905 |  |  |  | 7,302 |  |  |  | 2,378 |  |  |  | 13,544 |
Spin-off transaction costs |  |  |  | - |  |  |  | - |  |  |  | 5,409 |  |  |  | - |
Discontinued operations |  |  |  | - |  |  |  | 1,225 |  |  |  | 15,713 |  |  |  | 1,683 |
|  |  |  | 2,614 |  |  |  | 9,319 |  |  |  | 24,975 |  |  |  | 16,631 |
Capitalized in intangible assets of continuing operations |  |  |  | 124 |  |  |  | 133 |  |  |  | 283 |  |  |  | 188 |
Capitalized in intangible assets of discontinued operations |  |  |  | - |  |  |  | 202 |  |  |  | 181 |  |  |  | 393 |
Total |  |  | $ | 2,738 |  |  | $ | 9,654 |  |  | $ | 25,439 |  |  | $ | 17,212 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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