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Share-based compensation | 12 Months Ended
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Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-based compensation | Share-based compensation As of December 31, 2018, the Company maintains three share-based incentive plans: the 2008 Share Incentive Plan (the “2008 Plan”), the Fluent, Inc. 2015 Stock Incentive Plan (the “2015 Plan”) and the Fluent, Inc. 2018 Stock Incentive Plan (the "2018 Plan"), which, when combined, authorize the issuance of 21,152,558 shares of common stock. The 2008 Plan expired in December 2018, and no future grants can be granted out of that plan. In April 2018, the Company's board of directors approved the 2018 Plan, which was subsequently approved by stockholders at the Company's Annual Meeting of Stockholders held on June 6, 2018. The primary purpose of the 2015 Plan and 2018 Plans, respectively, is to attract, retain, reward and motivate certain individuals by providing them with opportunities to acquire or increase their ownership interests in the Company. As of December 31, 2018, there were 156,490 and 7,652,558 shares of common stock reserved for issuance under the 2015 Plan and the 2018 Plan, respectively. Shares issued outside of the equity plans The following RSUs were issued outside of the 2008 Plan, 2015 Plan and 2018 Plan: Effective October 14, 2014, pursuant to a business consulting agreement (the "Business Consulting Agreement"), Marlin Capital Investments, LLC ("Marlin Capital"), a company of which Michael Brauser, the Company's Executive Chairman prior to the Spin-off, owned 50% of and was 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 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. As of December 31, 2015, the Company determined the performance goals were met. On March 12, 2018, the Company terminated the Business Consulting Agreement, which resulted in the acceleration of the 500,000 shares that were unvested. During the first quarter of December 31, 2018, the related share-based compensation expense of $906 was recognized in loss on disposal of discontinued operations. Effective November 16, 2015, the Company entered into an employment agreement with Michael Brauser (the "Brauser Employment Agreement") related 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 the 2015 Plan representing the right to receive 5,000,000 shares of common stock. 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. 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 Phillip Frost, M.D. 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. This grant was fully vested and related share-based compensation expense was recognized on December 8, 2015, but Frost Gamma elected to defer delivery of any vested RSUs until Dr. Frost's separation from service from the Company or death or disability. Effective March 8, 2018, Dr. Frost resigned as Vice Chairman. 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 of the Board of Directors approved the Acceleration of stock options, RSUs and restricted stock held by certain employees, consultants and directors. Awards for an aggregate of 5,157,998 were accelerated, which included stock options for 47,500 shares, 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. Share-based compensation expense of $15,548, which resulted from the Acceleration was recognized in loss on disposal of discontinued operations during the first quarter of 2018. During the first quarter of 2018, and in connection with the Spin-off of Red Violet, common stock awards comprised of an aggregate of 304,000 shares were granted to certain employees of Red Violet ("Spin-off Grants"). 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 Company employees as a result of the Spin-off ("Transaction Grants"). The 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. Stock options For the years ended December 31, 2018 and 2017, the activity related to stock options consisted of the following:
| Number of options |  | Weighted average exercise price per share |  | Weighted average remaining contractual term |  | Aggregate intrinsic value
Outstanding as of December 31, 2016 | 352,000 |  |  | $ | 10.25 |  |  | 4.4 years |  |
Expired | (130,000 | ) |  | 6.25 |  |  |  |  |
Outstanding as of December 31, 2017 | 222,000 |  |  | 12.59 |  |  | 5.4 years |  | — |
Expired | (110,000 | ) |  | 11.17 |  |  |  |  |
Outstanding as of December 31, 2018 | 112,000 |  |  | 13.98 |  |  | 2.8 years |  | — |
Options vested and expected to vest as of December 31, 2018 | 112,000 |  |  | 13.98 |  |  | 2.8 years |  | — |
Options exercisable as of December 31, 2018 | 112,000 |  |  | $ | 13.98 |  |  | 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 December 31, 2018 of $3.60 and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date. For the years ended December 31, 2018 and 2017, the activity related to the unvested balance of options consisted of the following:
| Number of options |  | Weighted average exercise price per share |  | Weighted average remaining contractual term
Unvested as of December 31, 2016 | 68,750 |  |  | $ | 8.91 |  |  | 8.9 years
Vested | (21,250 | ) |  | 8.80 |  |  |
Unvested as of December 31, 2017 | 47,500 |  |  | 8.96 |  |  | 7.9 years
Vested (1) | (47,500 | ) |  | 8.96 |  |  |
Unvested as of December 31, 2018 | — |  |  | $ | — |  |  | 0.0 years
(1)47,500 shares of stock options were accelerated as a result of the Spin-off of Red Violet. The Company estimates the fair value of each stock option on the date of grant using a Black-Scholes option pricing model applying the following assumptions, and amortizes the fair value to expense over the option’s vesting period using the straight-line attribution approach for employees and non-employee directors. For the years ended December 31, 2018 and 2017, there were no grants of stock options, and there were no stock options exercised. The risk-free interest rate is based on rates in effect for United States government bonds with terms similar to the expected terms of the stock options, at the time of grant. The estimated volatility of shares on the date of grant is based on the historical volatility of the Company's publicly-traded shares. The expected term is determined by taking into account the contractual terms and historical exercise patterns. During the years ended December 31, 2018 and 2017, the total fair value of vested stock options was $159 and $125, respectively. For the years ended December 31, 2018 and 2017, compensation expense recognized for these stock options was $243 and $123, respectively. This compensation expense was recognized in discontinued operations in the consolidated statements of operations. As of December 31, 2018, there was no unrecognized share-based compensation with respect to outstanding stock options. Restricted stock units, common stock grants and restricted stock For the years ended December 31, 2018 and 2017, activity related to unvested RSUs, common stock grants and restricted stock activity consisted of the following:
| Number of units |  | Weighted average grant date fair value
Unvested as of December 31, 2016 | 12,407,029 |  |  | $ | 8.40 |
Granted | 2,732,000 |  |  | 5.61 |
Vested and delivered (1) | (3,659,520 | ) |  | 8.29 |
Withheld as treasury stock (2) | (192,288 | ) |  | 8.48 |
Vested not delivered (3) | (2,568,318 | ) |  | 3.43 |
Forfeited | (567,998 | ) |  | 5.65 |
Unvested as of December 31, 2017 (4) | 8,150,905 |  |  | 9.27 |
Granted (5) | 4,598,125 |  |  | 2.63
Vested and delivered (1) | (11,468,333 | ) |  | 7.63
Withheld as treasury stock (2) | (875,675 | ) |  | 6.05
Vested not delivered (3) | 3,766,068 |  |  | 9.85
Forfeited | (339,125 | ) |  | 4.68
Unvested as of December 31, 2018 | 3,831,965 |  |  | $ | 7.95 |
(1) | Among the shares vested and delivered during the years ended December 31, 2018 and 2017, there were 6,278,318 and 34,584 shares that were vested but deferred from prior periods, respectively. See (3) below.
(2) | As discussed in Note 11, Common Shares and Preferred Shares, the increase in treasury stock was primarily attributable to shares withheld to cover statutory withholding taxes upon the vesting of RSUs. As of December 31, 2018 and 2017, there were 1,233,198 and 352,523 outstanding shares of treasury stock, respectively.
(3) | Vested not delivered represent vested RSUs or common stock grants with delivery deferred to a future time. During the year ended December 31, 2018, there was a net decrease of 3,766,068 shares included in vested not delivered, as a result of the delivery of common stock of underlying RSUs included in "vested not delivered" in prior periods. During the year ended December 31, 2017, there was a net increase of 2,568,318 shares within the same balance due to the addition of vestings subject to deferred delivery terms. As of December 31, 2018 and 2017, there were 2,909,917 and 6,675,985 outstanding RSUs or shares of common stock grants included in vested not delivered, respectively.
(4) | As of December 31, 2017, included in the unvested shares were 150,000 shares of unvested restricted stock, which were, as of December 31, 2017, included in the issued and outstanding shares of the Company’s common stock.
(5) | As discussed in "Spin-off of Red Violet" above, included in the RSUs granted during the year ended December 31, 2018, 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.
For the years ended December 31, 2018 and 2017, the Company recognized compensation (included in sales and marketing expenses, general and administrative expenses. product development, and discontinued operations in the consolidated statements of operations, and intangible assets in the consolidated balance sheets) for these RSUs, common stock grants and restricted stock of $15,104 and $35,169, respectively. The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant. As of December 31, 2018, unrecognized share-based compensation expense associated with the granted RSUs is $7,418, which is expected to be recognized over a weighted average period of 1.9 years. For the years ended December 31, 2018 and 2017, share-based compensation for the Company’s stock options, RSUs, common stock grants and restricted stock was allocated to the following accounts in the consolidated financial statements:
| Year Ended December 31,
(In thousands) | 2018 |  | 2017
Sales and marketing expenses | $ | 2,856 |  |  | $ | 2,254 |
Product development | 676 |  |  | 423 |
General and administrative expenses | 5,739 |  |  | 28,448 |
Spin-off transaction costs | 5,410 |  |  | — |
Discontinued operations | 15,712 |  |  | 2,871 |
| 30,393 |  |  | 33,996 |
Capitalized in intangible assets of continuing operations | 423 |  |  | 512 |
Capitalized in intangible assets of discontinued operations | 181 |  |  | 784 |
Total | $ | 30,997 |  |  | $ | 35,292 |

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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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