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STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

13. STOCK-BASED COMPENSATION

On December 2, 2009, the Company adopted the 2009 Equity Incentive Plan (the “2009 Plan”) for the purpose of issuing incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards to employees, directors, consultants and other service providers. A total of 320,000 shares of common stock are reserved for issuance under the 2009 Plan. Options may be granted under the 2009 Plan on terms and at prices as determined by the board of directors or by the plan administrators appointed by the board of directors.

On May 11, 2011, the board of directors of the Company adopted the Pioneer Power Solutions, Inc. 2011 Long-Term Incentive Plan (the “2011 Plan”) which was subsequently approved by stockholders of the Company on May 31, 2011. The 2011 Plan replaces and supersedes the 2009 Plan. The Company’s outside directors and employees, including the Company’s principal executive officer, principal financial officer and other named executive officers, and certain contractors are all eligible to participate in the 2011 Plan. The 2011 Plan allows for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and upon such terms as are determined by the Board or a committee of the Board that is designated to administer the Plan. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2011 Plan is 700,000 shares. As of December 31, 2017, 435,800 stock options had been granted, consisting of 36,000 incentive stock options and 399,800 non-qualified stock options.

Expense for stock-based compensation recorded for the years ended December 31, 2017 and 2016 was approximately $0.5 and $0.1 million, respectively. All of the stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. As of December 31, 2017, the Company had total stock-based compensation expense remaining to be recognized of approximately $0.2 million.

The fair value of the stock options granted was measured using the Black-Scholes valuation model with the following assumptions:

		Year Ended December 31,
		2017				2016
Expected volatility			31.1 - 31.3%				34 - 35%
Expected life in years			5.5 - 6.0				5.5 - 6.0
Risk-free interest rate			2.08 - 2.15%				1.57 - 1.66%
Dividend yield			0%				0%

A summary of stock option activity for the years ended December 31, 2017 and 2016, and changes during the years then ended is presented below:

		Stock Options				Weighted average exercise price				Weighted average remaining contractual term				Aggregate intrinsic value
Outstanding as of January 1, 2016			344,733			$	9.35				6.5			$	107
Granted			27,000				3.68				9.2				28
Exercised			—				—				—				—
Forfeited			(124,333	)			9.31				5.9				—
Outstanding as of December 31, 2016			247,400			$	8.75				5.9			$	135
Granted			262,000				7.3				9.2				81
Exercised			(26,333	)			4.55				—				—
Forfeited			(47,267	)			6.74				6.8				—
Outstanding as of December 31, 2017			435,800			$	8.35				7.5			$	216
Exercisable as of December 31, 2017			173,800			$	9.94				4.8			$	135

The total number of shares reserved for the plan is 700,000 leaving a balance of 237,867 available for future grants.

Intrinsic value is the difference between the market value of the stock at December 31, 2017 and the exercise price which is aggregated for all options outstanding and exercisable. A summary of the weighted-average grant-date fair value of options, total intrinsic value of options exercised, and cash receipts from options exercised is shown below:

		Year Ended Decmber 31,
		2017				2016
Weighted-average fair value of options granted (per share)		$	2.40			$	1.33
Intrinsic value gain of options exercised			81				—
Cash receipts from exercise of options			120				—

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- References

No definition available.

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- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

+ References

Reference 1: 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=96867065&loc=d3e5070-113901

Reference 2: 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=96867065&loc=d3e5047-113901

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