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SHARE-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2014
SHARE-BASED COMPENSATION |
SHARE-BASED COMPENSATION | NOTE 11 — SHARE-BASED COMPENSATION Overview of Share-Based Compensation Plans 2007 Equity Incentive Plan The Company has granted incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Board in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. The 2007 EIP reserved 691,051 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depends to a large degree. As of March 31, 2014, the Company had reserved 73,897 shares for issuance upon the exercise of stock options outstanding and 74,659 shares for issuance upon the vesting of restricted stock unit (“RSU”) awards outstanding. As of March 31, 2013, 213,070 shares of common stock reserved for stock options and RSU awards under the 2007 EIP have been issued in the form of common stock. 2012 Equity Incentive Plan The Company has granted incentive stock options and other equity awards pursuant to the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP;” together with the 2007 EIP, the “Equity Incentive Plans”), which was approved by the Board in March 2012 and by the Company’s stockholders in May 2012. The purposes of the 2012 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2012 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2012 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights; (iv) restricted stock and RSUs; and (v) performance awards. The 2012 EIP reserves 1,200,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of March 31, 2014, the Company had reserved 116,987 shares for issuance upon the exercise of stock options outstanding and 558,883 shares for issuance upon the vesting of RSU awards outstanding. As of March 31, 2014, 192,193 shares of common stock reserved for stock options and RSU awards under the 2012 EIP have been issued in the form of common stock. Stock Options. The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term. Restricted Stock Units. The granting of RSUs is provided for under the Equity Incentive Plans. RSUs generally vest on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award. The following table summarizes stock option activity during the three months ended March 31, 2014 under the Equity Incentive Plans, as follows:
|  | Options |  | Weighted Average Exercise Price |
Outstanding as of December 31, 2013 |  | 207,775 |  | $ | 26.22 |
Granted |  | — |  | $ | — |
Exercised |  | — |  | $ | — |
Forfeited |  | — |  | $ | — |
Expired |  | (16,891 | ) | $ | 101.25 |
Outstanding as of March 31, 2014 |  | 190,884 |  | $ | 19.58 |
Exercisable as of March 31, 2014 |  | 91,440 |  | $ | 35.62 |
The following table summarizes RSU activity during the three months ended March 31, 2014 under the Equity Incentive Plans, as follows:
|  | Number of RSU’s |  | Weighted Average Grant-Date Fair Value Per RSU |
Outstanding as of December 31, 2013 |  | 670,338 |  | $ | 4.47 |
Granted |  | 48,784 |  | $ | 8.86 |
Vested |  | (76,639 | ) | $ | 4.52 |
Forfeited |  | (8,941 | ) | $ | 4.60 |
Outstanding as of March 31, 2014 |  | 633,542 |  | $ | 4.80 |
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. There were no stock options granted during the three months ended March 31, 2014. The Company utilized a forfeiture rate of 25% during the three months ended March 31, 2014 and 2013 for estimating the forfeitures of stock compensation granted. The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, as follows:
|  | Three Months Ended March 31, |
|  | 2014 |  | 2013 |
Share-based compensation expense: |  |  |  |  |
Cost of Sales |  | $ | 62 |  | $ | 31 |
Selling, general and administrative |  | 161 |  | 396 |
Income tax benefit (1) |  | — |  | — |
Net effect of share-based compensation expense on net loss |  | $ | 223 |  | $ | 427 |
Reduction in earnings per share: |  |  |  |  |
Basic and diluted earnings per share (2) |  | $ | 0.02 |  | $ | 0.03 |
(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the three months ended March 31, 2014 and 2013. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance. (2) Diluted earnings per share for the three months ended March 31, 2014 and 2013 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented. As of March 31, 2014, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and RSUs, in the amount of approximately $2,263 will be recognized through 2017. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

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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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