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Stock Compensation and Unit-Based Compensation | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock Compensation and Unit-Based Compensation | Note 18. Stock Compensation and Unit-Based Compensation The issuance of common stock and options to purchase common stock to prior holders of Profits Interests in connection with the Corporate Conversion was accounted for as a type-1 modification of the old awards. Under the previous LLC structure, in connection with employment and service provider agreements, the Company granted Units that constitute profits interests for income tax purposes to grantees pursuant to Unit Forfeiture Agreements, subject to certain restrictions defined in each such agreement. The Company maintained a Unit award account for each of the grantees. Generally, the Units vested 25% on the one-year anniversary of the employment start date or agreement date and the balance ratably per quarter thereafter over an additional three-year period. After the restrictions lapsed, the grantees became fully vested in such Units. In 2018, the Company granted 19,447,218 Units to its employees, of which 110,354 were forfeited immediately prior to the Corporate Conversion. In connection with the Corporate Conversion, 62,765,605 Units (outstanding immediately prior to the IPO) were converted, in the aggregate, into (i) 1,345,231 shares of common stock, and (ii) with respect to Units held by current employees and consultants at the time of the conversion, options to purchase 2,141,748 shares of electroCore, Inc. common stock at an exercise price of $15.00 per share. The number of shares of common stock and the number of options issued for the outstanding units were determined based upon the appreciation in value of the Company after the date of Unit grant through the completion of the IPO. The number of shares of common stock issued for each Unit (the "Conversion Shares") was equal to (x) the percentage of the capital account balance associated with such Unit as it related to the total value of the Company at the IPO pre-money valuation, divided by (y) the percentage interest in the Company represented by such Unit based on the total outstanding Units in the Company immediately prior to the IPO, multiplied by (z) the total number of Units represented by the applicable Profits Interest. Of the shares of common stock issued for the Units, 1,157,139 vested immediately, 188,092 vested January 1, 2019, and the balance vesting over the next succeeding 10 calendar quarters. The Company accounts for the 1,345,231 shares of common stock as restricted stock awards as reflected in the table below. As of December 31, 2018, the total number of restricted shares outstanding was 185,571 as 2,521 share awards were forfeited and no further share awards were granted in 2018. The number of options issued in respect of each Unit was equal to (i) the total number of Units represented by such Profits Interest prior to the corporate conversion minus (ii) the Conversion Shares issued in respect of such Profits Interest. Of the options issued for the Units, 228,954 vested 100% on January 1, 2019, 1,912,797 vested 25% on January 1, 2019, and the balance vesting over the next succeeding 14 calendar quarters. The options have an exercise price of $15.00 per share. Stock compensation expense for the Profits Interests not recognized prior to the Corporate Conversion was $2.8 million. This expense was allocated to the common stock and options to purchase common stock awards based on their relative fair value on the date of the IPO. For the common stock awards that vested at the time of issuance, the Company recognized $1.2 million immediately. At the time of issuance of stock compensation expense for the common stock awards and the options to purchase common stock that did not vest immediately totaled, $0.2 million and $1.4 million, respectively, and is being amortized over the respective vesting periods. The incremental stock compensation expensed due to the modification was $7.8 million. This expense was allocated to the common stock and the options to purchase common stock based on their fair value on the date of the awards. For the common stock that vested at the time of issuance, the Company recognized $3.8 million. For the common stock awards and the options to purchase common stock that did not vest immediately, the Company will recognize $0.4 million and $3.6 million, respectively, over the respective vesting periods. On June 21, 2018, the Company adopted the 2018 Omnibus Equity Incentive Plan (“Plan”). This plan reserved 6.2 million shares with an increase to be added annually beginning in 2019 through 2028 up to 4% of the total number of shares of common stock issued and outstanding on a fully diluted basis as of the end of the immediately preceding fiscal year, providing that the aggregate number of additional shares shall not exceed a total of 45 million shares, and a maximum of 40 million shares pursuant to the exercise of stock options. Effective January 1, 2019, the amount of shares reserved under the Plan was increased to approximately 6.9 million. The Company’s policy is to issue new shares of its common stock upon the exercise of stock options, new grants of restricted stock awards, and settlement of restricted stock units. Stock options issued under the plan have a contractual life of 10 years and are generally forfeited upon separation from the Company. The options issued in conjunction with the Corporate Conversion were issued under this Plan. At December 31, 2019 there were approximately 2,120,000 shares available to be awarded under the Plan. The following table presents a summary of stock options granted:
| Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value
Outstanding, December 31, 2018 |  | 2,228,904 |  |  | $ | 14.89 |  |  |  | 9.5 |  |  | *
Granted |  | 2,146,699 |  |  |  | 4.68 |  |  |  |  |  |  |
Exercised |  | — |  |  |  | — |  |  |  |  |  |  |
Cancelled |  | (1,244,337 | ) |  |  | 13.34 |  |  |  |  |  |  |
Outstanding, December 31, 2019 |  | 3,131,266 |  |  | $ | 8.53 |  |  |  | 8.9 |  |  | *
Exercisable, December 31, 2019 |  | 1,348,994 |  |  | $ | 11.99 |  |  |  | 8.6 |  |  | *
* de minimis |  |  |  |  |  |  |  |  |  |  |  |  |
The intrinsic value is calculated as the difference between the fair market value at December 31, 2019 and the exercise price per share of the stock options. The fair market value per share of common stock as of December 31, 2019 was $1.59. In general, option awards granted to employees and consultants vest over four years. The following table provides additional information about stock options that are outstanding and exercisable at December 31, 2019:
Exercise Price |  | Options Outstanding |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Options Exercisable |
$1.40 - $2.50 |  |  | 1,019,495 |  |  |  | 9.7 |  |  |  | 95,635 |
$2.51 - $7.52 |  |  | 647,629 |  |  |  | 9.2 |  |  |  | 324,900 |
$7.53 - $15.00 |  |  | 1,464,142 |  |  |  | 8.6 |  |  |  | 928,459 |
The following table presents a summary of restricted stock awards granted:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |  |
Nonvested, December 31, 2018 |  |  | 185,571 |  |  | $ | 15.00 |  |
Granted |  |  | 204,088 |  |  |  | 6.88 |  |
Vested |  |  | (139,473 | ) |  |  | 14.25 |  |
Cancelled |  |  | (122,681 | ) |  |  | 9.27 |  |
Nonvested, December 31, 2019 |  |  | 127,505 |  |  | $ | 8.09 |  |
In general, restricted stock awards granted to employees and consultants in 2019 vest over 4 years. The following table presents a summary of restricted and deferred stock units (“Stock Units”) granted:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested, December 31, 2018 |  |  | 79,998 |  |  | $ | 15.00 |
Granted |  |  | 1,566,205 |  |  |  | 2.47 |
Vested |  |  | (274,939 | ) |  |  | 4.62 |
Cancelled |  |  | (129,771 | ) |  |  | 1.90 |
Nonvested, December 31, 2019 |  |  | 1,241,493 |  |  | $ | 2.86 |
In general, Stock Units awarded to employees and consultants vest over two years. Immediately following the Company’s annual meeting of stockholders, the Company generally grants each non-employee director an equity award that vests over a 12-month period. Upon a non-employee director’s initial appointment or election to the board of directors, the Company grants such non-employee director an equity award subject to vesting as determined by the board of directors. For the years ended December 31, 2019 and 2018, stock compensation expense reported as a component of selling, general and administrative expense was $2.7 million and $4.6 million, respectively. For the same period, stock compensation expense reported as a component of research and development expense was $1.1 million and $2.8 million, respectively. For the years ended December 31, 2019 and 2018, stock compensation expense reported as a component of cost of goods sold was $0.1 million and $0.2 million respectively. Total unrecognized compensation cost related to equity awards as of December 31, 2019 was $7.9 million and is expected to be recognized over the next 3 years. Valuation Information for Stock-Based Compensation The fair value of each stock option award granted was estimated on the date of grant using the Black-Scholes model. Expected volatility was based on historical volatility of the Company’s common stock. The risk-free interest rate was based on the average U.S. Treasury rate that most closely resembles the expected life of the related award. The expected term of the award was calculated using the simplified method. No dividend was assumed as the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted in the periods presented were:
|  | 2019 |  |  | 2018 |
Fair value at grant date |  | $ | 3.39 |  |  | $ | 2.50 |
Expected volatility |  | 95.9% |  |  | 70.9% |
Risk-free interest rate |  | 2.1% |  |  | 2.7% |
Expected holding period, in years |  |  | 5.9 |  |  |  | 5.9 |
Dividend yield |  |  | — |  |  |  | — |
The fair value of restricted stock awards and restricted stock units is the market close price of the Company’s common stock on the trading day immediately preceding the date of grant. Employee Stock Purchase Plan Effective January 1, 2019, the Company adopted the 2019 Employee Stock Purchase Plan. The plan, which was terminated effective January 1, 2020, provided eligible employee of the Company with an opportunity to purchase common stock of the Company through accumulated payroll deductions. The maximum number of shares reserved for delivery under the plan was 300,000 shares, plus an annual increase not to exceed an aggregate of 4,500,000 shares over the life of the plan. The weighted average assumptions used in the Black-Scholes valuation of the fair value of the discount for the year ended December 31, 2019 were:
|  | 2019 |
Fair value at grant date |  | $ | 0.75 |
Expected volatility |  | 169% |
Risk-free interest rate |  | 2.3% |
Expected holding period |  | 6 months |
Dividend yield |  |  | — |

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- Definition The entire disclosure for share-based payment arrangement. + 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 + Details
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