NOTE 7 - SHAREHOLDERS’ EQUITY

Share capital:

The Company’s ordinary shares are traded in the United States on the NASDAQ National Market, under the symbol MNDO.

Treasury shares:

During the period between September 2008 and December 2009, the Company has purchased an aggregate amount of 3,165,092 ordinary shares for a total consideration of approximately $2.8 million. Currently, the Company does not have an active buyback plan. As of December 31, 2018, the remaining treasury shares are 2,220,792 which amounted to $1.5 million after exercise of options issued to employees from treasury shares in the amount of $39 thousand, $53 thousand and $85 thousand in the years ended December 31, 2018, 2017 and 2016 respectively.

Dividend:

Dividends paid per share in the years ended December 31, 2018, 2017 and 2016 were $0.30, $0.32 and $0.27, respectively.

The Company paid dividends to its shareholders in the amounts of $5.8 million, $6.2 million and $5.2 million during the years ended December 31, 2018, 2017 and 2016, respectively.

Stock option plans:

In 2011, the Board of Directors and the 2011 Annual General Meeting of the Company’s shareholders approved a share incentive plan (the “2011 Share Incentive Plan”). Under the 2011 Share Incentive Plan, options for up to 1,800,000 ordinary shares of NIS 0.01 par value are to be granted to employees of the Company and its subsidiaries, directors, consultants or contractors of the Company.

Each option can be exercised to purchase one ordinary share. Immediately upon issuance, the ordinary shares issuable upon the exercise of the options will confer on holders the same rights as the other ordinary shares.

The Board of Directors determines the exercise price and the vesting period of the options granted. The outstanding options granted under the abovementioned plan vest over 2-4 years. Options not exercised will expire 5 years after the day of grant.

The compensation costs charged against income for all of the Company’s equity incentive plans during the years ended December 31, 2018, 2017 and 2016 were approximately $224 thousand, $182 thousand and $137 thousand, respectively without any reduction in income taxes.

Under Section 102 of the Israeli Income Tax Ordinance, pursuant to an election made by the Company thereunder, Israeli employees (except for employees who are deemed “Controlling Members” under the Israeli Income Tax Ordinance) are subject to a lower tax rate on capital gains accruing to them in respect of Section 102 awards. However, the Company is not allowed to claim as an expense for tax purposes the amounts credited to such employees.

The following is a summary of the status of the 2011 Share Incentive Plan as of December 31, 2018, 2017 and 2016, and changes during the years ended on those dates:

	Years ended December 31,
	2 0 1 8					2 0 1 7					2 0 1 6
	Number			Weighted average exercise price		Number			Weighted average exercise price		Number			Weighted average exercise price

Options outstanding at beginning of year		813,100		$	1.490		875,500		$	1.600		710,300		$	2.510
Changes during year:
Granted (a)		118,000		$	0.003		90,000		$	0.650		344,000		$	0.003
Exercised		(131,800	)	$	0.003		(46,000	)	$	1.150		(59,000	)	$	1.450
Forfeited		(74,100	)	$	0.500		(78,400	)	$	1.410		(117,800	)	$	2.490
Expired		(51,000	)	$	2.950		(28,000	)	$	2.950		(2,000	)	$	2.160
Options outstanding at end of year		674,200		$	1.46		813,100		$	1.490		875,500		$	1.600

Options exercisable at end of year		350,000		$	2.630		303,000		$	2.900		246,500		$	2.870
Vested and expected to vest at end of year		637,361		$	1.540

Weighted average grant date fair value of options granted during the year (b)				$	1.46				$	1.30				$	1.46

(a)

In the year ended December 31, 2018, the options were granted with an exercise price equal to NIS 0.01.

In the year ended December 31, 2017, the options were granted with an exercise price equal to the average closing price per share of the Company’s ordinary shares on the stock market during the 30-day trading period immediately preceding the date of grant of such option, or with an exercise price equal to par value of NIS 0.01.

In the year ended December 31, 2016, the options were granted with an exercise price equal to par value of NIS 0.01.

(b)

The fair value of each stock option granted is computed on the date of grant according to the Black-Scholes option-pricing model with the following assumptions:

	Years ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 6

Dividend yield		11	%		11	%		11	%

Expected volatility*		28	%		35	%		35	%

Average risk-free interest rate		2.6	%		1.9	%		2.0	%

Expected average term - in years		3.88			3.88			3.88

Volatility is based on historical volatility of the Company’s share price for periods matching the expected term of the option until exercise.

As of December 31, 2018, there were approximately $422 thousand of total unrecognized compensation costs, net of expected forfeitures, related to nonvested share-based compensation awards granted under the stock option plan. The costs are expected to be recognized over a weighted average period of 1.44 years.

The following table summarizes information about options outstanding and exercisable as of December 31, 2018:

		Options Outstanding						Options Exercisable
Range of exercise prices		Number outstanding at December 31, 2 0 1 8		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable at December 31, 2 0 1 8		Weighted average remaining contractual life		Weighted average exercise price
				Years						Years

	$ 0.003		334,200		3.46	$	0.003		37,000		2.84	$	0.003
	$ 2.425 – 2.947		340,000		0.92	$	2.90		313,000		0.86	$	2.94

The total intrinsic value of options exercised during the years ended December 31, 2018, 2017 and 2016 were approximately $266 thousand, $70 thousand and $51 thousand, respectively. As of December 31, 2018, the aggregate intrinsic value of the outstanding options is $738 thousand, and the aggregate intrinsic value of the exercisable options is $84 thousand.