Stock-based Compensation

3 Months Ended

Mar. 31, 2017

Stock-based Compensation

Stock-based Compensation

NOTE (8) – Stock-based Compensation

The Company issues stock-based compensation awards to its directors and employees under the 2008 Long-Term Incentive Plan (“2008 LTIP”).  The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive for up to 2,000,000 shares of common stock.  As of March 31, 2017, there were 1,338,892 shares available for future awards under the 2008 LTIP.

No options were granted during the three months ended March 31, 2017, compared to 450,000 stock options granted to senior executive officers under the 2008 LTIP during the three months ended March 31, 2016.  These options have an exercise price of $1.62 per share, vest over five years and expire in ten years from grant date.  The Company estimated the compensation costs and fair value per share of these stock options to be $194 thousand and $0.43 per share, respectively, using the Black-Scholes option pricing model and the following assumptions: (i) expected volatility of 27.36%; (ii) risk free interest rate of 1.21%; (iii) expected option term of five years; and (iv) 0% dividend yield.

The following table summarizes stock option activity during the three months ended March 31, 2017 and 2016:

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Three Months Ended March 31, 2017:
Outstanding at January 1, 2017	540,625	$    2.18
Granted	-	-
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2017	540,625	$    2.18	7.74	$  86,000
Exercisable at March 31, 2017	180,625	$    3.29	5.44	$  17,000
Three Months Ended March 31, 2016:
Outstanding at January 1, 2016	90,625	$    4.95
Granted	450,000	1.62
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2016	540,625	$    2.18	7.74	$ 140,000
Exercisable at March 31, 2016	90,625	$    4.95	3.00	$             -

The Company recorded $10 thousand and $3 thousand of stock-based compensation expense related to stock options during the three months ended March 31, 2017 and 2016, respectively.  As of March 31, 2017, unrecognized compensation cost related to nonvested stock options granted under the plan was $152 thousand.  The cost is expected to be recognized over a period of 3.90 years.

In March 2016, the Company awarded 120,483 shares of restricted stock to its Chief Executive Officer under the 2008 LTIP.  A restricted stock award is valued at the closing price of the Company’s stock on the date of such award.  Subject to certain performance restrictions, 100,000 shares of restricted stock shall vest over a two-year period and the remaining 20,483 shares shall vest over a three-year period.  Stock-based compensation expense is recognized on a straight-line basis over the vesting period.  The Company recorded $26 thousand of stock-based compensation expense related to this award during the three months ended March 31, 2017.  No stock-based compensation expense was recorded during the three months ended March 31, 2016.  As of March 31, 2017, unrecognized compensation cost related to nonvested restricted stock award was $119 thousand.  The cost is expected to be recognized over a period of 1.17 years.