11. Stock-Based Compensation

Stock Plans

The Loral amended and restated 2005 stock incentive plan (the “Stock Incentive Plan”) allows for the grant of several forms of stock-based compensation awards including stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and other stock-based awards (collectively, the “Awards”). The total number of shares of voting common stock reserved and available for issuance under the Stock Incentive Plan is 1,403,746 shares of which 1,319,533 were available for future grant at December 31, 2013. This number of shares of voting common stock available for issuance would be reduced if restricted stock units or SS/L phantom stock appreciation rights are settled in voting common stock. In addition, shares of common stock that are issuable under awards that expire, are forfeited or canceled, or withheld in payment of the exercise price or taxes relating to an Award, will again be available for Awards under the Stock Incentive Plan.

Mr. Targoff was awarded 85,000 RSUs (the “Initial Grant”) on March 5, 2009 (the “Grant Date”). In addition, the Company agreed to issue Mr. Targoff 50,000 RSUs on the first anniversary of the Grant Date and 40,000 RSUs on the second anniversary of the Grant Date (the “Subsequent Grants”). Vesting of the Initial Grant required the satisfaction of two conditions: a time-based vesting condition and a stock price vesting condition. Vesting of the Subsequent Grants was subject only to the stock-price vesting condition. The time-based vesting condition for the Initial Grant was satisfied upon Mr. Targoff’s continued employment through March 5, 2010, the first anniversary of the Grant Date. The stock price vesting condition, which applied to both the Initial Grant and the Subsequent Grants, was also satisfied. As a result of the termination of Mr. Targoff’s employment in December 2012, both the Initial Grant and the Subsequent Grants were settled in June 2013, in accordance with Internal Revenue Code Section 409A (see Note 10).

As of December 31, 2013, there were 84,213 vested RSU’s outstanding. A summary of the Company’s non-vested RSU activity for the year ended December 31, 2013 is presented below:


			Weighted
			Average
			Grant- Date
	Shares		Fair Value
Non-vested RSUs at January 1, 2013		27,681	$	38.53
Granted		—
Vested		(27,681)	$	38.53
Forfeited		—
Non-vested RSUs at December 31, 2013		—

In June 2009, the Company introduced a performance based long-term incentive compensation program consisting of SS/L phantom stock appreciation rights (“SS/L Phantom SARs”). Because SS/L common stock was not freely tradable on the open market and thus did not have a readily ascertainable market value, SS/L equity value under the program was derived from an Adjusted EBITDA-based formula. Each SS/L Phantom SAR provides the recipient with the right to receive an amount equal to the increase in SS/L’s notional stock price over the base price multiplied by the number of SS/L Phantom SARs vested on the applicable vesting date, subject to adjustment. The SS/L notional stock price was frozen as of December 31, 2011 in connection with the Sale. SS/L Phantom SARs are settled and the value (if any) is paid out on each vesting date. SS/L Phantom SARs may be settled in Loral voting common stock (based on the fair value of Loral voting common stock on the date of settlement) or cash at the option of the Company. SS/L Phantom SARs expire on June 30, 2016.

As of December 31, 2013, all remaining unvested SS/L Phantom SARs granted to Loral employees vest on March 18, 2014. The fair value of the SS/L Phantom SARs in included as a liability in our consolidated balance sheet.

A summary of the Company’s non-vested SS/L Phantom SAR activity for the year ended December 31, 2013 is presented below:


		Weighted
		Average
		Grant- Date
	Shares	Fair Value
Non-vested SS/L Phantom SARs at January 1, 2013	70,000	$	2.13
Granted	—
Vested	(56,250)	$	2.13
Forfeited	—
Non-vested SS/L Phantom SARs at December 31, 2013	13,750	$	2.13

During fiscal years 2013, 2012 and 2011, the following activity occurred under the Stock Incentive Plan (in thousands):


	Year Ended December 31,
	2013		2012		2011
Total intrinsic value of options exercised	$	—	$	17,472	$	39,018
Total fair value of restricted stock vested	$	—	$	287	$	155
Total fair value of restricted stock units vested	$	2,241	$	1,403	$	3,969

Stock-based compensation expense consists of the following:



	2013		2012		2011
Stock-based compensation	$	488	$	1,796	$	2,545

Included in total stock-based compensation expense is stock-based compensation paid in cash of $0.5 million, $2.3 million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013, there is no unrecognized compensation cost related to non-vested awards.