STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

Notes To Financial Statements [Abstract]

NOTE 5: STOCK-BASED COMPENSATION

The Company currently has one active stock-based compensation plan, which was approved by shareholders. The Company grants stock options to employees, consultants, and board members at the fair market value of its common stock, on the date of grant, with a term no greater than ten years. The majority of stock options vest over two or three years. Shareholders who own 10% or more of the Company’s outstanding stock are granted incentive stock options at an exercise price that may not be less than 110% of the fair market value of the Company’s common stock on the date of grant and have a term no greater than five years.

In February 2008, the Company’s Board of Directors approved the Mannatech, Incorporated 2008 Stock Incentive Plan, as amended (the “2008 Plan”), which reserves up to 1,000,000 shares of common stock for issuance of stock options and restricted stock to our employees, board members, and consultants, plus any shares reserved under the Company’s then-existing, unexpired stock plans for which options had not yet been issued, and any shares underlying outstanding options under the then-existing stock option plans that terminate without having been exercised in full. The 2008 Plan was approved by the Company’s shareholders at the 2008 Annual Shareholders’ Meeting. As of September 30, 2011, the 2008 Plan had 316,733 stock options available for grant before the plan expires on February 20, 2018.

The Company records stock-based compensation expense related to granting stock options in selling and administrative expenses. During the three months ended September 30, 2011 and 2010, the Company granted 25,000 and 465,558 stock options, respectively. During the nine months ended September 30, 2011 and 2010, the Company granted 373,158 and 772,194 stock options, respectively. Included in the stock options granted during the three and nine months ended September 30, 2010 were 440,558 stock options issued August 16, 2010 in connection with the option exchange program. The fair value of stock options granted during the three months ended September 30, 2011 was $0.33. The fair value of stock options granted during the three months ended September 30, 2010 ranged from $1.26 to $1.40. The fair value of stock options granted during the nine months ended September 30, 2011 ranged from $0.33 to $0.94 per share. The fair value of stock options granted during the nine months ended September 30, 2010 ranged from $1.18 to $2.03 per share. The Company recognized compensation expense as follows for the periods ended September 30 (in thousands):

	Three months					Nine months
	2011		2010			2011		2010
Total gross compensation expense	$	78	$	123	$	280	$	514
Total tax benefit associated with compensation expense		15		10		66		67
Total net compensation expense	$	63	$	113	$	214	$	447

As of September 30, 2011, the Company expects to record compensation expense in the future as follows (in thousands):

	Three months ending December 31, 2011		Year ending December 31,
	Three months ending December 31, 2011		2012		2013		2014
Total gross unrecognized compensation expense	$	78	$	240	$	114	$	10
Tax benefit associated with unrecognized compensation expense		13		39		16		—
Total net unrecognized compensation expense	$	65	$	201	$	98	$	10