Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

STOCK-BASED COMPENSATION

(a) Stock Options

The following table summarizes the stock option activity during the nine months ended September 30, 2016:




	Number of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2015	611,875	$	4.50	2.2	$	43
Granted	40,000	4.67
Expired	—	—
Outstanding at September 30, 2016	651,875	$	4.51	1.6	$	802
Exercisable at September 30, 2016	651,875	$	4.51	1.6	$	802

The aggregate intrinsic value of stock options outstanding and exercisable is the difference between the September 30, 2016 market price for the Company's common shares and the exercise price of the options, multiplied by the number of options where the September 30, 2016 market price exceeds the exercise price.

The Company uses the Black-Scholes option pricing model to estimate the fair value of each option on the date of grant. The assumptions used in the Black-Scholes pricing model for options granted or exchanged during the nine months ended September 30, 2016 were as follows:



	Nine months ended September 30, 2016
Risk-free interest rate	1.1	%
Dividend yield	—
Expected volatility	0.5	%
Expected term (in years)	4.0

(b) Restricted Stock Awards

Under the 2013 Equity Incentive Plan, the Company made grants of restricted common stock awards ("Restricted Stock Awards") to certain officers of the Company. The Restricted Stock Awards vest after a ten-year period and are subject to the officers' continued employment through the vesting date. The Restricted Stock Awards are amortized on a straight-line basis over the ten-year requisite service period. Total unamortized compensation expense related to unvested Restricted Stock Awards at September 30, 2016 was $6.1 million. The grant-date fair value of the Restricted Stock Awards was determined using the closing price of Kingsway common stock on the date of grant. The following table summarizes the activity related to unvested Restricted Stock Awards for the nine months ended September 30, 2016:




	Number of Restricted Stock Awards	Weighted-Average Grant Date Fair Value (per Share)
Unvested at December 31, 2015	1,952,665	$	4.14
Granted	—	—
Forfeited	—	—
Unvested at September 30, 2016	1,952,665	$	4.14

The Company granted restricted common stock units ("Restricted Stock Units") to an officer of the Company pursuant to a Restricted Stock Unit Agreement dated August 24, 2016. Each Restricted Stock Unit represents a right to receive one common share on the vesting date. The Restricted Stock Units shall become fully vested and the restriction period shall lapse as of March 28, 2024 subject to the officer's continued employment through the vesting date. The Restricted Stock Units are amortized on a straight-line basis over the requisite service period. Total unamortized compensation expense related to unvested Restricted Stock Units at September 30, 2016 was $2.8 million. The grant-date fair value of the Restricted Stock Units was determined using the closing price of Kingsway common stock on the date of grant. The following table summarizes the activity related to unvested Restricted Stock Units for the nine months ended September 30, 2016:




	Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value (per Share)
Unvested at December 31, 2015	—	$	—
Granted	500,000	5.73
Vested	—	—
Forfeited	—	—
Unvested at September 30, 2016	500,000	$	5.73

Total stock-based compensation expense, net of forfeitures, was $0.2 million and $0.2 million for the three months ended September 30, 2016 and September 30, 2015, respectively ($0.7 million and $0.6 million for the nine months ended September 30, 2016 and September 30, 2015, respectively).