Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Employee Benefit Plans:

Employee Benefit Plans

6. Employee Benefit Plans

      Stock Option Plan

2011 Stock Option and Incentive Plan

On May 12, 2011, the Company’s stockholders approved the 2011 Stock Option and Incentive Plan (the 2011 Plan). The 2011 Plan provides for the issuance of up to a maximum number of shares of common stock equal to the sum of (i) 1,000,000, plus (ii) the number of shares of common stock underlying any grants pursuant to the 2011 Plan or the Plug Power Inc. 1999 Stock Option and Incentive Plan that are forfeited, canceled, repurchased or are terminated (other than by exercise). The shares may be issued pursuant to stock options, stock appreciation rights, restricted stock awards and certain other equity-based awards granted to employees, directors and consultants of the Company. No grants may be made under the 2011 Plan after May 12, 2021. On May 16, 2012, the stockholders approved an amendment to the 2011 Plan, to increase the number of shares of the Company’s common stock authorized for issuance under the 2011 Plan from 1.0 million to 6.5 million.

At December 31, 2013, there were approximately 4.7 million options granted and outstanding and 1.1 million options available to be issued under the 2011 Stock Option Plan. The 2011 Stock Option Plan permits the Company to: grant incentive stock options; grant non-qualified stock options; grant stock appreciation rights; issue or sell common stock with vesting or other restrictions, or without restrictions; grant rights to receive common stock in the future with or without vesting; grant common stock upon the attainment of specified performance goals; and grant dividend rights in respect of common stock. Options for employees issued under this plan generally vest in equal annual installments over three years and expire ten years after issuance. Options granted to members of the Board generally vest one year after issuance. To date, options granted under the 2011 Stock Option Plan have vesting provisions ranging from one to three years in duration and expire ten years after issuance.

Compensation cost associated with employee stock options represented approximately $1,445,000 of the total share-based payment expense recorded for the year ended December 31, 2013. The Company estimates the fair value of stock options using a Black-Scholes valuation model, and the resulting fair value is recorded as compensation cost on a straight-line basis over the option vesting period. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The assumptions made for purposes of estimating fair value under the Black-Scholes model for the 3,090,900, 78,400 and 1,618,400 options granted during the years ended December 31, 2013, 2012 and 2011, respectively, were as follows:

	2013	2012	2011
Divident yield:	0%	0%	0%
Expected term of options (years):	6	6	6
Risk free interest rate:	0.93%-1.70%	0.80%-1.16%	1.16%-2.61%
Volatility:	92%-107%	80%	74%-79%

The Company’s estimate of an expected option term was calculated in accordance with the simplified method for calculating the expected term assumption. The estimated stock price volatility was derived from the Company’s actual historic stock prices over the past six years, which represents the Company’s best estimate of expected volatility.

A summary of stock option activity for the year December 31, 2013 is as follows:

			Weighted		Weighted Average	Aggregate
			Average Exercise		Remaining	Intrinsic
	Shares		Price		Contractual Terms	Value
Options outstanding at December 31, 2012		1,986,255	$	8.95	7.9	$	-
Granted		3,090,900	0.40		9.6	-
Exercised		-	-		-	-
Forfeited		(340,837)	6.41		-	-
Expired		(32,992)	51.05		-	-
Options outstanding at December 31, 2013		4,703,326	$	3.22	8.7	-
Options exercisable at December 31, 2013		1,193,800	10.45		6.7	-
Options unvested at December 31, 2013		3,509,526	$	0.77	9.4	$	2,751,453

The weighted average grant date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $0.32, $0.83 and $3.58, respectively. There were no stock options exercised during the year ended December 31, 2013. As of December 31, 2013, there was approximately $1,437,000 of unrecognized compensation cost related to stock option awards to be recognized over the next three years. The total fair value of stock options that vested during the years ended December 31, 2013 and 2012 was approximately $1,445,000 and $1,407,000, respectively.

Restricted stock awards generally vest in equal installments over a period of one to three years. Restricted stock awards are valued based on the closing price of the Company’s common stock on the date of grant, and compensation cost is recorded on a straight-line basis over the share vesting period. The Company recorded expense of approximately $33,000 associated with its restricted stock awards in 2013. Additionally, as of December 31, 2013, there was $207,000 of unrecognized compensation cost related to restricted stock awards to be recognized over the next three years.

A summary of restricted stock activity for the year ended December 31, 2013 is as follows:

			Aggregate
			Instrinsic
	Shares		Value
Unvested restricted stock at December 31, 2012		-	$	-
Granted		683,336	1,059,171
Forfeited		(33,334)	(51,668)
Unvested restricted stock at December 31, 2013		650,002	$	1,007,503

For the years ended December 31, 2013, 2012, and 2011, the Company recorded expense of approximately $2.2 million, $2.0 million, and $1.5 million respectively, in connection with its share based payment awards.

401(k) Savings & Retirement Plan

The Company offers a 401(k) Savings & Retirement Plan to eligible employees meeting certain age and service requirements. This plan permits participants to contribute 100% of their salary, up to the maximum allowable by the Internal Revenue Service regulations. Participants are immediately vested in their voluntary contributions plus actual earnings or less actual losses thereon. Participants are vested in the Company’s matching contribution based on years of service completed. Participants are fully vested upon completion of three years of service. During 2002, the Company began funding its matching contribution in common stock. Accordingly, the Company has issued 1,319,914, 403,579 and 133,748 shares of common stock to the Plug Power Inc. 401(k) Savings & Retirement Plan during 2013, 2012 and 2011, respectively. 

The Company’s expense for this plan, including the issuance of shares, was approximately $371,000, $436,000 and $374,000 for years ended December 31, 2013, 2012 and 2011, respectively.