14. Share-Based Payments

Stock Option Plan 2007

On September 12, 2007 the Company’s management and supervisory boards resolved to implement a stock option plan (“SOP 2007”) for all employees (including members of the management board) with open-ended contracts of employment with the Company and for selected members of the supervisory board of the Company and further participants. The stock option plan became effective on September 28, 2007 and the shareholders of the Company resolved to amend the SOP 2007 on September 17, 2009, May 7, 2010 and June 30, 2015. The total number of options that were eligible to be granted and vested in the beneficiaries under the SOP 2007 did not exceed 29,889 (the overall number of options under the SOP 2007).

The options grant the beneficiaries the right to acquire shares in the Company. The vesting period for the options is four years following the grant date. On the last day of the last calendar month of the first year of the vesting period, 25% of the options attributable to each beneficiary are automatically vested. On the last day of the last calendar month of the second year of the vesting period, a further 25% of the options are vested. During the third and fourth years of the vesting period, the remaining 50% of the options vest on a monthly pro rata basis (i.e. 2.083% per month).

Notwithstanding any of the above, the exercise of vested options was only permissible in case of a liquidation event (e.g. sale of 50% or more of the shares or assets of the Company or merger of the Company) or a qualified public offering. Since the closing of the initial public offering of the Company on September 23, 2015 the beneficiaries are entitled to exercise their vested options until the end of the exercise period on September 27, 2017.

The beneficiaries are not entitled to transfer vested options except to individuals by way of inheritance or bequest. Options do not entitle beneficiaries to exercise any shareholder rights. Beneficiaries may exercise shareholder rights if and to the extent such beneficiary otherwise holds shares.

As of March 31, 2017, the vested option rights outstanding under the SOP 2007 amount to $1,087 and are recorded under additional paid in capital.

Movements in the number of share options outstanding and their related weighted average exercise prices concerning the SOP 2007 are as follows:

	2017
Stock Option Plan 2007	Weighted average exercise price in $ per share	Options		Aggregate intrinsic value
Outstanding as of January 1, 2017	7.32	10,996
Granted	—	—
Exercised	7.32	(5,156	)
Forfeited	—	—

Outstanding as of March 31, 2017	7.32	5,840		$	1,112

Vested and exercisable as of March 31, 2017	7.32	5,712		$	1,086

The total intrinsic value of options exercised during the three months ended March 31, 2017 was $943,000.

The weighted average remaining contractual life of all options granted under the SOP 2007 is 0.2 years. Stock-based compensation expense under the Stock Option Plan 2007 was $15,000, for the three months ended March 31, 2017. We did not accrue any income tax benefit under the Stock Option Plan 2007 for the three months ended March 31, 2017.

The weighted average share price at the date of exercise of options exercised during the three months ended March 31, 2017 was $97.67.

Stock Option Plan 2015

On April 2, 2015, the Company’s shareholders, management board and supervisory board adopted the Stock Option Plan 2015 and the shareholders approved an amended and restated version of the Stock Option Plan 2015 on June 30, 2015. An amendment to the amended and restated Stock Option Plan 2015 was approved by the shareholders on July 22, 2015. The Stock Option Plan 2015 became effective on July 3, 2015 upon the registration with the commercial register in Austria of the conditional capital increase approved by the shareholders on June 30, 2015. The Stock Option Plan 2015 initially provided for the grant of options for up to 95,000 common shares to the Company’s employees, including members of the management board, and to members of the supervisory board. Following the closing of the initial public offering of the Company, the overall number of options increased to 177,499 shares. Following approval by the Company’s shareholders at its 2016 annual general meeting, the number of shares available for issuance under the Stock Option Plan 2015 was increased to 346,235 common shares.

Each vested option grants the beneficiary the right to acquire one share in the Company. The vesting period for the options is four years following the grant date. On the last day of the last calendar month of the first year of the vesting period, 25% of the options attributable to each beneficiary are automatically vested. During the second, third and fourth years of the vesting period, the remaining 75% of the options vest on a monthly pro rata basis (i.e. 2.083% per month).

Options granted under the Stock Option Plan 2015 have a term of no more than ten years from the beneficiary’s date of participation.

The beneficiaries are not entitled to transfer vested options except to individuals by way of inheritance or bequest. Options do not entitle beneficiaries to exercise any shareholder rights. Beneficiaries may only exercise shareholder rights if and to the extent such beneficiary otherwise holds shares.

As at March 31, 2017, the vested option rights outstanding under the SOP 2015 amounted to $4,214 and is recorded under additional paid in capital.

Movements in the number of share options outstanding and their related weighted average exercise prices under the Stock Option Plan 2015 are as follows:

	2017
Stock Option Plan 2015	Weighted average exercise price in $ per share	Options		Aggregate intrinsic value
Outstanding as of January 1, 2017	78.25	179,436
Granted	85.51	102,560
Exercised	—	—
Forfeited	88.00	(9,257	)

Outstanding as of March 31, 2017	80.65	272,739		$	12,255

Vested and exercisable as of March 31, 2017	77.12	62,805		$	3,926

Stock-based compensation expense under the Stock Option Plan 2015 was approximately $1.8 million for the three months ended March 31, 2017. The total income tax benefit under the Stock Option Plan 2015 recognized in the statement of operations and comprehensive income (loss) for the three months ended March 31, 2017 was $200,000. The weighted average fair value of the options granted during the three months ended March 31, 2017 was $32.47 per share. The 102,560 options granted in the three months ended March 31, 2017 were valued based on a Black Scholes option pricing model. The significant inputs into the model were as follows:

Input parameters	Granted on February 7, 2017		Granted on March 21, 2017
Grant date share price in $	85.00		110.00
Exercise price in $	85.00		110.00
Expected volatility	68	%	66	%
Expected term of options	2.2 years		2.2 years
Risk-free interest rate	-0.777	%	-0.718	%
Dividend yield	—		—

The expected price volatility is based on historical trading volatility for the publicly traded peer companies under consideration of the remaining life of the options. The weighted average remaining contractual life of the options granted in the three months ended March 31, 2017 is 9.9 years.

As of March 31, 2017, there was $8.0 million of total unrecognized compensation expense, related to unvested options granted under the Stock Option Plan 2015, which will be recognized over the weighted —average remaining vesting period of 2.2 years.

Founders’ Program 2007

The Founders’ Program 2007 was an additional share-based payment scheme, the beneficiaries of which were Dr. Gerd Ascher and Dr. Rodger Novak. There remain 623 shares available in form of stock options at an exercise price of €1.00 per share granted under the Founders’ Program and otherwise on the same terms and conditions as set out in the Company’s Stock Option Plan 2007. The 623 options vested as follows: 25% of the options (156 shares) vested in November 2007. A further 25% (155 shares) vested in February 2008. The remaining 50% vested during the period from March 2008 to February 2010 on a monthly pro rata basis (i.e., 2.083% per month, or 13 shares per month). The fair value of each of these options at grant date is $144.23 per share. The options are fully vested and have been exercised.