Stock Based Compensation

Glowpoint 2014 Stock Incentive Plan

On May 28, 2014, the Glowpoint, Inc. 2014 Equity Incentive Plan (the “2014 Plan”) was approved by the Company’s stockholders at the Company’s 2014 Annual Meeting of Stockholders. The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means to attract, motivate, retain and reward selected employees and other eligible persons through the grant of equity awards. Awards may be granted under the 2014 Plan to officers, employees, directors and consultants of the Company or its subsidiaries. The 2014 Plan permits the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, cash awards and other awards, including stock bonuses, performance stock, performance units, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the Company’s common stock, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof, or any similar securities with a value derived from the value of or related to the Company’s common stock and/or returns thereon. A total of 4,400,000 shares of the Company’s common stock were initially available for issuance under the 2014 Plan. During the years ended December 31, 2016 and 2015, 2,431,000 and 2,969,000 awards, respectively, were granted under the 2014 Plan. As of December 31, 2016, 648,000 shares are available for issuance under the 2014 Plan.

Glowpoint 2007 Stock Incentive Plan

In May 2014, the Board terminated the Company’s 2007 Stock Incentive Plan (the “2007 Plan”). Notwithstanding the termination of the 2007 Plan, outstanding awards under the 2007 Plan will remain in effect accordance with their terms. As of December 31, 2016, options to purchase a total of 1,209,000 shares of common stock and 193,000 shares of restricted stock were outstanding under the 2007 Plan.

Glowpoint 2000 Stock Incentive Plan

In June 2010, the Board terminated the Glowpoint 2000 Stock Incentive Plan (as amended, the “2000 Plan”). Notwithstanding the termination of the 2000 Plan, outstanding awards under the 2000 Plan will remain in effect accordance with their terms. As of December 31, 2016, options to purchase a total of 13,000 shares of common stock were outstanding.

Stock Options

For the years ended December 31, 2016 and 2015, no stock options were granted or exercised; therefore, no fair value assumptions are presented herein for the years ended December 31, 2016 and 2015. A summary of stock options granted, exercised, expired and forfeited under our plans and options outstanding as of, and changes made during, the years ended December 31, 2016 and 2015 (options in thousands):



	Outstanding				Exercisable
	Number of Options		Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding, December 31, 2014	1,350		$	2.02	729	$	2.05
Granted	—		—
Exercised	—		—
Expired	(70	)	2.11
Forfeited	(11	)	5.43
Options outstanding, December 31, 2015	1,269		$	1.98	960	$	1.99
Granted	—		—
Exercised	—		—
Expired	(15	)	1.52
Forfeited	(32	)	1.83
Options outstanding, December 31, 2016	1,222		$	1.99	1,198	$	1.99

Additional information as of December 31, 2016 is as follows (options in thousands):



	Outstanding				Exercisable
Range of price	Number of Options	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.90 – $1.44	58	5.79	$	0.94	58	$	0.94
$1.45 – $1.96	113	5.79	1.55		107	1.55
$1.97 – $2.04	881	6.01	1.98		863	1.98
$2.05 – $2.60	69	4.20	2.25		69	2.25
$2.61 – $3.02	101	5.16	3.02		101	3.02
	1,222	5.81	$	1.99	1,198	$	1.99

A summary of unvested options as of, and changes during the years ended December 31, 2016 and 2015, is presented below (options in thousands):



	Options		Weighted Average Grant Date Fair Value
Unvested options outstanding, December 31, 2014	621		$	1.51
Granted	—		—
Vested	(302	)	1.51
Forfeited	(10	)	2.04
Unvested options outstanding, December 31, 2015	309		$	1.49
Granted	—		—
Vested	(285	)	1.50
Forfeited	—		—
Unvested options outstanding, December 31, 2016	24		$	1.41

Stock-based compensation expense relating to stock option awards is allocated as follows (in thousands):



	Year Ended December 31,
	2016		2015
General and administrative	$	361	$	386
	$	361	$	386

The intrinsic value of vested options, unvested options and exercised options were not significant for all periods presented. The remaining unrecognized stock-based compensation expense for options at December 31, 2016 was $18,000, and will be amortized over a weighted average period of approximately 3 months.

Restricted Stock Awards

A summary of restricted stock granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2016 and 2015, is presented below (shares in thousands):



	Restricted Shares		Weighted Average Grant Price
Unvested restricted shares outstanding, December 31, 2014	641		$	1.61
Granted	0		—
Vested	(241	)	1.62
Forfeited	(139	)	1.66
Unvested restricted shares outstanding, December 31, 2015	261		$	1.58
Granted	170		0.55
Vested	(68	)	1.67
Forfeited	—		—
Unvested restricted shares outstanding, December 31, 2016	363		$	1.08

The number of restricted stock awards vested during the year ended December 31, 2016 includes 25,000 shares withheld and repurchased by the Company on behalf of employees to satisfy $13,000 of tax obligations relating to the vesting of such shares. Such shares are held in the Company’s treasury stock as of December 31, 2016.

Stock-based compensation expense relating to restricted stock awards is allocated as follows (in thousands):



	Year Ended December 31,
	2016		2015
Cost of revenue	$	7	$	(17	)
Research and development	5		(1		)
Sales and marketing	—		(40		)
General and administrative	149		80
	$	161	$	22

During the year ended December 31, 2016, the Company recorded $93,000 in stock-based compensation expense related to 170,000 shares of restricted stock awards issued during 2016 in lieu of payment of $84,000 in cash bonuses earned in 2014.

During the year ended December 31, 2015, the Company recorded a reversal of $110,000 in stock-based compensation expense, of which $48,000 related to expense for unvested awards that were forfeited and $62,000 related to revised estimates for expense previously recorded on performance-based awards.

Certain restricted stock awards have performance-based vesting provisions and are subject to forfeiture, in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the probability of whether the performance criteria will be achieved and, once it is deemed probable, stock-based compensation expense is recognized over the relevant performance period. For those awards not subject to performance criteria, the cost of the restricted stock awards is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line basis over the vesting period.

The remaining unrecognized stock-based compensation expense for restricted stock awards at December 31, 2016 was $233,000. Of this amount, $78,000 relates to time-based awards with a remaining weighted average period of 6 months. The remaining $155,000 of unrecognized stock-based compensation expense relates to performance-based awards for which expense will be recognized upon the Company achieving defined AEBITDA targets.

Restricted Stock Units

A summary of restricted stock units granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2016 and 2015, is presented below (shares in thousands):



	Restricted Stock Units		Weighted Average Grant Price
Unvested restricted stock units outstanding, December 31, 2014	—		$	—
Granted	2,969		1.02
Vested	—		—
Forfeited	(805	)	1.04
Unvested restricted stock units outstanding, December 31, 2015	2,164		1.02
Granted	2,261		0.43
Vested	(387	)	0.92
Forfeited	(842	)	1.00
Unvested restricted stock units outstanding, December 31, 2016	3,196		$	0.62

As of December 31, 2016, 387,000 vested restricted stock units remain outstanding as shares of common stock have not yet been delivered for these units in accordance with the terms of the restricted stock units.

Stock-based compensation expense relating to restricted stock units is allocated as follows (in thousands):



	Year Ended December 31,
	2016		2015
Cost of revenue	$	35	$	11
Research and development	39		13
Sales and marketing	8		6
General and administrative	325		375
	$	407	$	405

Certain restricted stock unit awards have performance-based vesting provisions and are subject to forfeiture, in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the probability of whether the performance criteria will be achieved and, once it is deemed probable, stock-based compensation expense is recognized over the relevant performance period. For those awards not subject to performance criteria, the cost of the restricted stock unit awards is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line basis over the vesting period.

The remaining unrecognized stock-based compensation expense for restricted stock units at December 31, 2016 was $1,526,000. Of this amount, $445,000 relates to time-based awards with remaining weighted average period of 8 months. The remaining $1,081,000 of unrecognized stock based compensation expense relates to performance-based awards for which expense will be recognized upon the Company achieving defined revenue and AEBITDA targets over fiscal years 2017 through 2019.

There was no tax benefit recognized for stock-based compensation expense for the years ended December 31, 2016 and 2015. No compensation costs were capitalized as part of the cost of an asset during the periods presented.