Stock Options

12 Months Ended

Dec. 31, 2014

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

Stock Options

11. Stock Options

On February 21, 2000, the Company’s Board of Directors approved the adoption of the 2000 Incentive Stock Option Plan (the “Plan”) for TOR Minerals International, Inc. The Plan provides for the award of a variety of incentive compensation arrangements, including restricted stock awards, performance units or other non-option awards, to such employees and directors as may be determined by a Committee of the Board. At the Annual Shareholders’ meeting on May 11, 2012, the maximum number of shares of the Company’s common stock that may be sold or issued under the Plan was increased to 500,000 shares subject to certain adjustments upon recapitalization, stock splits and combinations, merger, stock dividend and similar events; in addition the Plan was extended to May 23, 2022. At December 31, 2014, there were 147,705 options outstanding, 114,631 exercised and 237,664 available for future issuance under the Plan.

For the years ended December 31, 2014 and 2013, the Company recorded $128,000 and $109,000, respectively, in stock-based employee compensation. This compensation cost is included in the general and administrative expenses and cost of sales in the accompanying consolidated statements of operations.

The Company granted options to purchase 20,500 shares of common stock during the year ended December 31, 2014. The weighted average fair value per option at the date of grant for options granted in the year ended December 31, 2014 was $10.34, as valued using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Twelve Months Ended December 31,
	2014		2013
Risk-free interest rate	2.18	%	1.28	%
Expected dividend yield	0.00	%	0.00	%
Expected volatility	0.65		0.90
Expected term (in years)	7.00		7.00

The risk free interest rate is based on the Treasury Constant Maturity Rate as quoted by the Federal Reserve at the time of the grant for a term equivalent to the expected term of the grant. The estimated volatility is based on the historical volatility of our stock and other factors. The expected term of options represents the period of time the options are expected to be outstanding from grant date.

The following table summarizes certain information regarding stock option activity:

				Options
	Total Reserved			Outstanding			Weighted Avg Exercise Price	Range of Exercise Prices
Balances at December 31, 2012		412,546			173,888		$13.39	$2.70  -  $30.55
Granted					20,500		$8.83	$11.27  -  $11.39
Exercised		(25,338	)		(25,338	)	$10.69	$2.70  -  $11.05
Forfeited or expired					(37,886	)	$14.63	$11.00  -  $29.50
Balances at December 31, 2013		387,208			131,164		$13.24	$2.70  -  $30.55
Granted					20,500		$10.34	$11.27  -  $11.39
Exercised		(1,839	)		(1,839	)	$6.25	$2.70  -    $7.50
Forfeited or expired					(2,120	)	$21.22	$19.95  -  $21.30
Balances at December 31, 2014		385,369			147,705		$13.24	$2.70  -  $30.55

The number of shares of common stock underlying options exercisable at December 31, 2014 was 97,705. The weighted-average remaining contractual life of those options is 5.62 years. Exercise prices on options outstanding at December 31, 2014, ranged from $2.70 to $30.55 per share as noted in the following table.

Options Outstanding at December 31,
2014	2013	Range of Exercise Prices
13,189	15,028	$  2.70 - $  9.99
103,616	83,116	$10.00 - $14.99
23,500	23,620	$15.00 - $19.99
--	2,000	$20.00 - $24.99
2,000	2,000	$25.00 - $29.99
5,400	5,400	$30.00 - $30.55
147,705	131,164

 As of December 31, 2014, there was approximately $373,000 of compensation expense related to non-vested awards. This expense is expected to be recognized over a weighted average period of 2.67 years.