Stock Based Compensation and Stock Options
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Dec. 31, 2014
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation and Stock Options | Note B - Stock Based Compensation and Stock Options Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at December 31, 2014, options for up to 19,365,000 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors and consultants at exercise prices not less than the fair market value of the stock at the date of grant. Options granted under the Plan are non-statutory stock options and generally vest 25% one year from date of grant and the remaining 75% vesting ratably each month for the next 36 months. The options granted to employees and the board of directors expire at the end of five years and ten years from date of grant, respectively. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses historical data among other factors to estimate the expected volatility, the expected option life, and the expected forfeiture rate. The risk-free rate is based on the interest rate paid on a U.S. Treasury issue with a term similar to the estimated life of the option. Based upon the historical experience of options cancellations, the Company has estimated an annualized forfeiture rate of 12.40% and 12.12% for the three months ended December 31, 2013 and 2014, respectively. Forfeiture rates will be adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate. The following assumptions were used to estimate the fair value of options granted during the three months ended December 31, 2013 and 2014 using the Black-Scholes option-pricing model:
All options granted in the nine months ended December 31, 2013 and 2014 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options. For the three months ended December 31, 2013 and 2014, the Company recorded share-based compensation expense of $676,000 and $432,000, respectively. For the nine months ended December 31, 2013 and 2014, the Company recorded share-based compensation expense of $1,546,000 and $1,594,000, respectively. The table below shows the amounts recognized in the financial statements for stock compensation expense for time based options and performance based options during the three and nine months ended December 31, 2013 and 2014, respectively.
Summarized information for all stock options for the three and nine months ended December 31, 2013 and 2014 follows:
The following table summarizes the status of stock options outstanding and exercisable at December 31, 2014:
A summary of the status for all outstanding options at December 31, 2014, and changes during the three months then ended, is presented in the table below:
The weighted-average grant-date fair value of options granted during the three months ended December 31, 2013 and 2014, was $16.70 and $14.22, respectively. Included in the above-noted stock option grants and stock compensation expense are performance-based stock options under which vesting occurs only upon the Company achieving certain revenue or earnings per shares targets on a calendar year basis as determined by the Company’s board of directors. These options were valued in the same manner as the time-vesting options. However, the Company only recognizes stock compensation to the extent that the targets are determined to be achieved which allow the performance options to vest. The Company recognized $285,000 and ($30,000) of stock compensation expense for the three months ended December 31, 2013 and 2014, respectively, for performance-based stock options. The Company recognized $448,000 and $113,000 of stock compensation expense for the nine months ended December 31, 2013 and 2014, respectively, for performance-based stock options. The current period reduction reflects changes in management’s estimate of certain performance based measurements not being achieved for the current fiscal year. |