The Company’s stock-based compensation has been granted under several stock incentive and long-term incentive plans. The plans authorize the Compensation Committee of the Company’s Board of Directors to issue various types of incentive compensation. Currently, the Company has issued stock options and restricted shares under the 2014 Long-Term Incentive Plan (“2014 Plan”) and stock appreciation rights under the 2016 Stock Appreciation Rights Plan. At March 31, 2020, 187,941 shares were authorized for future grants under the 2014 plan. On April 27, 2020, the Company’s Board of Directors approved the 2020 Long-Term Incentive Plan (“2020 Plan”) under which 5,500,000 shares are authorized for future grants. No awards have been granted under the 2020 Plan, and the adoption of the 2020 Plan is subject to approval by the Company’s shareholders.

For each stock option granted, the number of authorized shares under both the 2014 Plan and 2020 Plan will be reduced on a one-for-one basis. For each restricted share granted, the number of shares authorized under both the 2014 Plan and 2020 Plan will be reduced by twice the number of restricted shares. The Company has no set policy for sourcing shares for option grants. Historically the shares issued under option grants have been new shares.

The Company records compensation expense related to stock-based compensation as general and administrative expense. For the three months ended March 31, 2020 and 2019, stock-based compensation was $(2.6) million and $1.7 million, respectively, related to the issuance of stock options, restricted stock and stock appreciation rights. During the three months ended March 31, 2020, the company did not settle any stock-based compensation exercises. During the three months ended March 31, 2019, the Company settled in cash $47 thousand for stock option exercises. Because the Company does not pay significant United States federal income taxes, no amounts were recorded for future tax benefits.

Stock options have an exercise price that may not be less than the fair market value of the underlying shares on the date of grant. In general, stock options granted to participants will become exercisable over a period determined by the Compensation Committee of the Company’s Board of Directors, which in the past has been a five-year life, with the options vesting over a service period of up to five years. In addition, stock options will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee. During the three months ended March 31, 2020, the Company did not grant stock options to employees or directors.

During the three months ended March 31, 2020, no shares were added to treasury as a result of tax withholding on options exercised. During the three months ended March 31, 2019, 13,875 shares were added to treasury as a result of tax withholding on options exercised.

The Company uses the Black-Scholes model to calculate the grant date fair value of stock option awards. This fair value is then amortized to expense over the vesting period of the option. During the three months ended March 31, 2020 and 2019, the weighted average assumptions shown below were used to calculate the weighted average grant date fair value of option grants. Because the Company has not paid cash dividends and does not anticipate paying cash dividends on the common stock in the foreseeable future, no expected dividend yield was input to the Black-Scholes model.


	Three Months Ended March 31,
	2020		2019
Weighted average exercise price - ($/share)		N/A	$	1.58
Expected life in years		N/A		3.5
Average expected volatility		N/A		72.93	%
Risk-free interest rate		N/A		2.52	%
Weighted average grant date fair value - ($/share)		N/A	$	1.23

Stock option activity for the three months ended March 31, 2020 is provided below:


	Number of Shares Underlying Options	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(in thousands)			(in years)		(in thousands)
Outstanding at January 1, 2020	2,834	$	1.55
Granted	—		—
Exercised	—		—
Unvested shares forfeited	—		—
Vested shares expired	(120)		4.98
Outstanding at March 31, 2020	2,714		1.39	2.64	$	17
Exercisable at March 31, 2020	2,043		1.28	2.42	$	11

Restricted shares

Restricted stock granted to employees will vest over a period determined by the Compensation Committee that is generally a three-year period, vesting in three equal parts on the anniversaries following the date of the grant. Share grants to directors vest immediately and are not restricted. During the three months ended March 31, 2020, the Company did not grant restricted stock to employees or directors.

The following is a summary of activity for the three months ended March 31, 2020:


	Restricted Stock	Weighted Average Grant Price
	(in thousands)
Non-vested shares outstanding at January 1, 2020	343	$	1.52
Awards granted	—		—
Awards vested	(125)		1.37
Awards forfeited	—		—
Non-vested shares outstanding at March 31, 2020	218		1.61

During the three months ended March 31, 2020, 34,459 shares were added to treasury as a result of tax withholding on the vesting of restricted shares. During the three months ended March 31, 2019, 30,573 shares were added to treasury as a result of tax withholding on the vesting of restricted shares.

Stock appreciation rights (“SARs”)

SARs are granted under the VAALCO Energy, Inc. 2016 Stock Appreciation Rights Plan. A SAR is the right to receive a cash amount equal to the spread with respect to a share of common stock upon the exercise of the SAR. The spread is the difference between the SAR price per share specified in a SAR award on the date of grant (that may not be less than the fair market value of the Company’s common stock on the date of grant) and the fair market value per share on the date of exercise of the SAR. SARs granted to participants will become exercisable over a period determined by the Compensation Committee of the Company’s Board of Directors. In addition, SARs will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee of the Company’s Board of Directors.

During the three months ended March 31, 2020, the Company did not grant SARs to employees or directors.


	Number of Shares Underlying SARs	Weighted Average Exercise Price Per Share		Term	Aggregate Intrinsic Value
	(in thousands)			(in years)		(in thousands)
Outstanding at January 1, 2020	3,418	$	1.30
Granted	—		—
Exercised	—		—
Unvested shares forfeited	—		—
Vested shares expired	—		—
Outstanding at March 31, 2020	3,418		1.30	2.96	$	73
Exercisable at March 31, 2020	1,813		1.13	2.74	$	47