Note 6 - Equity Incentive Plan

6 Months Ended

Jun. 30, 2015

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

Equity Incentive Plan

The Company estimates the fair value of stock options and stock appreciation rights (“SARs”) using the Black-Scholes valuation model. Fair value of restricted stock is measured by the grant-date price of the Company’s shares. The fair value of each stock option award during the three- and six-month periods ended June 30, 2015 and 2014, respectively, was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Six Months Ended June 30,
	2015			2014
Risk free interest rate	1.15%	-	1.46%	1.16%	-	1.33%
Expected volatility	53.15%	-	54.65%		53.28%
Expected life (years)		4.5			4
Expected dividend yield		0.00%			0.00%

The Company recorded $509,352 and $377,960 of share-based compensation expense for the three-month periods ended June 30, 2015 and 2014, respectively, for equity compensation awards. The Company recorded $1,063,949 and $805,782 of share-based compensation expense for the six-month periods ended June 30, 2015 and 2014, respectively, for equity compensation awards. The Company presents the expenses related to stock-based compensation awards in the same expense line items as cash compensation paid to the respective recipients.

There were 7,500 and 111,625 stock options granted under the Anika Therapeutics, Inc. Second Amended and Restated Stock Option and Incentive Plan, as amended, (the “Plan”) during the three- and six-month periods ended June 30, 2015, respectively. There were no Restricted Stock Awards (“RSAs”) or

Restricted Stock Units (“RSUs”) granted under the plan during the three-month period ended June 30, 2015.

There were 23,375 RSAs granted under the Plan during the six-month period ended June 30, 2015. There were 9,678 RSUs granted to members of the Company’s Board of Directors under the Plan during the six month period ended June 30, 2015. The stock options, RSAs, and RSUs granted to employees and directors generally become exercisable or vest ratably over four years from the date of grant.

A portion of the stock options granted during the six-month period ended June 30, 2015 contained certain performance features, as compared to established targets, in addition to time-based vesting conditions. The compensation cost associated with these grants was estimated using the Black Scholes valuation method multiplied by the expected number of shares to be issued, which is adjusted based on the estimated probabilities of achieving the performance goals.

As of June 30, 2015, there was approximately $4.7 million of total unrecognized compensation cost related to non-vested stock options, SARs, RSAs, and RSUs granted under the Company’s incentive plans. This cost is expected to be recognized over a weighted-average period of 2.95 years.

The total intrinsic value of stock options and SARs exercised during the six-month periods ended June 30, 2015 and 2014 was $2,990,912 and $25,396,552, respectively. Cash received from the exercise of stock options during the three- and six-month periods ended June 30, 2015 and 2014 was $5,448 and $294,106, and $969,029 and $1,361,805, respectively. During the second quarter of 2014, the Company acquired and subsequently retired 133,774 common shares related to an employee SARs exercise, to meet minimum statutory tax withholding requirements.

There were 825,897 options and SARs outstanding under the Company’s incentive plans as of June 30, 2015 with a weighted-average exercise price of $17.86 per share, an aggregate intrinsic value of approximately $13.9 million, and a weighted-average remaining contractual term of 6.8 years. None of the options or SARs outstanding at June 30, 2015 or 2014, respectively, had cash-settlement features.

The Company may satisfy the awards upon exercise, or upon fulfillment of the vesting requirements for other equity-based awards, with either authorized but unissued shares or shares reacquired by the Company. Stock-based awards are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. Awards containing service conditions generally become exercisable ratably over one to four years, have a ten year contractual term, and sometimes contain performance conditions.