Equity-Based Compensation

3 Months Ended

Mar. 31, 2017

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

Equity-Based Compensation

Note 3: Equity-Based Compensation

The fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. There were no options or equity warrants granted in the three months ended March 31, 2017 and 2016.

Stock option for employees’ activity during the three months ended March 31, 2017 is as follows:

Stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		836,256		$	16.82		4.47	$	—
Granted		—			—		—		—
Forfeited		(5,048	)		25.47		—		—
Outstanding March 31, 2017		831,208		$	16.77		4.24	$	—
Vested and expected to vest March 31, 2017		831,208		$	16.77		4.24	$	—
Exercisable March 31, 2017		786,936		$	16.54		3.24	$	—

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		90,625		$	1.72		9.33	$	—
Granted		—			—		—		—
Vested		(46,354	)		1.58		—		—
Forfeited		—			—		—		—
Outstanding March 31, 2017		44,271		$	1.87		8.91	$	—

Stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		271,500		$	10.41		4.66	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(5,590	)		15.08		—		—
Outstanding March 31, 2017		265,910		$	10.31		4.41	$	—
Vested and expected to vest March 31, 2017		265,910		$	10.31		4.41	$	—
Exercisable March 31, 2017		254,104		$	10.69		4.11	$	—

 Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		26,389		$	1.65		8.61	$	—
Granted		—			—		—		—
Vested		(11,771	)		1.64		—		—
Forfeited		(2,812	)		1.68		—		—
Outstanding March 31, 2017		11,806		$	1.65		9.41	$	—

The impact on the Company’s results of operations of recording equity-based compensation for the three months ended March 31, 2017 and 2016 was to increase costs and expenses by approximately $52,000 and $52,000, respectively, which had no impact on earnings per share.

As of March 31, 2017 and 2016, respectively, there was $135,000 and $168,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.

On January 26, 2016, the Board, based on the recommendation of its Compensation Committee, established two programs - the 2016 Senior Executive Deferred Cash Performance Award Plan for Dr. William A. Carter and Thomas K. Equels, the Company’s two primary executive officers, and the 2016 Voluntary Incentive Stock Award Plan for Company employees and Board members other than Dr. Carter and Mr. Equels. Both Plans include a Base Pay Supplement provision.

The Company maintains a record of the number of shares of stock represented by each Incentive Right issued out of the 2016 Voluntary Incentive Stock Award Plan. During the three months ended March 31, 2016, the Company granted rights to 53,051 incentive shares associated with the Plan and recorded $21,000 in equity-based compensation. There were no incentive shares issued during the quarter ended March 31, 2017.