Stock-Based Compensation | 10. Stock-Based Compensation Stock Option and Incentive Plans In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. The 2007 Plan allowed the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock units and other awards. Under the 2007 Plan, stock options could not be granted at less than fair market value on the date of grant, and grants generally vested over a three- to four-year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. Additionally, beginning with awards made in August 2015, the Company had the option to direct a net issuance of shares for satisfaction of tax liability with respect to vesting of awards and delivery of shares. Prior to August 2015, this choice of settlement method was solely at the discretion of the award recipient. At the inception of the plan, t he Company reserved for issuance an aggregate of 2,911,667 shares of common stock under the 2007 Plan, which expired in May 2017. The 2007 Plan was subject to an automatic annual increase of shares on January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a) 2% of the outstanding number of shares of common stock (on a fully-diluted basis) on the immediately preceding December 31 and (b) such lower number of shares as may be determined by the compensation committee of the Board. The number of shares available for issuance under the 2007 Plan was subject to adjustment in the event of a stock split, stock dividend or other change in capitalization. Approximately 8,224,334 shares were added to the 2007 Plan in accordance with the automatic annual increase and other provisions. No new awards may be granted under the 2007 Plan; however, the shares of common stock remaining in the 2007 Plan are available for issuance in connection with previously awarded grants under the 2007 Plan. 373,500 In March 2017, the Board approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which was approved by the stockholders of the Company at the 2017 Annual Meeting and became effective June 16, 2017. The 2017 Plan replaces the Company’s 2007 Plan. On that date, 3,000,000 shares of Common Stock were reserved for issuance under the 2017 Plan and, generally, shares that are forfeited or canceled from awards under the 2017 Plan also will be available for future awards. Under the 2017 Plan, the Company may grant restricted stock and restricted stock units, non-qualified stock options, stock appreciation rights, performance awards, and other stock-based and cash-based awards. Grants generally vest in equal tranches over a three-year period. Stock options granted under the 2017 Plan expire no later than ten years after the grant date. Shares of stock issued pursuant to restricted stock awards are restricted in that they are not transferable until they vest. Stock underlying awards of restricted stock units are not issued until the units vest. Non-qualified stock options cannot be exercised until they vest. Under the 2017 Plan, all stock options and stock appreciation rights must be granted with an exercise price that is at least equal to the fair market value of the stock on the date of grant. The 2017 Plan broadly prohibits the repricing of options and stock appreciation rights without stockholder approval and requires that no dividends or dividend equivalents be paid with respect to options or stock appreciation rights. The 2017 Plan further provides that, in the event any dividends or dividend equivalents are declared with respect to restricted stock, restricted stock units, other stock-based awards and performance awards (referred to as “full-value awards”), they would be subject to the same vesting and forfeiture provisions as the underlying award. There is a total of 999,761 shares of common stock that remain subject to outstanding stock grants under the 2017 Plan as of March 31, 2019. Accounting for Stock-Based Compensation The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award. The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a zero coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period. A summary of the stock option activity under the Company’s plans for the three months ended March 31, 2019 is presented below: Year-to-Date Activity Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term in Years Aggregate Intrinsic Value Options outstanding at December 31, 2018 186,000 $ 9.50 Granted — — Exercised (10,000 ) $ 2.34 $ 20 Forfeited — $ — Cancelled — $ — Options outstanding at March 31, 2019 176,000 $ 9.91 4.30 $ 1,362 Options exercisable at March 31, 2019 156,000 $ 7.54 3.67 $ 1,362 Options vested or expected to vest at March 31, 2019 175,588 $ 9.87 4.29 $ 1,362 The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $20 and $0.8 million during the three months ended March 31, 2019 and March 31, 2018, respectively. The total amount of cash received from exercise of these options was approximately $23 and $0.4 million during the three months ended March 31, 2019 and 2018, respectively. Restricted Stock Units Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the three months ended March 31, 2019 is presented below: Year-to-Date Activity Shares Weighted- Average Grant Date Fair Value Per Share Aggregate Intrinsic Value Nonvested outstanding at December 31, 2018 1,197,261 $ 17.69 Granted 42,604 $ 16.83 Vested (42,604 ) $ 16.83 Forfeited — $ — Nonvested outstanding at March 31, 2019 1,197,261 $ 17.69 $ 1,949 There were 42,604 restricted stock units with a total grant-date fair value of $0.7 million that vested during the three months ended March 31, 2019. There were no restricted stock units that vested or were granted during the three months ended March 31, 2018. As of March 31, 2019, there was $15.5 million of total unrecognized compensation expense related to stock options and restricted stock units, which is expected to be recognized over a weighted average period of 1.6 |