Share Based Payment
|3 Months Ended|
Mar. 31, 2012
|Share Based Payment [Abstract]|
|Share Based Payment||
The Company’s 1994 Incentive Plan, as amended (the “Plan”) provides for the awarding of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance awards, bonuses or other forms of share-based awards or cash, or combinations of these to the Company’s directors, officers, employees, consultants and advisors (except consultants or advisors in capital-raising transactions) as the board of directors may determine. The Plan is more fully described in Note 13 to the Consolidated Financial Statements in the Company’s 2011 Annual Report on Form 10-K.
Stock-based compensation expense for both employee and non-employee awards is as follows (in thousands):
On March 8, 2012, the Compensation and Nominating Committee of the Company’s Board of Directors (the “Compensation Committee”) approved the grant of nonqualified stock options and RSUs to the Company’s newly-appointed Chief Executive Officer and President in reliance on the employment inducement exception to the NASDAQ rules that require shareholder approval of equity-based incentive plans and awards. The Company granted 176,676 nonqualified stock options at an exercise price of $2.83 per share. These options are subject to the terms and conditions of the Plan, have a ten-year term, and vest 28% on the first anniversary of the date of grant and 9% quarterly thereafter. The Company also granted 58,892 RSUs at a fair value of $2.83 per unit. These RSUs are subject to the terms and conditions of the Plan and vest 28% on the first anniversary of the date of grant and 9% quarterly thereafter, beginning June 20, 2013.
On February 22, 2012, the Compensation Committee approved the grant of long-term incentive awards to certain executive officers consisting of nonqualified stock options and RSUs. The Company granted a total of 283,161 nonqualified stock options at an exercise price of $3.06 per share, a third of which vest on each of the first, second and third anniversaries of the date of grant. The Company also issued 94,387 RSUs at a fair value of $3.06 per unit, a third of which vest on March 20, 2013 (the “Vesting Commencement Date”) and each of the first and second anniversaries of the Vesting Commencement Date.
Stock option activity for the three months ended March 31, 2012 and stock option information as of March 31, 2012 is summarized as follows:
The aggregate intrinsic value represents the difference between the exercise price and the Company’s closing stock price on the last trading day of the quarter.
The Company estimates the fair value of stock options using a Black-Scholes valuation model. The weighted-average fair value and assumptions used for the three months ended March 31, 2012 and 2011 were as follows:
The expected term of the options has historically been based upon the historical term until exercise or expiration of all granted options. Due to the significant change in the Company following the Merger and significant change in the terms of the options granted, CDTI’s historical exercise data was not considered to provide a reasonable basis for estimating the expected term for current option grants. As such, the expected term of stock options granted in 2012 and 2011 was determined using the “simplified method” as allowed under ASC 718-10-S99. The “simplified method” calculates the expected term as the average of the vesting term and original contractual term of the options. Also, due to the significant change in the Company following the Merger, CDTI’s historical price volatility was not considered representative of expected volatility going forward. Therefore, the Company utilized an estimate based upon the historical and implied volatility of a portfolio of peer companies. The risk-free interest rate is the constant maturity rate published by the U.S. Federal Reserve Board that corresponds to the expected term of the option. The dividend yield is assumed as 0% because the Company has not paid dividends and does not expect to pay dividends in the future.
Compensation costs for stock options that vest over time are recognized over the vesting period on a straight-line basis. As of March 31, 2012, the Company had $1.0 million of unrecognized compensation cost related to stock option grants that remained to be recognized over vesting periods. These costs are expected to be recognized over a weighted average period of 2.8 years.
There was no cash received from option exercises under any share-based payment arrangements for the three months ended March 31, 2012 or 2011.
Restricted Stock Units
RSU activity for the three months ended March 31, 2012 and RSU information as of March 31, 2012 is as follows:
As of March 31, 2012, the Company had approximately $0.5 million of unrecognized compensation expense, net of estimated forfeitures, related to RSUs, which will be recognized over a weighted average estimated remaining life of 2.7 years.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef