Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation Plan

 v2.3.0.11
Stock-Based Compensation Plan
6 Months Ended
Jun. 30, 2011
Stock-Based Compensation Plan  
Stock-Based Compensation Plan

NOTE 11.  STOCK-BASED COMPENSATION PLAN

 

Under the Company's 2005 Stock Incentive Plan (the "2005 Plan"), the Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees of the Company or its subsidiaries, directors, officers or consultants to the Company.  The 2005 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units.  The aggregate number of shares of common stock that may be granted through awards under the 2005 Plan to any employee in any calendar year may not exceed 500 shares.  The 2005 Plan will continue in effect until June 2015 unless terminated sooner.

 

During the six months ended June 30, 2011, the Company issued 118 stock options, under the Company's 2005 Plan, to directors and employees of the Company.  Of the 118 options issued, 40 will vest in four equal consecutive quarterly tranches from the date of grant, 38 will vest in three installments as follows: 15 shares shall vest on December 31, 2012 and the remaining shares shall vest equally on December 31, 2013 and December 31, 2014.  The remaining 40 options granted will vest in three installments as follows: 16 shares shall vest on December 31, 2013 and the remaining shares shall vest equally on December 31, 2014 and December 31, 2015.

 

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:

 

Options Granted During Six Months Ended June 30, 2011

 

 

 

Number of Options

 

118

Option Vesting Period

 

1 - 5 Years

Grant Price

 

$6.22 - $8.00

Dividend Yield

 

0.00%

Expected Volatility (a)

 

55.8% - 59.6%

Risk-free Interest Rate

 

1.60% - 2.92%

Expected Life (Years)

 

5.31 - 6.95

Weighted Average Fair Value

 

$3.65 - $4.48

 

 

(a)

Since the Company's historical volatility was not representative of the ongoing future business, the Company's historical volatility was based on the historical volatility of a peer group of companies within similar industries and similar size as the Company.

 

Using these assumptions, the fair value of the stock options granted during the six months ended June 30, 2011 was approximately $475, which will be amortized over the vesting period of the options.

 

On May 28, 2010, the Company entered into a restricted stock award agreement (the "RSA Agreement") with Mr. Warren B. Kanders.  Under the RSA Agreement, on January 17, 2011, the Company granted to Mr. Kanders a seven-year restricted stock award of 250 shares of common stock pursuant to the Company's 2005 Plan, which award will vest on the date the Fair Market Value (as defined in the 2005 Plan) of the Company's common stock shall have equaled or exceeded $14.00 per share for 20 consecutive trading days.  For computing the fair value of the 250 seven-year restricted stock-based awards, the fair value of each restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the following assumptions:

 

Restricted Stock Granted on January 17, 2011

 

 

 

Number issued

 

250

Vesting Period

 

$14.00 Stock Price target

Grant Price

 

$7.34

Dividend Yield

 

0.00%

Expected Volatility (a)

 

58.00%

Risk-free Interest Rate

 

2.64%

Expected Life (Years)

 

1.90

Weighted Average Fair Value

 

$6.27

 

 

(a)

Since the Company's historical volatility was not representative of the ongoing future business, the Company's historical volatility was based on the historical volatility of a peer group of companies within similar industries and similar size as the Company.

 

Using these assumptions, the fair value of the restricted stock award granted on January 17, 2011 was approximately $1,567, which will be amortized over the expected life of the award.

 

The total non-cash stock compensation expense related to stock options and restricted stock recorded by the Company during the three and six months ended June 30, 2011 and 2010, respectively, was as follows.

 

 

 

THREE MONTHS ENDED

 

 

 

June 30, 2011

 

 

June 30, 2010

 

 

 

 

 

 

 

 

Restricted stock

 

$

771

 

 

$

1,082

 

Stock options

 

 

192

 

 

 

1,673

 

Restricted stock units

 

 

-

 

 

 

683

 

Stock subscription expense

 

 

-

 

 

 

145

 

Total

 

$

963

 

 

$

3,583

 

 

 

 

 

 

 

 

 

 

 

 

SIX MONTHS ENDED

 

 

 

June 30, 2011

 

 

June 30, 2010

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

$

1,537

 

 

$

1,149

 

Stock options

 

 

325

 

 

 

1,723

 

Restricted stock units

 

 

-

 

 

 

683

 

Stock subscription expense

 

 

-

 

 

 

145

 

Total

 

$

1,862

 

 

$

3,700

 

 

The fair value of unvested restricted stock awards is determined based on the market price of our shares on the grant date.  As of June 30, 2011, there were 600 unvested stock options and unrecognized compensation cost of approximately $1,841 related to unvested stock options, as well as 750 unvested restricted stock awards and unrecognized compensation cost of approximately $1,665 related to unvested restricted stock awards.