Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.8
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

At September 30, 2014, we have instruments outstanding under three stock-based compensation plans; the 1996 Stock Incentive Plan (the 1996 Plan), the Fourth Amended and Restated 2002 Stock Incentive Plan (the 2002 Plan), and the 2014 Stock Incentive Plan (the 2014 Plan). Currently, under the 2014 Plan, we may grant incentive stock options, nonqualified stock options, and restricted stock awards to full-time employees and directors, and nonqualified stock options and restricted stock awards may be granted to our consultants and agents. Total shares authorized under each plan are 1.5 million shares, 12 million shares, and 5 million shares, respectively. Although instruments are still outstanding under the 1996 Plan and the 2002 Plan, the plans have expired and no new grants may be made from them. Under all plans, the exercise price of each option is greater than or equal to the closing market price of our common stock on the date of the grant.

Stock options granted under the 1996 Plan, the 2002 Plan, and the 2014 Plan generally vest on an annual basis over one to four years. Outstanding stock options under the plans, if not exercised, generally expire ten years from their date of grant or up to 90 days following the date of an optionee’s separation from employment with the Company. We issue new shares of our common stock upon exercise of stock options.

Stock-based payments to employees and directors, including grants of stock options, are recognized in the consolidated statements of operations based on their estimated fair values. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on the Company’s historical volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current circumstances. Navidea uses historical data to estimate forfeiture rates. The expected term of stock options granted is based on the vesting period and the contractual life of the options. The risk-free rate is based on the U.S. Treasury yield in effect at the time of the grant.

Compensation cost arising from stock-based awards is recognized as expense over either (1) the requisite service period or (2) the estimated performance period. Restricted stock awards are valued based on the closing stock price on the date of grant and amortized ratably over the estimated life of the award. Restricted stock may vest based on the passage of time, or upon occurrence of a specific event or achievement of goals as defined in the grant agreements. In such cases, we record compensation expense related to grants of restricted stock based on management’s estimates of the probable dates of the vesting events. Stock-based awards that do not vest because the requisite service period is not met prior to termination result in reversal of previously recognized compensation cost.

For the three-month periods ended September 30, 2014 and 2013, our total stock-based compensation (income) expense was approximately $(528,000) and $772,000, respectively. For the nine-month periods ended September 30, 2014 and 2013, our total stock-based compensation expense was approximately $1.0 million and $2.2 million, respectively. We have not recorded any income tax benefit related to stock-based compensation in any of the three-month or nine-month periods ended September 30, 2014 and 2013.

A summary of the status of our stock options as of September 30, 2014, and changes during the nine-month period then ended, is presented below:
 
Nine Months Ended September 30,
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
Outstanding at beginning of period
4,866,602

 
$
2.38

 
 
 
 
Granted
1,509,605

 
1.76

 
 
 
 
Exercised
(343,000
)
 
0.51

 
 
 
 
Canceled and Forfeited
(1,467,443
)
 
2.53

 
 
 
 
Expired
(120,000
)
 
0.53

 
 
 
 
Outstanding at end of period
4,445,764

 
$
2.31

 
7.4 years
 
$
491,723

 
 
 
 
 
 
 
 
Exercisable at end of period
1,958,554

 
$
2.11

 
5.9 years
 
$
489,240



A summary of the status of our unvested restricted stock as of September 30, 2014, and changes during the nine-month period then ended, is presented below:
 
Nine Months Ended September 30,
 
Number of
Shares
 
Weighted
Average
Grant-Date
Fair Value
Unvested at beginning of period
634,250

 
$
2.73

Granted
378,250

 
1.48

Vested
(149,000
)
 
3.16

Forfeited
(300,000
)
 
2.26

Unvested at end of period
563,500

 
$
2.03



In February 2014, 49,000 shares of restricted stock held by non-employee directors with an aggregate fair value of $96,000 vested as scheduled according to the terms of the restricted stock agreements. In March 2014, 100,000 shares of restricted stock with an aggregate fair value of $205,000 vested as scheduled according to the terms of a restricted stock agreement. In May 2014, 175,000 shares of restricted stock held by our former CEO with an aggregate fair value of $278,000 were forfeited in connection with his separation from employment. In September 2014, 125,000 shares of restricted stock held by our former CEO with an aggregate fair value of $166,250 were forfeited in connection with termination of his Consulting Agreement.

As of September 30, 2014, there was approximately $1.7 million of total unrecognized compensation expense related to unvested stock-based awards, which we expect to recognize over remaining weighted average vesting terms of 1.9 years.