Stock-Based Compensation
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Jun. 30, 2011
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Stock-Based Compensation |
At
June 30, 2011, we have instruments outstanding under three
stock-based compensation plans; the Amended and Restated
Stock Option and Restricted Stock Purchase Plan (the Amended Plan),
the 1996 Stock Incentive Plan (the 1996 Plan), and the Second
Amended and Restated 2002 Stock Incentive Plan (the 2002
Plan). Currently, under the 2002 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 2 million shares, 1.5 million shares and 7 million
shares, respectively. An additional 3 million shares
have been authorized under the 2002 Plan by the Company’s
board of directors, subject to ratification by stockholders at the
2011 annual meeting of stockholders. Although
instruments are still outstanding under the Amended Plan and the
1996 Plan, these plans have expired and no new grants may be made
from them. Under all three plans, the exercise price of
each stock option is greater than or equal to the closing market
price of our common stock on the day prior to or the date of the
grant.
Stock
options granted under the Amended Plan, the 1996 Plan and the 2002
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
90 days from 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 statement 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 volatility under the current
circumstances. Neoprobe 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 using
the straight-line method over the vesting
period. Restricted shares generally vest upon occurrence
of a specific event or achievement of goals as defined in the grant
agreements. As a result, we record compensation expense
related to grants of restricted stock based on management’s
estimates of the probable dates of the vesting events.
For
the three-month periods ended June 30, 2011 and 2010, our total
stock-based compensation expense was approximately $279,000 and
$80,000, respectively. For the six-month periods ended
June 30, 2011 and 2010, our total stock-based compensation expense
was approximately $1.3 million and $303,000,
respectively. Stock-based compensation expense for the
first six months of 2011 included approximately $718,000 of expense
related to the separation of our former President and CEO, David C.
Bupp. (See Note 9.) We have not recorded any
income tax benefit related to stock-based compensation in any of
the three-month or six-month periods ended June 30, 2011 and
2010.
A
summary of the status of our stock options as of June 30, 2011, and
changes during the six-month period then ended, is presented
below:
A
summary of the status of our unvested restricted stock as of June
30, 2011, and changes during the six-month period then ended, is
presented below:
In
April 2011, 1,000,000 shares of restricted stock vested related to
the separation of Mr. Bupp.
As
of June 30, 2011, there was approximately $1.7 million of total
unrecognized compensation cost related to unvested stock-based
awards, which we expect to recognize over remaining weighted
average vesting terms of 2.0 years.
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