Quarterly report pursuant to sections 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2013
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
11. STOCK-BASED COMPENSATION

Stock Options – On May 29, 2013, the Company awarded 10 year options to Executive Vice President, Simon Upfill-Brown for 90,000 shares.  These options have an exercise price equal to the closing price of the stock on May 29, 2013, which was $7.71 and vest in 25% increments over a 4 year period.  Compensation expense recognized during the three and six months ending June 30, 2013, in connection with this award was approximately $2,400. The fair value of the options granted was calculated using the Black-Scholes option valuation model with the following assumptions:

Expected volatility
85%
Expected dividends
None
Expected term (in years)
6.25
Risk free interest rate
1.326%

A summary of the status of the Company’s stock option awards is presented below:

   
Number of Stock Options
   
Weighted Average Exercise Price per Share
   
Weighted
Average
Remaining
Contractual
Life
 
                   
Outstanding at January 1, 2013
   
1,173,180
   
$
4.04
       
   Granted
   
90,000
     
7.71
       
   Exercised
   
(9,320
)
   
4.71
       
   Expired
   
--
     
--
       
   Cancelled
   
--
     
--
       
   Forfeited
   
--
     
--
       
Outstanding at June 30, 2013
   
1,253,860
   
$
4.30
     
7.2
 
Exercisable at June 30, 2013
   
428,356
   
$
3.55
     
6.4
 

The fair value of the options granted below was calculated using the Black Scholes option valuation model with the assumptions as disclosed in prior quarterly and annual filings.

Directors’ compensation of approximately $94,000 and $63,000 during the three months and $189,000 and $126,000 during the six months ended June 30, 2013, and 2012, respectively, were recognized related to options to purchase shares vesting through 2017.

Employee compensation of approximately $119,000 and $122,000 during the three months and $238,000 and $252,000 during the six months ended June 30, 2013, and 2012, respectively, was recognized related to options with a 4 year vesting period which were awarded to officers and key employees.  These options vest through 2015.

Post-retirement compensation of approximately $24,000 was recognized during the three months and $49,000 was recognized during the six months ended June 30, 2013, and 2012, related to options awarded to Mr. Hatem El Khalidi in July 2009.  On May 9, 2010, the Board of Directors determined that Mr. El Khalidi forfeited these options and other retirement benefits when he made various demands against the Company and other AMAK Saudi shareholders which would benefit him personally and were not in the best interests of the Company and its shareholders.  The Company is litigating its right to withdraw the options and benefits and as such, these options and benefits continue to be shown as outstanding.  See further discussion in Note 16.

Post-retirement compensation of approximately $413,000 was reversed during the second quarter of 2012 due to the performance condition associated with 200,000 shares in options awarded Mr. El Khalidi not being met as required by the terms of the award by June 30, 2012.

See the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2012, for additional information.

On February 1, 2013, the Company issued a warrant for the purchase of 100,000 shares of common stock to Genesis Select Corporation (“Genesis”) at a strike price of $10.00 per share.  The term of the warrant is 5 years with 50% vesting in equal increments of 1/12th each calendar month throughout the first year.  The remaining 50% will vest in equal increments of 1/36th each calendar month over years 2 through 4 contingent upon continuous investor relations service under the consulting agreement with Genesis.  Investor relations expense recognized in connection with this warrant was approximately $42,000 and $71,000 for the three and six months ended June 30, 2013.