Quarterly report pursuant to sections 13 or 15(d)

STOCK-BASED COMPENSATION

 v2.3.0.11
STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION
10. STOCK-BASED COMPENSATION

Common Stock

In January 2010 the Company issued 14,000 shares of common stock to non-employee directors for services rendered during 2009.  Compensation expense recognized in connection with this issuance was approximately $31,000.

Stock Options

On May 20, 2011, the Company awarded 10 year options to Director Joseph Palm for 19,333 shares with the intent to increase the aggregate grant to 100,000 shares, if and as they become available.  The initial grant of 19,333 options have an exercise price equal to the closing price of the stock on May 20, 2011, which was $3.90 and vest after 1 year.  Options to purchase the balance (80,667 shares) will have an exercise price equal to the closing price of the stock on the actual grant date or dates and be subject to a vesting schedule similar to that currently in effect for other non-employee directors as determined by the Compensation Committee of the Board of Directors.  Compensation expense recognized in connection with this award was approximately $6,000 for the three and six months ended June 30, 2011.

On May 2, 2011, the Company awarded 10 year options to Director John Townsend for 100,000 shares.  These options have an exercise price equal to the closing price of the stock on May 2, 2011, which was $4.09 and vest in 20% increments over a 5 year period.  Compensation expense recognized in connection with this award was approximately $13,000 for the three and six months ended June 30, 2011.


The fair value of the options granted above was calculated using the Black-Scholes option valuation model with the following range of assumptions:

Expected volatility
95.9%-185%
Expected dividends
None
Expected term (in years)
5.5-6.5
Risk free interest rate
1.99%-2.49%

On January 12, 2011, the Company awarded 10 year options to key employees for 391,000 shares.  These options have an exercise price equal to the closing price of the stock on January 12, 2011, which was $4.86 and vest in 25% increments over a 4 year period.  Compensation expense recognized in connection with this award was approximately $119,000 and $238,000 for the three and six months ended June 30, 2011, respectively.

Compensation expense of approximately $52,000 and $35,000 was recognized during the six months ended June 30, 2011 and 2010, respectively and approximately $26,000 and $17,000 was recognized during the three months ended June 30, 2011, and 2010, respectively, related to options with a 2 year vesting period which were awarded to its officers and key employees in January 2010.

Compensation expense of approximately $6,000 and $0 was recognized during the six months ended June 30, 2011, and 2010, respectively, and $3,000 and $0 was recognized during the three months ended June 30, 2011, and 2010, respectively, related to options with a 2 year vesting period which were awarded to a key employee in June 2010.

No directors' fees expense was recognized during the three months ended June 30, 2011, and 2010, respectively, and $0 and $72,000 was recognized during the six months ended June 30, 2011, and 2010, respectively, related to fully vested options awarded to non-employee directors in January 2010 for their service during 2009.

Directors' fees expense of approximately $61,000 and $94,000 was recognized during the six months ended June 30, 2011, and 2010, respectively, and $42,000 and $70,500 was recognized during the three months ended June 30, 2011, and 2010, respectively, related to options to purchase 500,000 shares awarded to non-employee directors in February 2010 for their service during 2010 and 2011 subject to attendance and service requirements.

Compensation expense of approximately $49,000 and $186,000 was recognized during the six months ended June 30, 2011, and 2010, respectively and $24,000 and $93,000 was recognized during the three months ended June 30, 2011, and 2010, respectively, 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 15.

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

   
Number of StockOptions
    
Weighted Average Exercise Price per Share
    
Weighted
Average
Remaining
Contractual
Life
  
                   
Outstanding at January 1, 2011
     1,076,667     $ 2.91        
   Granted
     510,333       4.67        
   Exercised
     (7,500 )     2.21        
   Expired
     (7,000 )     1.39        
   Cancelled
     --       --        
   Forfeited
     (180,000 )     2.82        
Outstanding at June 30, 2011
     1,392,500     $ 3.58       8.6  
Exercisable at June 30, 2011
     189,667     $ 2.33       7.7  

See the Company's Annual Report on Form 10-K for the year ended December 31, 2010, for additional information.