Annual report pursuant to Section 13 and 15(d)

SHARE-BASED COMPENSATION

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SHARE-BASED COMPENSATION
12 Months Ended
Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION
The Stock Option Plan for Key Employees, as well as, the Non-Employee Director Stock Option Plan (hereinafter collectively referred to as the “Stock Option Plans”), were approved by the Company’s shareholders in July 2008. The Stock Option Plans allot for the issuance of up to 1,000,000 shares.

The Trecora Resources Stock and Incentive Plan (the “Plan”) was approved by the Company’s shareholders in June 2012. The Plan allots for the issuance of up to 1,500,000 shares in the form of stock options or restricted stock unit awards.

Share-based compensation of approximately $1.8 million, $2.7 million, and $2.6 million was recognized in 2018, 2017, and 2016, respectively. The Company reclassified approximately $318,000 for 2018 from share-based compensation expense in connection with the restructuring described in Note 21.

Stock Options and Warrant Awards

Stock options and warrants granted under the provisions of the Stock Option Plans permit the purchase of our common stock at exercise prices equal to the closing price of Company common stock on the date the options were granted. The options have terms of 10 years and generally vest ratably over terms of 4 to 5 years. There were no stock options or warrant awards issued during 2018, 2017, or 2016.

A summary of the status of the Company’s stock option and warrant awards is as follows:

 
Stock Options and Warrants

 
Weighted
Average
Exercise
Price
Per Share

 
Weighted
Average
Remaining
Contractual
Life
 
Intrinsic
Value
(in thousands)

Outstanding at January 1, 2018
1,323,587

 
$
7.82

 
 
 
 
Granted

 

 
 
 
 
Expired

 

 
 
 
 
Exercised
(377,757
)
 
5.21

 
 
 
 
Forfeited
(200,000
)
 
3.40

 
 
 
 
Outstanding at December 31, 2018
745,830

 
$
10.33

 
4.6
 
$

Expected to vest

 
$

 
0.0
 
$

Exercisable at December 31, 2018
745,830

 
$
10.33

 
4.6
 
$



The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2018, options to purchase approximately 0.5 million shares of common stock were in-the-money.

Since no options were granted, the weighted average grant-date fair value per share of options granted during the years 2018, 2017, and 2016 was $0. During 2018, 2017, and 2016 the aggregate intrinsic value of options and warrants exercised was approximately $2,630,000, $164,000 and $237,000 respectively, determined as of the date of option exercise.

The Company received approximately $912,000, $25,000 and $11,000 in cash from the exercise of options during 2018, 2017 and 2016, respectively. Of the approximately 378,000 stock options and warrants exercised, the Company only issued approximately 268,000 shares due to cashless transactions. The tax benefit realized from the exercise was insignificant.

A summary of the status of the Company's non-vested options that are expected to vest is presented below:
 
Shares

 
Weighted
Average
Grant-Date
Fair Value
Per Share

Non-vested at January 1, 2018
325,000

 
$
6.81

Granted

 

Forfeited
(200,000
)
 
3.40

Vested
(125,000
)
 
12.26

Non-vested at December 31, 2018

 
$


Total fair value of options that vested during 2018 was approximately $1,533,000.
As of December 31, 2018, there was no unrecognized compensation costs related to non-vested share-based compensation.
Post-retirement compensation of approximately $680,000 and $0 during the years ended December 31, 2018 and 2017, respectively, was reversed 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 shareholders which would benefit him personally and were not in the best interests of the Company and its shareholders. The Company was successful in litigating its right to withdraw the options and benefits and as such, these options and benefits were reversed during the second quarter of 2018. 
Restricted Stock and Restricted Stock Unit Awards
Generally, restricted stock and restricted stock unit awards are granted annually to officers and directors of the Company under the provisions of the Plan. Restricted stock units are also granted ad hoc to attract or retain key personnel, and the terms and conditions under which these restricted stock units vest vary by award. The fair market value of restricted stock units granted is equal to the Company’s closing stock price on the date of grant. Restricted stock units granted generally vest ratably over periods ranging from 2.5 to 5 years. Certain awards also include vesting provisions based on performance metrics. Upon vesting, the restricted stock units are settled by issuing one share of Company common stock per unit.

A summary of the status of the Company's restricted stock units activity is as follows:
 
Shares of Restricted
Stock Units

 
Weighted Average Grant Date Price per Share

Outstanding at January 1, 2018
387,702

 
$
11.39

Granted
226,908

 
11.45

Forfeited
(103,637
)
 
11.39

Vested
(105,298
)
 
11.99

Outstanding at December 31, 2018
405,675

 
$
11.27

Expected to vest
405,675

 
 

As of December 31, 2018, there was approximately $2.5 million of unrecognized compensation costs related to non-vested restricted share-based compensation that is expected to be recognized over a weighted average period of 1.9 years.