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
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
10. STOCK-BASED COMPENSATION

On February 21, 2014, we awarded 10 year options to various employees for 500,000 shares.  These options have an exercise price equal to the closing price of the stock on February 21, 2014, which was $12.26 and vest in 25% increments over a 4 year period.  Compensation expense recognized during the three months and nine months ended September 30, 2014, was approximately $277,000 and $677,000, respectively.  The fair value of the options granted was calculated using the Black-Scholes option valuation model with the following assumptions:

Expected volatility
84%
Expected dividends
None
Expected term (in years)
6.25
Risk free interest rate
1.95%

A summary of the status of our stock option awards and warrants is presented below:

   
Number of StockOptions & Warrants
   
Weighted Average Exercise Price per Share
   
Weighted
Average
Remaining
Contractual
Life
 
             
Outstanding at January 1, 2014
   
1,326,360
   
$
4.75
     
Granted
   
500,000
     
12.26
     
Exercised
   
(145,820
)
   
2.91
     
Expired
   
--
     
--
     
Cancelled
   
--
     
--
     
Forfeited
   
(20,000
)
 
$
2.82
     
Outstanding at September 30, 2014
   
1,660,540
   
$
7.19
     
7.0
 
Exercisable at September 30, 2014
   
576,401
   
$
4.89
     
5.7
 

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 $80,000 and $94,000 during the three months and $250,000 and $283,000 during the nine months ended September 30, 2014, and 2013, respectively, were recognized related to options to purchase shares vesting through 2017.

Excluding the options granted in 2014 as disclosed above, employee compensation of approximately $150,000 and $119,000 during the three months and $451,000 and $408,000 during the nine months ended September 30, 2014, and 2013, respectively, was recognized related to options with a 4 year vesting period which were awarded to officers and key employees.  These options vest through 2017.

Post-retirement compensation of approximately $24,000 was recognized during the three months and $73,000 was recognized during the nine months ended September 30, 2014, and 2013, 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.

Investor relations expense of approximately $25,000 and $47,000 during the three months and $79,000 and $118,000 during the nine months ended September 30, 2014, and 2013, respectively, was recognized related to warrants issued for the purchase of 100,000 shares of common stock to Genesis Select Corporation (“Genesis”).  These warrants vest through 2017 contingent upon continuous investor relations service under the consulting agreement with Genesis.

See the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, for additional information.