4. Stock-based Compensation

The Company recognized stock-based compensation on all employee and non-employee awards as follows:

 

 

At the Company’s Annual Meeting of Shareholders held on June 22, 2018, the shareholders approved an amendment to the Company’s 2012 Equity Incentive Plan solely to increase the shares available for awards thereunder by 1,500,000 shares. The aggregate number of shares of the Company’s common stock currently authorized pursuant to its 2012 Equity Incentive Plan, as amended is 2,250,000 and the Company’s 2012 Equity Incentive Plan, as amended (the “Plan”) continues to provide that the maximum number of shares that may be subject to stock options and stock appreciation rights or awards intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code (other than stock options and stock appreciation rights) granted to any individual in a calendar year is 1,000,000 shares. As of September 30, 2018, an aggregate of 1,813,633 shares of common stock are covered by outstanding option awards and 195,617 shares of common stock are available for future awards under the Plan.

 

The Company granted 1,425,000 and 1,553,000 stock options under its Plan, with a weighted-average grant date fair value of $0.72 and $0.79 per share, during three and nine months ended September 30, 2018, respectively. The Company granted -0- and 105,600 stock options, with a weighted-average grant date fair value of $-0- and $3.60 per share, during the three and nine months ended September 30, 2017, respectively.

During the nine months ended September 30, 2018, 1,028,852 stock options previously granted under the Plan have vested and 1,500  stock options were forfeited and no stock options were exercised.

On September 27, 2018, the Board of Directors approved discretionary stock option awards under the Plan providing the right to acquire 125,000 shares of common stock, to each of the Company’s non-employee directors: Frederick Telling, Charles Pope, Alan Dunton, and Robert Koski under the Plan at an exercise price of $0.73 per share, the closing price on September 27, 2018, the date of grant. The options vest immediately. The stock option awards are subject to the standard terms and conditions of the Company’s form of stock option agreement.

Also, on September 27, 2018, the Board of Directors approved discretionary stock option awards under the Plan, as recommended and approved by the Compensation Committee, for the Company’s executive officers and certain currently employees. Dr. Alan Joslyn, the Company’s Chief Executive Officer, Mr. Michael Sullivan, the Company’s Chief Financial Officer, and Dr. Handfield, the Company’s Senior Vice President of Discovery Research, were granted options to purchase 400,000, 250,000 and 220,000 shares of Company common stock, respectively, under the Plan at an exercise price of $0.73 per share, the closing price on September 27, 2018, the date of grant. The stock option awards are subject to the standard terms and conditions of the Company’s form of stock option agreement which includes earlier vesting upon a change in control of the Company.

Also, on June 22, 2018, and in connection with, and in furtherance of, the non-employee director compensation program, the Board approved the award of 4,000 restricted shares of the Company’s common stock to each of the Company’s non-employee directors, Frederick Telling, Charles Pope, Alan Dunton, and Robert Koski under the Plan. Pursuant to the terms of the award, the restricted shares were immediately vested.

On June 22, 2018, in connection with, and in furtherance of, the non-employee director compensation program, the Board approved stock option awards in the amount of 14,000 to each of the Company’s non-employee directors, Frederick Telling, Charles Pope, Alan Dunton, and Robert Koski under the Plan at an exercise price of $1.52 per share, the closing price on June 22, 2018, the date of the grant.

In addition, on June 22, 2018, in connection with, and in furtherance of, the equity based award program, the Board approved stock option awards in the amount of 62,000 to management and 10,000 to staff under the Plan at an exercise price of $1.52 per share, the closing price on June 22, 2018, the date of the grant.

On June 22, 2017, in connection with, and in furtherance of, the non-employee director compensation program, the Board approved stock option awards in the amount of 14,000 to each of the Company’s non-employee directors, Frederick Telling, Charles Pope, Alan Dunton, and Robert Koski under the Plan at an exercise price of $3.70 per share, the closing price on June 22, 2017, the date of the grant.

In addition, on June 22, 2017, in connection with, and in furtherance of, the new equity based award program, the Board approved stock option awards in the amount of 45,500 to management and 4,100 to staff under the Plan at an exercise price of $3.70 per share, the closing price on June 22, 2017, the date of the grant.

On February 9, 2017, in connection with, and in furtherance of, the non-employee director compensation program, the Board approved the award of 4,000 restricted shares of the Company’s common stock to each of the Company’s non-employee directors, Frederick Telling, Charles Pope, Alan Dunton, and Robert Koski under the Plan, of which, 1,000 restricted shares vested at the end of each calendar quarter in 2017.

Each executive officer and non-employee director receiving equity-based awards is subject to a minimum dollar value stock ownership holding requirement with respect to the awards received as well as all prior equity awards under the Plan which requirements are intended to align the ability to sell shares with the performance of the Company’s stock price. The executive officer recipients each have a minimum dollar value stock ownership holding requirement threshold equal to two times (2x) their then base salaries below which dollar threshold they would be precluded from selling any shares of Company stock obtained from the Company under its Plan. Also, the non-employee directors are each subject to a minimum dollar value stock ownership holding requirement threshold equal to six times the annual Board retainer ($270,000) below which dollar threshold they would be precluded from selling shares of Company stock acquired from the Company under its Plan.