Annual report pursuant to Section 13 and 15(d)

Management Incentive Plans

v3.7.0.1
Management Incentive Plans
12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Management Incentive Plan Disclosure [Text Block]
Note 21 – Management Incentive Plans
 
Successor
 
Upon approval of the Business Combination, the Company adopted the 1347 Capital Corp. 2016 Omnibus Incentive Plan (the “2016 Plan”). Certain employees, directors and consultants will be eligible to be granted awards under the 2016 Plan, other than incentive stock options, which may be granted only to employees. Successor has reserved 800,000 shares of the Company’s common stock for issuance under the 2016 Plan. The number of shares issued or reserved pursuant to the 2016 Plan will be adjusted by the plan administrator, as they deem appropriate and equitable, as a result of stock splits, stock dividends, and similar changes in the Company’s common stock. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control. No stock-based awards have been granted under the 2016 Plan.
 
Predecessor
 
Effective July 20, 2006, the Board of Directors adopted a management option plan for executives and key employees and reserved 1,697,500 Class C units for that purpose. The option plan was amended by the Board of Directors in 2015 to increase the number of Class C units available to 2,000,000. These options vested over four years; 50% in year two and 25% in years three and four respectively, and all unexercised options were set to expire fifteen years from the date of issuance. As of December 31, 2015 unexercised options were set to expire between 2021 and 2030. These management options were only exercisable in conjunction with a change in control of the Company, consummation of an initial public offering, or dissolution of the Company, as defined by the agreement. At December 31, 2015, no options had been exercised and no compensation expense had been recognized in the Company’s financial statements. No additional management options were granted during 2016. 
 
Stock option activity for 2015 is set forth below:
 
 
 
 
 
Weighted
 
 
 
 
 
Average
 
 
 
Number of
 
Grant Date
 
Stock Option Activity
 
Shares
 
Fair Value
 
Unvested at December 31, 2014
 
 
120,000
 
$
0.18
 
Granted
 
 
320,000
 
 
3.92
 
Vested
 
 
-
 
 
0.00
 
Forfeited
 
 
-
 
 
0.00
 
Unvested at December 31, 2015
 
 
440,000
 
$
2.90
 
 
For options issued in 2015, the following assumptions were utilized in the Black-Scholes pricing model:
 
 
 
2015
 
Dividend yield
 
 
-
 
Expected volatility
 
 
75
%
Risk free rate of return
 
 
1.22
%
Expected life of options
 
 
4 years
 
Weighted average grant date fair value
 
$
3.92
 
 
Forfeitures have historically been insignificant so they were estimated at zero.
 
The Company had the following options vested at December 31: 
 
 
 
 
Options vested at December 31, 2014
 
 
1,337,500
 
Vested during 2015
 
 
-
 
Forfeited during 2015
 
 
(25,000)
 
Options vested at December 31, 2015
 
 
1,312,500
 
 
Stock options outstanding at December 31, 2015 had a weighted-average remaining contractual life of approximately 8 years. Total options available for grant were 247,500 at December 31, 2015.
 
Exercise Price and
 
 
 
Weighted Average
 
 
 
Weighted Average
 
Outstanding as of
 
Remaining Life
 
Exercisable as of
 
Exercise Price
 
December 31, 2015
 
(years)
 
December 31, 2015
 
$
2.73
 
 
1,167,500
 
 
5.7
 
 
 
$
4.75
 
 
120,000
 
 
7.7
 
 
 
$
6.00
 
 
25,000
 
 
9.3
 
 
 
$
2.20
 
 
120,000
 
 
14.0
 
 
 
$
2.00
 
 
160,000
 
 
14.6
 
 
 
$
2.25
 
 
82,500
 
 
14.6
 
 
 
$
2.75
 
 
77,500
 
 
14.6
 
 
 
 
 
 
 
1,752,500
 
 
8.0
 
 
 
 
In conjunction with the Business Combination on July 20, 2016, the 440,000 unvested options at December 31, 2015 immediately vested and those options along with the 1,312,500 previously vested Predecessor options were exercised in a cashless exercise and compensation expense of $1.5 million for all outstanding options was recorded in the predecessor period from January 1, 2016 to July 19, 2016; thus, there were no stock options outstanding at December 31, 2016.