8. STOCK-BASED INCENTIVE PLANS
|12 Months Ended|
Dec. 31, 2019
|Retirement Benefits [Abstract]|
|STOCK-BASED INCENTIVE PLANS||
The Super League 2014 Stock Option and Incentive Plan (the “Plan” or “SOP”) was approved by the Board of Directors and the stockholders of Super League in October 2014. The Plan was subsequently amended in May 2015, May 2016, July 2017 and October 2018. The Plan allows grants of stock options, stock awards and performance shares with respect to common stock of the Company to eligible individuals, which generally includes directors, officers, employees, advisors and consultants. The Plan provides for both the direct award and sale of shares of common stock and for the grant of options to purchase shares of common stock. Options granted under the Plan include non-statutory options as well as incentive options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended.
The Board of Directors administers the Plan and determines which eligible individuals are to receive option grants or stock issuances under the Plan, the times when the grants or issuances are to be made, the number of shares of common stock subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding. The exercise price of options is generally equal to the fair market value of common stock of the Company on the date of grant. Options generally begin to be exercisable six months to one year after grant and typically expire 10 years after grant. Stock options and restricted shares generally vest over two to four years (generally representing the requisite service period). The Plan terminates automatically on July 1, 2027. The Plan provides for the following programs:
Under the discretionary option grant program, Super League’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Super League or its affiliates (including employees, non-employee members of the Board of Directors and consultants) at an exercise price not less than 85% of the fair market value of such shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100% of the fair market value of such shares on the grant date (not less than 110% of fair market value if such employee actually or constructively owns more than 10% of Super League’s voting stock or the voting stock of any of its subsidiaries).
Stock Awards or Sales
Under the stock award or sales program, eligible individuals may be issued shares of common stock of the Company directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. Under this program, the purchase price for the shares will not be less than 100% of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered. Eligible individuals will have no stockholder rights with respect to any unvested restricted shares or restricted stock units issued to them under the stock award or sales program; however, eligible individuals will have the right to receive any regular cash dividends paid on such shares. As of December 31, 2019, 308,479 shares remained available for issuance under the Plan.
The initial reserve under the Plan was 583,334 shares of common stock, which reserve was subsequently increased to 1,000,000 shares upon stockholders’ approval in May 2016. In July 2017, the Company amended and restated the SOP to increase the number of shares of common stock reserved thereunder from1,000,000 shares to 1,500,000 shares. In October 2018, the Company amended and restated the SOP to increase the number of shares of common stock reserved thereunder from 1,500,000 shares to 1,833,334 shares.
Super League issues new shares of common stock upon the exercise of stock options, the grant of restricted stock, or the delivery of shares pursuant to vested restricted stock units. The compensation committee of the Board of Directors may amend or modify the Plan at any time, subject to any required approval by the stockholders of the Company, pursuant to the terms therein.
The fair value of stock options granted were estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following weighted-average assumptions for the years ended December 31, 2019 and 2018:
A summary of stock option activity for the year ended December 31, 2019 is as follows:
The weighted-average grant date fair value of stock options granted during the years ended December 31, 2019 and 2018 was $5.76 and $8.85, respectively. The aggregate fair value of stock options that vested during the years ended December 31, 2019 and 2018 was $3,989,000 and $4,720,000, respectively. As of December 31, 2019, the total unrecognized compensation expense related to non-vested stock option awards was $2,840,000, which is expected to be recognized over a weighted-average term of approximately 2.83 years.
Restricted Stock Units
The following table summarizes non-vested restricted stock unit activity for the year ended December 31, 2019:
As of December 31, 2019, the total unrecognized compensation expenses related to non-vested restricted stock units was $52,000 which will be recognized over a weighted-average term of approximately 0.12 years.
Warrants Issued to Employees and Nonemployees for Services
During the year ended December 31, 2018, the Company issued common stock purchase warrants to certain employees in exchange for services performed, subject to certain vesting conditions. The warrants have expiration dates of 10 years from the date of grant and an exercise price of $10.80 per share. A summary of employee and nonemployee warrant activity for the year ended December 31, 2019 is as follows:
Compensation expense related to common stock purchase warrants was $2,182,000 and $1,400,000 for the years ended December 31, 2019 and 2018, respectively. The weighted-average grant date fair value of warrants granted during the year ended December 31, 2018 was $7.80. No warrants were granted to employees or non-employees in exchange for services performed during the year ended December 31, 2019. The aggregate fair value of warrants that vested during the years ended December 31, 2019 and 2018 was $2,092,000 and $1,401,000, respectively.
As of December 31, 2019, the total unrecognized compensation expense related to warrants was $275,000, which is expected to be recognized over a weighted-average term of approximately 0.4 years.
Noncash Stock Compensation Expense
Noncash stock-based compensation expense for the periods presented was comprised of the following:
Noncash stock-based compensation expense for the periods presented was included in the following financial statement line items:
Noncash stock-based compensation expense for the year ended December 31, 2019 included compensation expense resulting from the vesting of certain performance-based options and warrants previously granted to certain executives, which vested upon the achievement of certain performance-based milestones, pursuant to vesting conditions in the underlying equity grant agreements. Performance targets included the completion of our IPO in February 2019 and other operational performance-based milestones. During fiscal year 2019, 325,000 of performance-based stock options and warrants vested with grant date fair values ranging from $8.28 to $8.50, resulting in noncash stock compensation expense of $2,766,000 during fiscal year 2019. The fair value of these equity awards was estimated on October 31, 2018, their original grant date, using the Black Scholes-Merton option pricing model and the following weighted-average assumptions: (i) volatility of 93%, (ii) risk-free interest rate of 3.0%, and (iii) expected term of 6.5 years.
The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef