Compensation and Other Benefit Plans
|12 Months Ended|
Dec. 31, 2016
|Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]|
|Compensation and Other Benefit Plans||
10. Compensation and Other Benefit Plans
The Company grants qualified and non-qualified stock options, RSUs, common stock and other stock-based awards under various plans to directors, officers, employees and other individuals. Stock options are granted at exercise prices of not less than the fair market value of the Company’s common stock on the date of grant. Additionally, the Company has an Employee Stock Purchase Plan (“ESPP”) that allows employees to purchase Company shares at a purchase price equal to 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.
Employee Stock Purchase Plan
Under the ESPP approved by the Company’s stockholders in May 1998 (the “1998 ESPP”), the Company was authorized to issue up to 233,333 shares of common stock to employees through payroll deductions at a purchase price per share equal to 95% of the closing price of XOMA shares on the exercise date. An employee could elect to have payroll deductions made under the 1998 ESPP for the purchase of shares in an amount not to exceed 15% of the employee’s compensation.
In May 2015, the Company’s stockholders approved the 2015 Employee Stock Purchase Plan (the “2015 ESPP”) which replaced the 1998 ESPP. Under the 2015 ESPP, the Company reserved 15,000 shares of common stock for issuance as of its effective date of July 1, 2015, subject to adjustment in the event of a stock split, stock dividend, combination or reclassification or similar event. The 2015 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The 2015 ESPP provides for six-month offering periods ending on May 31 and November 30 of each year, with the exception of the first offering period, which ran from July 1, 2015 through November 30, 2015, as the Company transitioned from the 1998 ESPP. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.
During the years ended December 31, 2016, 2015, and 2014, employees purchased 7,070, 6,029, and 885 shares of common stock, respectively, under the ESPP plans. Net payroll deductions under 1998 ESPP and 2015 ESPP totaled $60,000, $170,000, and $74,000 for the years ended December 31, 2016, 2015, and 2014, respectively.
Deferred Savings Plan
Under section 401(k) of the Internal Revenue Code of 1986, the Board of Directors adopted, effective June 1, 1987, a tax-qualified deferred compensation plan for employees of the Company. Participants may make contributions which defer up to 50% of their eligible compensation per payroll period, up to a maximum for 2016 and 2015 of $18,000 (or $24,000 for employees over 50 years of age) and for 2014 of $17,500 (or $23,000 for employees over 50 years of age). The Company may, at its sole discretion, make contributions each plan year, in cash or in shares of the Company’s common stock, in amounts which match up to 50% of the salary deferred by the participants. The expense related to these contributions was $0.5 million, $0.8 million, and $1.0 million for the years ended December 31, 2016, 2015, and 2014, respectively, and 100% was paid in common stock in each year.
Stock Option Plans
In May 2010, the Compensation Committee and the full Board adopted, and in July 2010 the Company’s stockholders approved, a new equity-based compensation plan, the 2010 Long Term Incentive and Share Award Plan, which has since been amended and restated as the Amended and Restated 2010 Long Term Incentive and Stock Award Plan (the “2010 Plan”). The 2010 Plan is intended to consolidate the Company’s long-term incentive compensation under a single plan, by replacing the Option Plan, the Restricted Plan and the 1992 Directors Share Option Plan (the “Directors Plan”) going forward, and to provide a more current set of terms under which to provide this type of compensation. In May 2014, the Company’s stockholders approved an amendment to the Company’s 2010 Plan to (a) increase the number of shares of common stock issuable over the term of the plan by an additional 267,500 to 938,560 shares in the aggregate and (b) provide that, for each stock appreciation right, restricted share, restricted stock unit, performance share, performance unit, dividend equivalent or other stock-based award issued, the number of available shares under the plan will be reduced by 1.18 shares.
In February 2016, the Company’s Board of Directors approved an amendment to the 2010 Plan to, among other things, allow for an increase in the number of shares of common stock reserved for issuance and recommended that the amendment be submitted to the Company’s shareholders for approval at the 2016 annual meeting. At the May 2016 annual meeting, the shareholders approved an amendment to the 2010 Plan to, among other things, increase the aggregate number of shares authorized for issuance by 170,000 shares to an aggregate of 1,108,560 shares.
The 2010 Plan grants stock options, RSUs, and other stock-based awards to eligible employees, consultants and directors. No further grants or awards will be made under the Option Plan, the Restricted Share Plan or the Directors Plan. Shares underlying options previously issued under the Option Plan, the Restricted Share Plan or the Directors Plan that are currently outstanding will, upon forfeiture, cancellation, surrender or other termination, become available under the 2010 Plan. Stock-based awards granted under the 2010 Plan may be exercised when vested and generally expire ten years from the date of the grant or three to six months from the date of termination of employment (longer in case of death or certain retirements). Vesting periods vary based on awards granted, however, certain stock-based awards may vest immediately or may accelerate based on performance-driven measures.
As of December 31, 2016, the Company had 94,815 shares available for grant under the stock option plans. As of December 31, 2016, options and RSUs covering 671,493 shares of common stock were outstanding under the stock option plans.
Stock options generally vest monthly over four years for employees and one year for directors. In December of 2016, the Company granted 207,100 options to employees that will vest in one year from the grant date. Stock options held by employees who qualify for retirement age (defined as employees that are a minimum of 55 years of age and the sum of their age plus years of full-time employment with the Company exceeds 70 years) vest on the earlier of scheduled vest date or the date of retirement.
Stock Option Plans Summary
The following table summarizes the Company’s stock option activity:
The aggregate intrinsic value of stock options exercised in 2015, and 2014 was $0.4 million, and $2.9 million, respectively. No stock options were exercised in 2016.
As of December 31, 2016, there were 544,021 stock options vested and expected to vest with a weighted average exercise price per share of $80.52, aggregate intrinsic value of zero, and a weighted average remaining contractual term of 6.93 years. As of December 31, 2016, there were 315,384 stock options exercisable with an aggregate intrinsic value of zero and a weighted average remaining contractual term of 5.06 years.
As of December 31, 2016, $2.4 million of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted average period of 1.1 years.
Restricted Stock Units
RSUs generally vest over three years for employees and one year for directors. In 2016, the Company granted 114,517 RSUs to employees that will vest one year from the date of grant. RSUs held by employees who qualify for retirement age (defined as employees that are a minimum of 55 years of age and the sum of their age plus years of full-time employment with the Company exceeds 70 years) vest on the earlier of scheduled vest date or the date of retirement.
Unvested RSU activity for the year ended December 31, 2016 is summarized below:
The total grant-date fair value of RSUs that vested in 2016, 2015, and 2014 was $5.3 million, $5.5 million and $3.9 million, respectively. As of December 31, 2016, $1.4 million of total unrecognized compensation expense related to employee RSUs was expected to be recognized over a weighted average period of 0.6 years.
Of the 91,228 outstanding RSUs as of December 31, 2016, 12,419 were forfeited upon termination in February 2017 of the majority of the employees included in the 2016 Restructuring.
Stock-based Compensation Expense
The fair value of stock options granted during the years ended December 31, 2016, 2015, and 2014, was estimated based on the following weighted average assumptions for:
The following table shows total stock-based compensation expense for stock options, RSUs and ESPP in the consolidated statements of comprehensive loss (in thousands):
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef