Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

v2.4.0.8
Stock Based Compensation
 12 Months Ended
Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Based Compensation
Note 7 - Stock Based Compensation
The 2012 Stock Incentive Plan
On January 16, 2013, the Company's shareholders approved the Magellan Petroleum Corporation 2012 Omnibus Incentive Compensation Plan (the "2012 Stock Incentive Plan"). The 2012 Stock Incentive Plan replaces the Company's 1998 Stock Incentive Plan (the "1998 Stock Plan"). The 2012 Stock Incentive Plan provides for the granting of stock options, stock appreciation rights, restricted stock and/or restricted stock units, performance shares and/or performance units, incentive awards, cash awards, and other stock based awards to employees, including officers, directors, and consultants of the Company (or subsidiaries of the Company) who are selected by the Compensation, Nominating and Governance Committee of the Board of Directors of the Company to receive incentive compensation awards. The stated maximum number of shares of the Company's common stock authorized for awards under the 2012 Stock Incentive Plan is 5,000,000 shares plus any remaining shares under the 1998 Stock Plan immediately before the effective date of the 2012 Stock Incentive Plan, which was 288,435 as of January 15, 2013. The maximum aggregate annual number of common shares or options that may be granted to one participant is 1,000,000, and the maximum annual number of performance shares, performance units, restricted stock or restricted stock units is 500,000. The maximum term of the 2012 Stock Incentive Plan is ten years.

Stock Option Grants
Under the 2012 Stock Incentive Plan, stock option grants may contain both time based or performance based vesting provisions. As of June 30, 2013, under the 2012 Stock Incentive Plan, all PBOs granted were fully vested and 4,776,769 shares, including forfeited shares, were available for future issuance. During the fiscal year ended June 30, 2013, 1,627,500 options were granted of which 75,000 were issued as PBOs and 882,500 options were issued outside of the 1998 Stock Plan. Options outstanding have expiration dates ranging from January 16, 2014, through January 14, 2023.
The following table summarizes the stock option activity for the fiscal years ended:
 
June 30,
 
2013
 
2012
 
Number of
Shares
 
WAEPS (1)
 
Number of
Shares
 
WAEPS (1)
Fiscal year beginning balance
6,753,125

 
$1.44
 
5,200,000

 
$1.49
Granted
1,627,500

 
$1.23
 
1,675,000

 
$1.10
Exercised
—

 
$0.00
 
(21,875
)
 
$1.60
Forfeited
(591,668
)
 
$1.16
 
(100,000
)
 
$1.72
Options outstanding at end of fiscal year
7,788,957

 
$1.33
 
6,753,125

 
$1.44
 
 
 
 
 
 
 
 
Weighted average remaining contractual term
 
 
5.9 years
 
 
 
6.8 years
(1) Weighted average exercise price per share
Cash received from the exercise of stock options for the fiscal year ended June 30, 2012, was less than $0.1 million. No stock options were exercised during 2013. The following table summarizes options outstanding and exercisable as of June 30, 2013:
 
 
 
 
Options outstanding and exercisable
Range of
exercise
prices
 
Number
of
shares
 
Weighted average remaining contractual life
 
Weighted average exercise price
$0.79
-
$1.09
 
1,277,500

 
8.5 years
 
$1.04
$1.10
-
$1.13
 
1,691,666

 
8.5 years
 
$1.11
$1.14
-
$1.18
 
100,000

 
4.6 years
 
$1.16
$1.19
-
$1.40
 
3,100,000

 
2.9 years
 
$1.20
$1.41
-
$2.41
 
1,619,791

 
5.7 years
 
$2.02
 
 
 
 
7,788,957

 
5.9 years
 
$1.33
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value
$
21,383

 
 
 
 

The fair value of shares issued under the 2012 Stock Incentive Plan was estimated using the following weighted-average assumptions for the fiscal years ended:
 
June 30,
 
2013
 
2012
Number of options
1,627,500
 
1,675,000
Weighted-average grant date fair value per share
$0.61
 
$0.66
Expected dividend
$0.00
 
$0.00
Forfeiture rate
—
 
—
Risk free interest rate
0.6
%
-
1.3%
 
1.0
%
-
1.3%
Expected life
5.1

-
6.0 years
 
5.3

-
6.0 years
Expected volatility (based on historical price)
60.3
%
-
63.5%
 
61.2
%
-
62.8%

Stock Compensation Expense
The Company recorded $0.8 million and $1.6 million of stock compensation expense for the fiscal years ended June 30, 2013, and 2012, respectively. Stock based compensation is included under general and administrative expense in the consolidated statements of operations. At June 30, 2013, there was a total of $0.8 million in unrecognized stock compensation expense related to stock options granted. This cost is expected to be recognized over a weighted-average period of 1.9 years. The amount of unrecognized compensation expense noted above does not necessarily represent the amount that will ultimately be realized by the Company in its consolidated statement of operations. During the fiscal year ending June 30, 2014, it is expected that an additional 1,367,500 stock options will vest.
The Company's compensation policy is designed to provide the Company's non-employee directors with a portion of their annual base Board service compensation in the form of equity. Between July 1, 2012, and June 30, 2013, the Company issued a total of 175,000 shares of its common stock to non-employee directors pursuant to this policy.