Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

v2.4.0.6
Stock Based Compensation
 9 Months Ended
Mar. 31, 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. The time based options are expensed on a straight-line basis over the vesting period. Performance based options ("PBOs") are recognized when the achievement of the performance conditions are considered probable. Accordingly, the Company recognizes stock based compensation expense on these awards over the period of time the performance condition is expected to be achieved. Management re-assesses whether achievement of performance conditions is probable at the end of each reporting period. If changes in the estimated outcome of the performance conditions affect the quantity of the awards expected to vest, the cumulative effect of the change is recognized in the period of change. As of March 31, 2013, all PBOs granted were fully vested.
As of March 31, 2013, 5,396,769 shares, including forfeited shares, were available for future issuance under the 2012 Stock Incentive Plan. During the nine months ended March 31, 2013, 1,007,500 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, to December 4, 2022.
The following table summarizes the stock option activity for the nine months ended March 31, 2013:
 
Number of
Shares
 
WAEPS (1)
June 30, 2012
6,753,125

 
$1.44
Granted
1,007,500

 
$1.10
Forfeited
(591,668
)
 
$1.29
March 31, 2013
7,168,957

 
$1.36
Weighted average remaining contractual term
4.8

years
(1) Weighted average exercise price per share
The fair value of stock option grants was estimated using the following weighted average assumptions for the nine months ended:
 
March 31,
 
2013
 
2012
Number of options
1,007,500
 
1,675,000
Weighted average grant date fair value per share
$0.61
 
$0.72
Expected dividend
$0.00
 
$0.00
Risk free interest rate
0.6
%
 
-
0.8
%
 
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 $0.1 million and $0.8 million of related stock compensation expense for the three and nine months ended March 31, 2013, respectively, and $0.4 million and $1.3 million of related stock compensation expense for the three and nine months ended March 31, 2012, respectively. Stock based compensation is included in general and administrative expense in the unaudited condensed consolidated statements of operations. The unrecorded expected future compensation expense related to stock option awards was $0.6 million as of March 31, 2013.
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 March 31, 2013, the Company issued a total of 171,565 shares of its common stock to non-employee directors pursuant to this policy.