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Stock-Based Compensation
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Sep. 30, 2014
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation |
Note 9 - 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 replaced 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 to receive incentive compensation awards by the Compensation, Nominating and Governance Committee (the "CNG Committee") of the Board of Directors of the Company (the "Board"), which is the plan administrator for the 2012 Stock Incentive Plan. 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 the remaining number of 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 options or stock appreciation rights 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 that may be granted to any one participant 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 time based, performance based, or market based vesting provisions. Performance metrics used to measure the potential vesting of the PBOs granted in October 2013 consist of: (i) completing the drilling of the CO2-EOR pilot program at Poplar (weighted 10%); (ii) Board approval of a full field CO2-EOR development project at Poplar (weighted 40%); (iii) sale of substantially all of the Amadeus Basin assets (weighted 20%); (iv) approval of a farmout agreement or the ability to participate in drilling one well in the Weald Basin with internally developed funding, including proceeds from a sale of assets (weighted 20%); and (v) approval and execution of a farmout agreement for drilling one well in the Bonaparte Basin (weighted 10%). Vesting of the market based stock options granted in October 2013 is subject to the Company maintaining a $2.35 per share closing price for 10 consecutive trading days and a median stock price of $2.35 over a period of 90 days. As of September 30, 2014, performance metrics (i), (iii) and (iv) were met. During each of the three months ended September 30, 2014 and September 30, 2013, the Company granted no stock options.
During the three months ended September 30, 2014, 288,541 stock options were exercised, resulting in the issuance of 225,235 shares of common stock, which number is net of shares withheld to satisfy certain employee tax and exercise price obligations. During the three months ended September 30, 2013, no stock options were exercised. During the three months ended September 30, 2014, 980,210 stock options were forfeited. There were no forfeitures during the three months ended September 30, 2013.
As of September 30, 2014, 1,728,124 stock options with market based vesting provisions or PBOs had not vested, and 819,323 options, including forfeited options, remained available for future issuance. Stock options outstanding have expiration dates ranging from August 17, 2015, to October 15, 2023. See Note 18 - Subsequent Events for information on activities related to stock options subsequent to September 30, 2014.
The following table summarizes the stock option activity for the three months ended September 30, 2014:
(1) Weighted average exercise price per share.
Stock Compensation Expense
The Company recorded $44 thousand of related stock compensation expense for the three months ended September 30, 2014, and $0.7 million of related stock compensation expense for the three months ended September 30, 2013. Stock compensation expense is included in general and administrative expense in the unaudited condensed consolidated statements of operations. The $44 thousand of stock compensation expense for the three months ended September 30, 2014 consisted of expense amortization related to prior period awards of $163 thousand, and stock awards and forfeitures as described below. As of September 30, 2014, the unrecorded expected future compensation expense related to stock option awards was $0.8 million.
Stock Awards
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. On July 1, 2014, the Company issued a total of 96,330 shares of its Common Stock to non-employee directors and one board-observer pursuant to this policy and the 2012 Stock Incentive Plan. Pursuant to the compensation policy, one director elected to apply his annual compensation to the exercise of a portion of his previously awarded and vested options in lieu of receiving a share award, resulting in the issuance of an additional 21,875 shares. Total compensation expense from the issuance of non-employee director compensation for the three months ended September 30, 2014 was $245 thousand.
Forfeitures
As a result of the resignation of an executive officer of the Company effective August 15, 2014, 980,210 unvested stock options and 100,000 unvested shares of restricted stock that were previously granted to such officer were forfeited. The forfeiture of unvested options and unvested restricted stock resulted in the reversal of previously recorded compensation expense of $320 thousand and $44 thousand, respectively, which is recorded as an offset to general and administrative expense during the three months ended September 30, 2014 in the accompanying unaudited condensed consolidated statement of operations.
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