Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

v3.10.0.1
Stock Based Compensation
12 Months Ended
Dec. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Based Compensation

Note 8 – Stock Based Compensation

Equity Incentive Plans

2013 Equity Incentive Plan

In December 2013, the Company’s board of directors and stockholders approved the Company’s 2013 Equity Incentive Plan, providing for the issuance of equity-based instruments covering up to, as amended, a total of 4,485,967 shares of common stock.

Effective on May 16, 2018, the Company’s stockholders approved the amendment and restatement of the 2013 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 1,600,000 shares, bringing the total number of approved shares to 6,085,967 under the 2013 Equity Incentive Plan.

As of December 31, 2018, 1,707,485 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

2014 Non-Employee Equity Compensation Plan

In March 2014, the Company’s board of directors and stockholders approved the 2014 Non-Employee Equity Compensation Plan for the issuance of equity-based instruments covering up to, as amended, a total of 600,000 shares of common stock to directors and other non-employees.

Effective on May 16, 2018, the Company’s shareholders approved the amendment and restatement of the 2014 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 250,000 shares, bringing the total number of shares to 850,000 under the 2014 Non-employee Equity Compensation Plan.

As of December 31, 2018, 366,829 shares of common stock remain eligible to be issued through equity-based instruments under the 2014 Non-Employee Equity Compensation Plan.

2015 Performance Share Unit Plan

In April 2015, the Company’s board of directors approved the Energous Corporation 2015 Performance Share Unit Plan (the “Performance Share Plan”), under which 1,310,104 shares of common stock became available for issuance as PSUs to a select group of employees and directors, subject to approval by the stockholders. On May 21, 2015 the Company’s stockholders approved the Performance Share Plan.

Effective on May 16, 2018, the Company’s shareholders approved the amendment and restatement of the 2015 Performance Share Plan to increase the number of shares reserved for issuance thereunder by 1,400,000 shares, bringing the total number of approved shares to 2,710,104 under the 2015 Performance Share Unit Plan.

As of December 31, 2018, 1,431,951 shares of common stock remain eligible to be issued through equity-based instruments under the Performance Share Unit Plan.

Note 8 – Stock Based Compensation, continued

Equity Incentive Plans, continued

2017 Equity Inducement Plan

On December 28, 2017, the Board of Directors approved the 2017 Equity Inducement Plan. Under the plan, the Board of Directors reserved 600,000 shares for the grant of RSUs. These grants will be administered by a committee of the Board of Directors or the Board of Directors acting as a Committee. These awards will be granted to individuals who (a) are being hired as an Employee by the Company or any Subsidiary and such Award is a material inducement to such person being hired; (b) are being rehired as an Employee following a bona fide period of interruption of employment with the Company or any Subsidiary; or (c) will become an Employee of the Company or any Subsidiary in connection with a merger or acquisition.

As of December 31, 2018, 271,000 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

Employee Stock Purchase Plan

In April 2015, the Company’s board of directors approved the ESPP, under which 600,000 shares of common stock have been reserved for purchase by the Company’s employees, subject to approval by the stockholders. On May 21, 2015, the Company’s stockholders approved the ESPP. Employees may designate an amount not less than 1% but not more than 10% of their annual compensation, but for not more than 7,500 shares during an offering period. An offering period shall be six months in duration commencing on or about January 1 and July 1 of each year. The exercise price of the option will be the lesser of 85% of the fair market of the common stock on the first business day of the offering period and 85% of the fair market value of the common stock on the applicable exercise date.

As of December 31, 2018, 343,753 shares of common stock remain eligible to be issued through equity based instruments under the ESPP. For the year ended December 31, 2018, eligible employees contributed $531,797 through payroll deductions to the ESPP and 62,168 shares were deemed delivered for the year ended December 31, 2018. For the year ended December 31, 2017, eligible employees contributed $869,066 through payroll deductions to the ESPP and 62,700 shares were deemed delivered for the year ended December 31, 2017.

Stock Option Award Activity

The following is a summary of the Company’s stock option activity during the year ended December 31, 2018:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Life In

Years

 

 

Intrinsic

Value

 

Outstanding at January 1, 2018

 

 

1,037,239

 

 

$

4.80

 

 

 

6.4

 

 

$

15,198,044

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

(380,745

)

 

 

3.47

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2018

 

 

656,494

 

 

$

5.57

 

 

 

4.6

 

 

$

252,887

 

Exercisable at December 31, 2018

 

 

656,494

 

 

$

5.57

 

 

 

4.6

 

 

$

252,887

 

 

As of December 31, 2018, the unamortized value of options was $0.

The aggregate intrinsic value of options exercised was $4,570,515 and $2,864,845 for the years ended December 31, 2018 and 2017, respectively.

No options were granted during the years ended December 31, 2018 and 2017.

Note 8 – Stock Based Compensation, continued

Restricted Stock Units (“RSUs”)

During the year ended December 31, 2018, the Compensation Committee of the Board (“Compensation Committee”) granted various directors and consultants RSUs under which the holders have the right to receive an aggregate 175,826 shares of common stock. These awards were granted under the 2014 Non-Employee Equity Compensation Plan. The awards granted vest over terms from one to four years.

During the year ended December 31, 2018, the Compensation Committee granted various employees RSUs under which the holders have the right to receive an aggregate 856,975 shares of common stock. The majority of these awards, granted under the 2013 Equity Incentive Plan, vest over terms ranging from one to four years.

During the year ended December 31, 2018, the Compensation Committee granted employees RSUs under which the holders have the right to receive 345,500 shares of common stock. The awards, granted under the 2017 Equity Inducement Plan, vest over four years beginning on the anniversary of the grant date.

The Company accounts for RSUs granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees” (“ASC 505-50”). In accordance with ASC 505-50, the Company estimates the fair value of the unvested portion of the RSU award each reporting period using the closing price of the Company’s common stock.

At December 31, 2018, the unamortized value of the RSUs was $25,810,914. The unamortized amount will be expensed over a weighted average period of 2.3 years. A summary of the activity related to RSUs for the year ended December 31, 2018 is presented below:

 

 

 

Total

 

 

Weighted

Average Grant

Date Fair Value

 

Outstanding at January 1, 2018

 

 

2,274,325

 

 

$

13.75

 

RSUs granted

 

 

1,378,301

 

 

$

15.89

 

RSUs forfeited

 

 

(220,433

)

 

$

14.36

 

RSUs vested

 

 

(963,019

)

 

$

13.30

 

Outstanding at December 31, 2018

 

 

2,469,174

 

 

$

15.07

 

 

Note 8 – Stock Based Compensation, continued

Performance Share Units (“PSUs”)

Performance share units (“PSUs”) are grants that vest upon the achievement of certain performance goals. The goals are commonly related to the Company’s market capitalization or market share price of the common stock.

The PSUs originally issued during 2015 to certain board members and senior management were earned based on the Company’s achievement of market capitalization growth between the effective date of the grant agreement and December 31, 2018. If the Company’s market capitalization was $100 million or less, no PSUs were earned. If the Company reached a market capitalization of $1.1 billion or more, 100% of the PSUs would have been earned. For market capitalization between $100 million and $1.1 billion, the percentage of PSUs earned was determined on a quarterly basis based on straight line interpolation.

The Company determined that the PSUs were equity awards with both market and service conditions. Grantees of PSUs were required to be employed through December 31, 2018 in order to earn the entire award, if and when vested. No PSUs were granted during the years ended December 31, 2018 and 2017.

 

The fair value of the grants of PSUs to purchase a total of 1,342,061 shares of common stock (including 1,278,153 PSUs granted under the 2015 Performance Share Unit Plan and 63,908 granted as an inducement) was determined to be approximately $3,218,000, and was amortized over the service period of May 21, 2015 through December 31, 2018, on a straight-line basis.

Amortization for all PSU awards was $819,816 and $1,661,650 for the years ended December 31, 2018 and 2017, respectively.

Note 8 – Stock Based Compensation, continued

Performance Share Units (“PSUs”), continued

At December 31, 2018, the unamortized value of all PSUs was $0. A summary of the activity related to PSUs for the year ended December 31, 2018 is presented below:

 

 

 

Total

 

 

Weighted

Average Grant

Date Fair Value

 

Outstanding at January 1, 2018

 

 

951,657

 

 

$

2.65

 

PSUs granted

 

 

 

 

$

 

PSUs forfeited

 

 

(656,688

)

 

$

2.65

 

PSUs vested

 

 

(294,969

)

 

$

2.65

 

Outstanding at December 31, 2018

 

 

 

 

$

 

 

Employee Stock Purchase Plan (“ESPP”)

During the years ended December 31, 2018 and 2017, there were two offering periods per year for the ESPP. The first offering period started on January 1 of each year and concluded on June 30 of each year. The second offering period started on July 1 of each year and concluded on December 31 of each year.

The weighted-average grant-date fair value of the purchase option for each designated share purchased under this plan was approximately $9.25 and $5.42 during the years ended December 31, 2018 and 2017, respectively, which represents the fair value of the option, consisting of three main components: (i) the value of the discount on the enrollment date, (ii) the proportionate value of the call option for 85% of the stock and (iii) the proportionate value of the put option for 15% of the stock. The Company recognized stock-based compensation expense for the plan of $574,927 and $331,913 for the years ended December 31, 2018 and 2017, respectively.

Note 8 – Stock Based Compensation, continued

Employee Stock Purchase Plan (“ESPP”), continued

The Company estimated the fair value of the purchase options granted during the years ended December 31, 2018 and 2017 using the Black-Scholes option pricing model. The fair values of the purchase options granted were estimated using the following assumptions:

 

 

For the Year Ended

December 31, 2018

Stock price range

$

14.48 – 22.34

 

Dividend yield

 

0

%

Expected volatility range

 

72 – 177

%

Risk-free interest rate range

 

1.61 – 2.14

%

Expected life

 

6 months

 

 

 

 

 

 

For the Year Ended

December 31, 2017

Stock price range

$

16.08 – 17.59

 

Dividend yield

 

0

%

Expected volatility range

 

56 – 66

%

Risk-free interest rate range

 

0.62 – 1.11

%

Expected life

 

6 months

 

 

 

 

 

 

Stock-Based Compensation Expense

The following tables summarize total stock-based compensation costs recognized for years ended December 31, 2018 and 2017:

 

 

 

For the Years Ended December 31,

 

 

 

2018

 

 

2017

 

Stock options

 

$

 

 

$

764,723

 

RSUs

 

 

15,359,011

 

 

 

13,043,171

 

PSUs

 

 

819,816

 

 

 

1,661,650

 

DSUs

 

 

 

 

 

1,362

 

ESPP

 

 

574,927

 

 

 

331,913

 

Total

 

$

16,753,754

 

 

$

15,802,819

 

 

The total amount of stock-based compensation was reflected within the statements of operations as:

 

 

 

For the Years Ended December 31,

 

 

 

2018

 

 

2017

 

Research and development

 

$

9,676,156

 

 

$

8,522,798

 

Sales and marketing

 

 

1,416,136

 

 

 

1,113,120

 

General and administrative

 

 

5,661,462

 

 

 

6,166,901

 

Total

 

$

16,753,754

 

 

$

15,802,819