8. Equity Compensation

 

Stock Options

 

In 2003, the Board of Directors adopted the 2003 Equity Incentive Plan (the “2003 Plan”), which provided for the granting of nonqualified and incentive stock options, stock appreciation rights, stock awards, restricted stock units and restricted stock awards. Under the 2003 Plan, the Company was able to grant nonqualified and incentive stock options to directors, employees and non-employees providing services to the Company. On June 11, 2013, the Company’s Board of Directors adopted the 2013 Stock Option and Incentive Plan (the “2013 Plan”), which was subsequently approved by the Company’s stockholders. The 2013 Plan became effective as of the closing of the Company’s initial public offering. To the extent that any awards outstanding under the 2003 Plan are forfeited or lapse unexercised after August 1, 2013, the shares of common stock subject to such awards will become available for issuance under the 2013 Plan. The 2013 Plan provides for annual increases in the number of reserved shares of 5% of the outstanding number of shares of the Company’s Common Stock as of the preceding December 31. On January 1, 2017, the number of reserved shares was increased by 1,186,489 in accordance with the provisions of the 2013 Plan.

 

A summary of stock option activity for the nine months ended September 30, 2017 is presented below:

 

 

The following table summarizes information about stock options outstanding and exercisable at September 30, 2017:

 

 

For the stock option awards vested during the three and nine months ended September 30, 2017, the total fair value was $0.8 million and $3.0 million, respectively. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands):

 

 

The Company did not award stock options during the three and nine months ended September 30, 2017. The fair value of each option awarded during the nine months ended September 30, 2016, was estimated using an expected volatility of 62%,  no expected dividends, an expected term of 6.1 years, and a risk-free rate of 1.1%.

 

Restricted stock units

 

A summary of restricted stock unit activity for the nine months ended September 30, 2017 is presented below:

 

 

During the nine months ended September 30, 2017, 746,819 restricted stock units vested of which 255,838 shares were withheld for tax purposes resulting in the issuance of 490,981 shares of common stock.

 

Company Matching Contribution to our 401(k) Plan

 

The Company offers a 401(k) Plan and in November 2016, our Board of Directors authorized a matching contribution by the Company starting in 2017. Matching contributions are as follows: the Company will match 100% of the first 1% of salary contributed by a participant, and 50% of the next 5% of salary contributed by a participant, for a maximum matching contribution of 3.5% of the salary of a participant up to the limit on contributions imposed by the IRS.  Currently, the Company funds its match in contribution with shares of Control4’s common stock.  During the nine months ended September 30, 2017, the Company contributed 53,159 shares of stock to employees under this plan and recorded $1.0 million of expenses associated with this contribution.

 

Stock-based compensation expense

 

Total stock-based compensation expense has been classified as follows in the accompanying Condensed Consolidated Statements of Operations (in thousands):

 

 

At September 30, 2017, there was $3.3 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 1.1 years. At September 30, 2017, there was $10.2 million of total unrecognized compensation cost related to non-vested restricted stock units that will be recognized over a weighted-average period of 1.9 years.