Canterbury Park Holding Corp Stock Compensation Disclosure

5.STOCK-BASED COMPENSATION



Stock-based compensation is recorded at fair value as of the date of grant, is included in the salaries and benefits expense line item on the consolidated statements of operations and amounted to $352,000 and $314,000 for the years ended December 31, 2017 and 2016, respectively. 



Stock Options:



The Company’s 1994 Stock Plan (the “Plan”) provides for the granting of awards in the form of stock options, restricted stock, stock appreciation rights, and deferred stock to key employees and non-employees, including directors of and consultants to the Company and any subsidiary, to purchase up to a maximum of 1,650,000 shares of common stock.  The Company currently has 389,486 shares available for grant under the Plan.  The Plan is administered by the Board of Directors which determines the persons who are to receive awards under the Plan, the type of award to be granted, the number of shares subject to each award and, if an option, the exercise price of each option. 



The Plan provides that payment of the exercise price may be made in the form of unrestricted shares of common stock already owned by the optionee. The Company calculates the fair market value of unrestricted shares as the average of the high and low sales prices on the date of the option exercise. The Company’s common stock is purchased upon the exercise of stock options, and restricted stock awards are settled in shares of the Company’s common stock.



Stock option activity related to the Plan during the years ended December 31, 2017 and 2016 is summarized below:





The grant-date fair value of options outstanding and exercisable at December 31, 2017 and 2016 was $407,000 and $547,000, respectively.  The weighted average remaining contractual term of these options is 1.8 years.    



There were no options granted in 2017 or 2016.  The total fair value of options exercised during the years ended December 31, 2017 and 2016 was $58,000 and $4,900, respectively. The total intrinsic value of options exercised during 2017 and 2016 was $90,000 and $8,000, respectively.



The following table summarizes information concerning all options outstanding and options exercisable as of December 31, 2017:













Board of Directors Stock Option and Restricted Stock Grants



The Company’s Stock Plan was amended to authorize annual grants to non-employee members of the Board of Directors of restricted stock or stock options, or both, as determined by the Board.  Options granted under the Plan generally expire 10 years after the grant date and generally become exercisable over a four year period. Generally the restricted stock vests 100% after one year and is subject to restrictions on resale for an additional year. 



Restricted stock awards are subject to forfeiture if a board member terminates prior to the shares vesting. A summary of changes in Board of Directors unvested restricted stock as December 31, 2017:





Employee Deferred Stock Award Grants



Employee deferred stock awards are subject to forfeiture if an employee terminates prior to the vesting. Generally, the awards vest ratably over a four-year period and compensation costs are recognized over the vesting period. Compensation costs are recorded in “Salaries and benefits” on the Consolidated Statements of Operations. 



A summary of the changes in employee unvested deferred stock award grants as of December 31, 2017, is as follows:

At December 31, 2017, there was approximately $59,000 of total unrecognized stock-based compensation expense related to unvested restricted stock and deferred stock awards the Company expects to recognize in 2018.



Long Term Incentive Plan and Award of Deferred Stock

 

Effective March 24, 2016, the Board of Directors of the Company approved a new plan for long-term incentive compensation of the Company’s named executive officers (NEOs) and other Senior Executives called the Canterbury Park Holding Corporation Long Term Incentive Plan (the “LTI Plan”). The LTI Plan authorizes the grant of Long Term Incentive Awards that provide an opportunity to NEOs and other Senior Executives to receive a payment in cash or shares of the Company’s common stock to the extent of achievement at the end of a period greater than one year (the “Performance Period”) as compared to Performance Goals established at the beginning of the Performance Period. The LTI is a sub-plan of the Company’s Stock Plan which authorizes the grant of Deferred Stock awards that represent the right to receive Company common stock if conditions specified in the awards are satisfied.  Further information regarding the LTI Plan is presented under Item 5.02 in the Company’s Report on Form 8-K for March 30, 2016.

 

Effective March 24, 2016, the Board approved 2016 granting opportunities to Company officers and key employees to earn long-term incentive compensation under the LTI Plan. Each officer and key employee was granted an Incentive Award (that was also a Deferred Stock Award under the Stock Plan) which provided an opportunity to receive a payout of shares of the Company’s common stock to the extent of achievement compared to Performance Goals at the end of the period beginning January 1, 2016 and ending December 31, 2018. Pursuant to these awards the Company has reserved 24,000 shares that potentially may be issued under the Deferred Stock Awards. Compensation expense for 2016 was $177,000.  



Effective May 11, 2017, the Board approved 2017 granting opportunities to Company officers and key employees to earn long-term incentive compensation under the LTI Plan. Each officer and key employee was granted an Incentive Award (that was also a Deferred Stock Award under the Stock Plan) which provided an opportunity to receive a payout of shares of the Company’s common stock to the extent of achievement compared to Performance Goals at the end of the period beginning January 1, 2017 and ending December 31, 2019. Pursuant to these awards the Company has reserved 34,554 shares that potentially may be issued under the Deferred Stock Awards. Compensation expense for 2017 was $207,000.