Annual report pursuant to Section 13 and 15(d)

Stock Option and Incentive Plans

Stock Option and Incentive Plans
12 Months Ended
Dec. 31, 2020
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Option and Incentive Plans
11. Stock Option and Incentive Plans
Amended and Restated 2008 Equity Incentive Plan
In July 2008, the Company adopted the 2008 Equity Incentive Plan (the “Plan”). On February 26, 2013, the board of directors approved an amended and restated plan (the “Amended Plan”) under which the number of shares of common stock available for issuance was 157,143. For new awards, the period that vested awards would remain exercisable upon termination of service was reduced from ten years to two years. The board of directors also increased the number of shares of common stock available under the Company’s Amended Plan on February 24, 2014 and April 29, 2014 to 185,714 and 235,714, respectively. As of the closing of the Company’s IPO, there were no further grants made under the Amended Plan.
2014 Omnibus Incentive Plan
In April 2014, the Company’s board of directors adopted the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by the Company’s shareholders on July 3, 2014. The 2014 Plan allows for the granting of incentive and
stock options, restricted stock and stock unit awards, stock appreciation rights and other performance-based awards to the Company’s employees, members of the board of directors and consultants of the Company. On July 28, 2014, the effective date of the 2014 Plan, the number of shares of common stock reserved pursuant to the 2014 Plan was 57,143. The 2014 Plan provides for an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2015 and ending on January 1, 2024, equal to the lesser of (i) 4% of the outstanding shares of common stock on December 31 immediately preceding such date or (ii) a lesser amount determined by the Company’s board of directors. Consistent with the provision for an annual increase, an additional 1,582,967 shares of common stock have been reserved under the 2014 Plan as of December 31, 2020.
The Company recognizes compensation expense for share-based compensation based on the fair value of the underlying instrument. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Stock option activity for the year ended December 31, 2020, is summarized as follows:
Number of
(in years)
Options outstanding at December 31, 2019
$ 19.75     
$ 9.67     
$ 4.54     
$ 60.00     
$ 12.85     
Options outstanding at December 31, 2020
$ 14.33     
$ 445,147  
Vested and exercisable at December 31, 2020
$ 20.52     
$ 182,106  
Of the option grants outstanding to purchase 1,853,841 shares of common stock, grants to purchase 30,001 shares of common stock were issued and are outstanding outside the Company’s incentive plans.
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of options granted during the years ended December 31, 2020, 2019 and 2018 was $9.67, $4.30 and $1.47, respectively. Total compensation expense recognized amounted to $2,576,456, $1,446,549 and $1,555,523 for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, the total remaining unrecognized compensation cost related to unvested stock options was approximately $5.2 million which will be recognized over a weighted average period of approximately 2.7 years.
The following weighted average assumptions were used to compute the fair value of stock option grants:
Year Ended December 31,
Risk free interest rate
     1.14     2.35     2.58
Expected dividend yield
     —         —         —    
Expected term (in years)
     6.03       6.06       6.02  
Expected volatility
     94.6     89.7     82.3
Expected volatility—
The Company estimated the expected volatility based on the Company’s historical volatility data.
Expected term—
The Company based expected term on the midpoint of the vesting period and the contractual term of each respective option grant.
Risk-free interest rate—
The Company estimated the risk-free interest rate in reference to yield on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award.
Expected dividend yield—
The Company estimated the expected dividend yield based on consideration of its historical dividend experience and future dividend expectations. The Company has not historically declared or paid dividends to common stockholders. Moreover, it does not intend to pay dividends in the future, but instead expects to retain any earnings to invest in its continued growth.