11. STOCK-BASED COMPENSATION

2015 Equity Incentive Plan. During the second quarter of 2017, the Company’s stockholders approved an amendment to the 2015 Equity Incentive Plan (“2015 Plan”) that increased the number of shares of common stock available for issuance under the 2015 Plan from 1,400,000 to 2,500,000. In addition to the increase in the number of authorized shares issuable under the 2015 Plan, the amendment included several “best practices” changes. The 2015 Plan includes new shares reserved for issuance to directors, employees and consultants and allows for a variety of forms of awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents and performance-based compensation. Stock option awards have maximum 10‑year terms and all awards issued thus far under the 2015 Plan do not vest on an accelerated basis if there is a change in control of the Company, unless the awards are not assumed by the successor, as defined.

In May 2017, the Company extended the employment agreement of Daniel R. Lee, the Company’s President and Chief Executive Officer, through November 2020 and simultaneously issued him an option to purchase 240,000 shares of common stock under the 2015 Plan with an exercise price of $2.32. Mr. Lee’s option will vest ratably on a monthly basis between December 1, 2018 and November 30, 2020 in conjunction with his amended employment agreement.

Effective as of May 2019, the Company extended the employment agreement of Lewis Fanger, the Company’s Senior Vice President and Chief Financial Officer, through May 2022. In May 2019, the Company also separately issued him an option to purchase 100,000 shares of common stock under the 2015 Plan with an exercise price of $2.23. Mr. Fanger’s option vests annually in equal amounts over a three-year period.

In September 2019, the Company issued options to purchase a total of 260,000 additional shares of common stock under the 2015 Plan to various other employees of the Company, all of which have an exercise price of $1.97. These stock options all vest annually in equal amounts over the next three years. In all cases, the exercise price of the options reflects the Company’s closing price on the date of grant.

In May 2019, the Company also issued to non-executive members of its Board of Directors, as compensation for their annual service, options to purchase a total of 51,900 shares of common stock under the 2015 Plan with an exercise price of $2.23 and a one-year vesting period; and 21,524 shares of common stock under the 2015 Plan that vested immediately with certain transfer restrictions.

As of December 31, 2019, the Company had 489,635 stock-based awards authorized by shareholders and available for grant from the 2015 Plan.

Prior to the adoption of the 2015 Plan and outside of the 2006 Plan, in order to recruit its executive officers, the Company issued a non-qualified stock option to purchase 943,834 shares to Daniel R. Lee, its President and Chief Executive Officer, and a non-qualified stock option to purchase 300,000 shares to Lewis Fanger, its Senior Vice President, Chief Financial Officer and Treasurer. Each of these stock options vested over a four-year period and, as of December 31, 2019, these stock options have fully vested.

Stock Options. The following table summarizes information related to the Company’s common stock options:

 

Compensation Cost. Compensation expense for the years ended December 31, 2019 and 2018 was $0.3 million and $0.6 million, respectively. These costs are recognized on a straight-line basis over the vesting period of the awards net of forfeitures and are included in selling, general and administrative expense on the consolidated statements of operations.

As of December 31, 2019, there was approximately $0.5 million of unrecognized compensation cost related to unvested stock options granted by the Company. This unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.1 years.

The Company estimated the fair value of each stock option award on the grant date using the Black-Scholes valuation model. Option valuation models require the input of highly subjective assumptions, and changes in assumptions used can materially affect the fair value estimate. Option valuation weighted-average assumptions were as follows:

 

The weighted-average grant date fair value of options granted during the years ended December 31, 2019 and 2018 was $0.94 and $1.34 per share, respectively.

Expected volatility is based on the historical volatility of our stock price. Dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award.