Equity Compensation Plan

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

In 2004, Holdings established the 2004 Equity Incentive Plan (the "Option Plan") to provide for the award of non-qualified stock options to attract and retain people who are in a position to make a significant contribution to the success of the Company and its subsidiaries. Awards granted under the Option Plan vest over a period of one to four years contingent upon achievement of certain financial performance targets as defined by the Option Plan and expire 10 years after the date of grant.

The Company uses a Black-Scholes option-pricing model to calculate the fair value of options. The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, fair market value of common stock, probability that financial targets will be met, and forfeiture rate. Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense.

The following table summarizes information about the Option Plan and other option grants for the three months ended September 30, 2013:



	Three months ended September 30, 2013
	Outstanding				Exercisable
	Stock Options		Weighted Average Exercise Price *		Stock Options	Weighted Average Exercise Price *
June 30, 2013	14,778,750		$	0.49	3,008,750	$	0.47
Exercised	—		—		—	—
Cancelled	(3,375,000	)	0.47		—	—
Granted	875,000		0.47		—	—
September 30, 2013	12,278,750		$	0.49	3,008,750	$	0.47

The following tables summarizes information about the Option Plan and other option grants for the nine months ended September 30, 2013:



	Nine months ended September 30, 2013
	Outstanding				Exercisable
	Stock Options		Weighted Average Exercise Price *		Stock Options	Weighted Average Exercise Price *
December 31, 2012	14,778,750		$	0.49	3,008,750	$	0.47
Exercised	—		—		—	—
Cancelled	(3,375,000	)	0.47		—	—
Granted	875,000		0.47		—	—
September 30, 2013	12,278,750		$	0.49	3,008,750	$	0.47

* Represents per share price.

During the three and nine months ended September 30, 2013, in connection with the retirement of our former President and CEO, M. David Jones, previously issued unvested options to purchase 3,375,000 shares were cancelled in accordance with the Option Plan. In addition, the Company extended the expiration date of Mr. Jones' vested options to purchase 875,000 shares through March 30, 2016 and granted to Mr. Jones stock options to purchase 875,000 shares of Holdings common stock in substitution of a portion of previously issued unvested options, which terminated upon his retirement. These new stock options were issued outside of the Company's Option Plan, were fully vested at grant, and are exercisable only upon a change of control. Their exercise price of $0.47 per share is the same as the exercise price of his previous options.

For the three and nine months ended September 30, 2013 and 2012, no compensation expense was recognized as management determined that it is not probable that the performance targets associated with the stock option awards will be achieved.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 2: http://www.xbrl.org/2003/role/presentationRef

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 123R

-Paragraph 64, 65, A240

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 40

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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-Section 50

-Paragraph 4

-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Staff Accounting Bulletin (SAB)

-Number Topic 14

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Statement of Position (SOP)

-Number 93-6

-Paragraph 53

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Stanadyne Holdings, Inc. 10-Q