Share-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss for the periods indicated below (in thousands):

 

Ocuphire Stock Options

 

Inducement Plan

 

On February 22, 2021, the Company adopted the Ocuphire Pharma, Inc. Inducement Plan (the “Plan”), pursuant to which the Company reserved 325,258 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

2020 Equity Incentive Plan

 

The stockholders of the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”) for share-based awards. The 2020 Plan became effective on November 5, 2020.  Under the 2020 Plan, (i) 1,000,000 new shares of common stock are reserved for issuance and (ii) up to 70,325 additional shares of common stock may be issued, consisting of (A) shares that remain available for the issuance of awards under prior equity plans and (B) shares of common stock subject to outstanding stock options or other awards covered by prior equity plans that have been cancelled or expire on or after the date that the 2020 Plan became effective. The 2020 Plan permits the grant of incentive and nonstatutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other share‑based awards.

 

2018 Equity Incentive Plan

 

Prior to the 2020 Plan, the Company had adopted a 2018 Equity Incentive Plan (the “2018 Plan”) in April 2018 under which 1,175,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants. Upon the effective date of the 2020 Plan, no additional shares were available for issuance under the 2018 Plan.

During the years ended December 31, 2021 and 2020, 420,300 and 830,167 stock options were granted to newly-hired officers, directors, employees and consultants (as adjusted for the Exchange Ratio), respectively, generally vesting over an immediate to forty-eight (48) month period. The Company recognized $1.8 million and $1.4 million in share-based compensation expense related to stock options during the years ended December 31, 2021 and 2020, respectively. During the years ended December 31,2021 and 2020, 73,442 and 40,672 stock options were exercised, respectively, with an intrinsic value of $345,000 and $175,000, respectively. The following table summarizes the Company’s stock option plan activity:

The weighted average fair value per share of options granted during the years ended December 31, 2021 and 2020 was $4.36 and $3.92, respectively. The Company measures the fair value of stock options with service‑based and performance‑based vesting criteria to employees, directors, consultants and directors on the date of grant using the Black‑Scholes option pricing model. The Company does not have history to support a calculation of volatility and expected term. As such, the Company has used a weighted‑average volatility considering the volatilities of several guideline companies.

 

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was based on the contractual term for agreements that allow for exercise of vested options through the end of the contractual term upon termination of continuous service, and for all other agreements, was based on the mid‑point between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk‑free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The weighted‑average assumptions used in the Black‑Scholes option‑pricing model are as follows during the years ended December 31, 2021 and 2020:

 

During the years ended December 31, 2021 and 2020, 468,301 and 379,576 stock options vested (as adjusted for the Exchange Ratio), respectively. The weighted average fair value per share of options vesting during the years ended December 31, 2021 and 2020 was $3.49 and $2.77, respectively. During the years ended December 31, 2021 and 2020, 34,220 and 43,002 stock options were forfeited, respectively.  As of December 31, 2021, 890,542 shares in the aggregate were available for future issuance under the 2020 Plan and Inducement Plan.

 

Unrecognized share‑based compensation cost was $2.4 million as of December 31, 2021. The unrecognized share‑based expense is expected to be recognized over a weighted average period of 1.1 years.

 

Ocuphire Restricted Stock Awards

 

On November 11, 2020, the Company granted 40,000 restricted stock awards (“RSAs”) that vested on January 8, 2021. There were no RSAs granted during the years ended December 31, 2021.

 

The share-based compensation expense attributed to the RSAs during each of the years ended December 31, 2021 and 2020 was $22,000 and $0.1 million, respectively.

 

A summary of RSA activity is as follows for the years ended December 31, 2021 and 2020:

 

Common Stock Issued for Services

The Company granted stock for services in the amount of 21,414 common shares to two board members who elected to receive their board retainers in the form of stock for services performed during the year ended December 31, 2021. The share-based compensation related to these services amounted to $108,000 during the year ended December 31, 2021.

Former Rexahn Options

 

Following the closing of the Merger, 123 unexercised and vested options to purchase Common Stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as amended (the “Rexahn 2003 Plan”, and together with the Rexahn 2013 Plan, the “Prior Plans”) were outstanding. As of December 31, 2021, 82 of the former Rexahn options remained outstanding. During the year ended December 31, 2021, 41 of the former Rexahn options expired. The exercise price related to the outstanding options granted under the Prior Plans was $182.40 per share with an average remaining contractual life of 0.5 years.