P37
December 31, 2009, 1,135,829 units granted have vested. The initial cost of the unit grants to the employees was forgiven
by the Company and was treated as additional compensation to the employee.
Non-employees
As of December 31, 2009 the total unrecognized compensation cost for these unit grants was US$1,845 (2008: US$20,335), which is being amortized over the remaining weighted average vesting period of 2 years (2008: 3 years). The compensation recognized in operating expenses for unit grants for the year ended December 31, 2009 was US$(2,466) (2008: US$48,351). Since inception to December 31, 2009, 100,320 units granted have vested. The initial cost of the unit grants to the non-employees was forgiven by the Company and was treated as additional compensation to the non-employee.
Summary Unit Grant Information
The Company determined the estimated unit price of the Company at the measurement date by using a combination of an independent valuation of the Company's units and internal analysis of milestones of the Company throughout the year.
Effective with the recapitalization from a limited liability company to a corporation on May 23, 2007 and the IPO the units granted to employees and non-employees were converted to shares based upon the IPO conversion of 1 unit to 0.8606 shares.
A summary of unit grant activity under the unit grant plan is summarized as follows:
Number
of Shares*
Outstanding at
December 31, 2007
1,758,206
G
ranted
-
F
orfeited
(242,315
)
Outstanding at
December 31, 2008
1,515,891
G
ranted
-
F
orfeited
(34,003
)
Outstanding at December 31, 2009
1,481,888
*Units granted under the plan converted to shares
The total shares granted under unit grant agreements included in the statement of shareholders' equity include both vested and non-vested shares.
(b) 2007 Equity Compensation Plan
On May 23, 2007, the Board of Directors approved the TyraTech, Inc. 2007 Equity Compensation Plan which authorizes up to a maximum of 2,400,000 of the shares outstanding after the IPO be made available for granting of awards
to all employees and non-employee directors. These share awards can be in the form of options to purchase capital stock, stock appreciation rights (SARs), restricted shares, and other option stock based awards the Board of Directors' Remuneration Committee shall determine. The Remuneration Committee, which is comprised of all independent directors, determines the number of shares, the term, the frequency and date, the type, the exercise periods, any performance criteria pursuant to which awards may be granted and the restrictions and other terms of each grant of restricted shares in accordance with terms of our Plan.
Stock Appreciation Rights
During the year ended December 31, 2009, the Company granted 753,384 (2008: 415,000) SARs. SARs can be granted with an exercise price less than, equal to or greater than the stock's fair market value at the date of grant and require the Company to issue stock to the employee upon exercise of the SAR. The SARs have ten-year terms and vest and become fully exercisable over varying periods between one to four years from the date of grant.
The fair value of each SAR was estimated on the grant date using the Black-Scholes option-pricing model that used the assumptions in the following table. The fair value is amortised to compensation expense on a straight-line basis over the expected term. The Company estimated the expected term of the SARs using an approach that approximated the "simplified approach." Using this approach, the Company assigned an expected term for grants with four-year graded vesting. The expected stock price volatility was determined by examining the historical volatilities for peers and using the Company's common stock. Industry peers consist of
several public companies in the biotechnology industry similar in size, stage of life cycle and financial leverage. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical
