Ameresco, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock Incentive Plan

Stock Incentive Plan

12 Months Ended

Dec. 31, 2013

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

STOCK INCENTIVE PLAN

In 2000, the Company’s Board of Directors approved the Company’s 2000 Stock Incentive Plan (the “2000 Plan”) and between 2000 and 2010 authorized the Company to reserve a total of 28,500,000 shares of its then authorized common stock, par value $0.0001 per share (”Common Stock”) for issuance under the 2000 Plan. The 2000 Plan provided for the issuance of restricted stock grants, incentive stock options and nonqualified stock options. The Company will grant no further stock options or restricted awards under the 2000 Plan.

The Company’s 2010 Stock Incentive Plan (the “2010 Plan”), was adopted by the Company’s Board of Directors in May 2010 and approved by its stockholders in June 2010. The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. Upon its effectiveness, 10,000,000 shares of the Company’s Class A common stock were reserved for issuance under the 2010 Plan. As of December 31, 2013, the Company had granted options to purchase 1,562,504 shares of Class A common stock under the 2010 Plan. The 2013 options were granted at a weighted average exercise price of $9.10 per share.

Stock Option Grants

The Company has granted stock options to certain employees and directors, including its principal and controlling stockholder, under the 2000 Plan. The Company has also granted stock options to certain employees and directors under the 2010 Plan. At December 31, 2013, 8,535,127 shares were available for grant under the 2010 Plan.

The following table summarizes the collective activity under the 2000 Plan and the 2010 Plan:



	Number of Options		Weighted-Average Exercise Price
Outstanding at December 31, 2010	8,274,000		$	4.177
Granted(1)	257,500		12.520
Exercised	(2,790,188	)	2.305
Forfeited	(316,700	)	10.787
Outstanding at December 31, 2011	5,424,612		5.151
Granted(1)	706,644		11.782
Exercised	(1,306,145	)	2.651
Forfeited	(46,968	)	2.749
Outstanding at December 31, 2012	4,778,143		6.794
Granted(1)	598,360		9.101
Exercised	(682,619	)	3.037
Forfeited	(120,506	)	11.691
Outstanding at December 31, 2013	4,573,378		$	7.528
Options exercisable at December 31, 2013	3,067,015		$	6.074
Expected to vest at December 31, 2013	1,492,239		$	10.489
Options exercisable at December 31, 2012	3,309,722		$	4.986

(1) Grants are related to the 2010 Plan.

The weighted-average remaining contractual life of options expected to vest at December 31, 2013 was 8.36. The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was $4,224,406, $12,829,917, and $31,757,430, respectively.

The following table summarizes information about stock options outstanding at December 31, 2013:



			Outstanding Options				Exercisable Options
Related Plan	Exercise Price		Number Outstanding	Weighted-Average Remaining Term	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
2000 Plan	$	2.750	324,231	0.49	$	2.750	324,231	$	2.750
2000 Plan	3.000		13,600	1.07	3.000		13,600	3.000
2000 Plan	3.250		580,044	2.19	3.250		580,044	3.250
2000 Plan	3.410		442,462	3.05	3.410		442,462	3.410
2000 Plan	4.220		210,050	3.66	4.220		210,050	4.220
2000 Plan	6.055		966,400	5.50	6.055		839,100	6.055
2010 Plan	7.150		30,000	9.31	7.150		—	7.150
2010 Plan	8.390		50,000	9.41	8.390		—	8.390
2010 Plan	8.480		100,000	9.69	8.480		—	8.480
2010 Plan	8.860		24,360	9.44	8.860		—	8.860
2010 Plan	9.450		374,000	9.56	9.450		—	9.450
2010 Plan	10.690		20,000	9.81	10.690		—	10.690
2010 Plan	10.750		50,000	8.41	10.750		10,000	10.750
2010 Plan	10.950		140,000	7.71	10.950		72,000	10.950
2010 Plan	11.630		155,093	8.46	11.630		36,028	11.630
2010 Plan	11.980		446,450	8.32	11.980		89,930	11.980
2000 Plan	13.045		558,000	6.32	13.045		414,100	13.045
2010 Plan	14.810		60,000	7.40	14.810		24,000	14.810
2010 Plan	16.290		28,688	7.07	16.290		11,470	16.290
			4,573,378				3,067,015

During the year ended December 31, 2013, a total of 682,619 shares were issued upon the exercise of options under the 2000 Plan at an average price of $3.037 per share. Cash received from option exercises under all stock-based payment arrangements, net, for the years ended December 31, 2013, 2012 and 2011 was $2,073,227, $3,462,679 and $6,407,804, respectively.

Under the 2000 Plan and the 2010 Plan, all options expire if not exercised within ten years after the grant date. Historically, options generally provided for vesting over five years, with 20% vesting on the first anniversary of the grant date and 5% vesting every three months thereafter. During 2011, the Company began awarding options generally providing for vesting over five years, with 20% vesting on each of the first five anniversaries of the grant date. From time to time, the Company awards options providing for vesting over three years, with one-third vesting on each of the first three anniversaries of the grant date. If the employee ceases to be employed by the Company for any reason before vested options have been exercised, the employee has 90 days to exercise options that have vested as of the date of such employee’s termination or they are forfeited.

The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company will recognize the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award.

The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The following table sets forth the significant assumptions used in the model during 2013, 2012 and 2011:



	Year Ended December 31,
	2013	2012	2011
Expected dividend yield	—%	—%	—%
Risk-free interest rate	1.03%-2.18%	0.82%-1.25%	1.35%-2.58%
Expected volatility	34%-52%	32%	32%-33%
Expected life	6.0-6.5 years	6.5 years	6.0-6.5 years

The Company will continue to use judgment in evaluating the expected term, volatility and forfeiture rate related to the stock-based compensation on a prospective basis, and incorporating these factors into the Black-Scholes pricing model. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant. In addition, any changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period that the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the accompanying consolidated financial statements. If a revised forfeiture rate is lower than the previously estimated rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the accompanying consolidated financial statements. These expenses will affect the cost of revenues, salaries and benefits and project development costs expenses.

The weighted-average fair value of stock options granted during the years ended December 31, 2013, 2012 and 2011, under the Black-Scholes option pricing model was $3.66, $4.03 and $5.59, respectively, per share. For the years ended December 31, 2013, 2012 and 2011, the Company recorded stock-based compensation expense of approximately $2,799,403, $3,351,142, and $2,865,706, respectively, in connection with stock-based payment awards. The compensation expense is allocated between cost of revenues and selling, general and administrative expenses in the accompanying consolidated statements of income based on the salaries and work assignments of the employees holding the options. As of December 31, 2013, there was approximately $5,984,747 of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 2.88 years.

- 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.

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