Salem Media Group, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

STOCK INCENTIVE PLAN (Tables)

STOCK INCENTIVE PLAN (Tables)

12 Months Ended

Dec. 31, 2016

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

Schedule of Stock-Based Compensation Expense Recognized

The following table reflects the components of stock-based compensation expense recognized in the Consolidated Statements of Operations for the years ended December 31, 2014, 2015 and 2016:

	Year Ended December 31,
	2014		2015		2016
	(Dollars in thousands)
Stock option compensation expense included in corporate expenses	$	1,025	$	474	$	378
Restricted stock shares compensation expense included in corporate expenses				34		24
Stock option compensation expense included in broadcast operating expenses		325		130		85
Stock option compensation expense included in Internet operating expenses		165		92		60
Stock option compensation expense included in publishing operating expenses		61		41		35
Total stock-based compensation expense, pre-tax	$	1,576	$	771	$	582
Tax benefit (expense) from stock-based compensation expense		(630)		(308)		(233)
Total stock-based compensation expense, net of tax	$	946	$	463	$	349

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value of Stock Options and Restricted Stock Awards using Black-Scholes Option Valuation Model

The weighted-average assumptions used to estimate the fair value of the stock options and restricted stock awards using the Black-Scholes valuation model were as follows for the years ended December 31, 2014, 2015 and 2016:

	Year Ended December 31,
	2014			2015			2016
Expected volatility		74.98	%		52.37	%		47.03	%
Expected dividends		2.70	%		4.28	%		5.36	%
Expected term (in years)		7.8			3.0			7.4
Risk-free interest rate		2.27	%		0.85	%		1.64	%

Schedule of Stock Option Activity

Activity with respect to the company’s option awards during the three years ended December 31, 2015 is as follows (Dollars in thousands, except weighted average exercise price and weighted average grant date fair value):

			Weighted Average		Weighted Average		Weighted Average	Aggregate
Options	Shares		Exercise Price		Grant Date Fair Value		Remaining Contractual Term	Intrinsic Value
Outstanding at January 1, 2014		2,162,067	$	5.09	$	3.57	5.5 years	$	8,491
Granted		25,000		8.40		4.73
Exercised		(278,837)		4.38		3.43			1,260
Forfeited or expired		(92,026)		12.25		7.89			43
Outstanding at December 31, 2014		1,816,204	$	4.88	$	3.39	4.8 years	$	5,718
Exercisable at December 31, 2014		663,417		5.32		3.90	3.0 years		2,015
Expected to Vest		1,094,574	$	4.62	$	3.10	5.9 years	$	3,515

Outstanding at January 1, 2015		1,816,204	$	4.88	$	3.39	5.5 years	$	5,718
Granted		10,000		6.08		1.98
Exercised		(163,994)		2.35		1.53			589
Forfeited or expired		(81,087)		10.32		6.93			12
Outstanding at December 31, 2015		1,581,123	$	4.87	$	3.39	4.3 years	$	1,738
Exercisable at December 31, 2015		947,573		4.92		3.54	3.3 years		1,001
Expected to Vest		601,557	$	4.80	$	3.15	5.6 years	$	700

Outstanding at January 1, 2016		1,581,123	$	4.87	$	3.39	4.3years	$	1,738
Granted		549,500		4.85		1.33
Exercised		(336,996)		2.95		2.02			1,418
Forfeited or expired		(73,627)		8.06		3.07			3
Outstanding at December 31, 2016		1,720,000	$	5.12	$	2.89	4.5 years	$	2,428
Exercisable at December 31, 2016		841,625		5.56		3.94	2.9 years		948
Expected to Vest		834,017	$	5.11	$	2.91	4.5 years	$	1,442

Schedule of Information Regarding Restricted Stock Activity

Activity with respect to the company’s restricted stock awards during the year ended December 31, 2016 is as follows:

			Weighted Average Grant Date		Weighted Average Remaining		Aggregate Intrinsic
Restricted Stock Awards	Shares		Fair Value		Contractual Term		Value
Non-Vested at January 1, 2016		10,000	$	5.83		0.2 years	$	40
Granted
Lapsed		(10,000)		(5.83)				52
Forfeited or expired
Outstanding at December 31, 2016			$				$

Schedule of Additional Information Regarding Options Outstanding

Additional information regarding options outstanding as of December 31, 2016, is as follows:

			Weighted Average
			Contractual Life		Weighted				Weighted Average
Range of			Remaining		Average		Exercisable		Grant Date
Exercise Prices	Options		(Years)		Exercise Price		Options		Fair Value
$2.38 - $2.56		147,375		2.4	$	2.38		147,375	$	2.38
$2.57 - $4.42		290,500		4.6		2.76		86,500		2.80
$4.43 - $4.85		541,000		6.7		4.85
$4.86 - $6.65		91,250		1.7		5.30		86,250		5.33
$6.66 - $7.54		619,875		3.6		6.92		506,750		6.92
$7.55 - $8.76		30,000		4.8		8.37		14,750		8.37
		1,720,000		4.5	$	5.12		841,625	$	5.56