9.	Stock and employee benefit plans

In December 2014, the Company adopted the 2014 Employee, Director and Consultant Equity Incentive Plan, (the “2014 Plan”) which provides for the grant of stock options to certain designated employees of the Company, non-employee directors of the Company and certain other persons performing significant services for the Company as designated by the Compensation Committee of the Board of Directors.

In June 2016, the Company adopted the 2016 Employee, Director and Consultant Equity Incentive Plan, (the “2016 Plan”) which provides for the grant of stock options, restricted and unrestricted stock awards, and other stock-based awards to employees of the Company, non-employee directors of the Company, and certain other consultants performing services for the Company as designated by the Compensation Committee of the Board of Directors or the Board of Directors. The 2016 Plan authorizes the issuance of up to 3,750,000 shares of common stock plus a number of additional shares, if awards outstanding under the 2014 Plan are cancelled or expire, to be granted under the 2016 Plan. The 2016 Plan does not provide for an “evergreen” provision. The vesting periods of equity incentives issued under the 2016 Plan are determined by the Compensation Committee of the Company´s Board of Directors, with stock options generally vesting over a four-year period.

The Company’s stock options have a maximum term of ten years from the date of grant. Stock options granted under the Plans may be either incentive stock options (“ISOs”), or nonqualified stock options. The exercise price of stock options granted under the Plans must be at least equal to the fair market value of the common stock on the date of grant. The Company’s general policy is to issue common shares upon the exercise of stock options.

Cash received from option exercises was zero and $10,000 during the years ended December 31, 2016 and 2015, respectively.

2014 Stock Plan

Pieris granted 1,157,734 and 755,329 stock options under the 2014 Plan during the years ended December 31, 2016 and 2015, respectively. Of these stock options granted in the 2015 period, a stock option to purchase 450,000 shares of the Company´s common stock, par value $0.001 (the “Common Stock”), was granted to a newly-hired executive officer subject to certain restrictions on exercise that required the Company´s shareholders to approve an increase in the number of shares authorized under the 2014 Plan. Upon the Company´s adoption of the 2016 Plan, this stock option was amended and issued under the 2016 Plan; the total shares available under the 2016 Plan reflects the issuance of this option. No compensation expense was recorded for this option in the 2015 period.

The Company granted an option to purchase 500,000 shares outside of the Plan to a newly hired executive officer that was an inducement option, material to the executive officer entering into employment with the Company during the 2015 period. The compensation expense with this inducement option was $0.3 million and $0.1 million and is included in research and development expense for the years ended December 31, 2016 and 2015, respectively.

A summary of the status of the Company’s 2014 plan as of December 31, 2016 and changes during the year then ended is as follows:

 

		Number of Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Life				Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2015			2,707,329			$	2.05				9.17 years			$	741
Granted			1,157,734				1.57
Forfeited			(140,000	)			1.71
Outstanding, December 31, 2016			3,725,063			$	1.91				8.55 years			$	—
Vested or expected to vest			3,725,063			$	1.91				8.55 years			$	—
Exercisable, December 31, 2016			1,961,811			$	2.01				7.99 years			$	—

 

Excluded from the table above is the option to purchase 500,000 shares outside of the Plan granted to a newly hired executive officer. The weighted-average exercise price of these options amounts to $3.36 with a remaining contractual life of 8.63 years.

The 2014 Plan was terminated on June 28, 2016 when the Company adopted its 2016 Plan. Therefore, no options were granted under the 2014 Plan and no options are available for future grant after this date.

2016 Stock Plan

The Company granted 265,313 options to employees and directors under the 2016 Plan during the year ended December 31, 2016. No options were granted during the year ended December 31, 2015. As of December 31, 2016, there were 3,124,687 shares available for future grant under the 2016 Plan. The shares available for future grant under the 2016 Plan include 90,000 shares, which were forfeited during the year ended December 31, 2016 under the 2014 Plan. These forfeited shares were added to the 2016 Plan.

The Company, in 2016, granted an option to purchase 500,000 shares outside of the Plan to a newly hired executive officer that was an inducement option, material to the executive officer entering into employment with the Company during the 2016 period. The compensation expense with this inducement option was $10,998 and is included in general and administration expense for the year ended December 31, 2016.

A summary of the status of the Company’s 2016 plan as of December 31, 2016 and changes during the year then ended is as follows:

 

		Number of Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Life				Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2015			—			$	—				—			$	—
Granted			715,313				2.36
Outstanding, December 31, 2016			715,313			$	2.36				9.62 years			$	—
Vested or expected to vest			715,313			$	2.36				9.62 years			$	—
Exercisable, December 31, 2016			228,774			$	2.46				8.90 years			$	—

Excluded from the table above is the option to purchase 500,000 shares outside of the Plan granted to a newly hired executive officer in 2016. The weighted-average exercise price of these options amounts to $1.45 with a remaining contractual life of 9.91 years.

401(k) Savings plan

In 2015, the Company established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pretax basis. The Company made matching contributions to participants in this plan which totaled $31,670 and $3,013 for the years ended December 31, 2016 and 2015, respectively.