Stock-Based Compensation
 12 Months Ended
Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
Expense Summary
Stock-based compensation expenses of $10.4 million, $13.7 million and $12.3 million was recorded during the years ended December 31, 2013, 2012 and 2011, in the consolidated statement of comprehensive loss. The table below sets forth a summary of stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011 (in thousands).
 
Years Ended December 31,
 
2013
 
2012
 
2011
Stock-based compensation:
 
 
 
 
 
Stock Options
$
866

 
$
838

 
$
1,171

Restricted Stock Units
 
 
 
 
 
Performance Awards
1,097

 
444

 
665

Service-based Awards
7,835

 
11,571

 
10,173

ESPP
597

 
802

 
232

Actek Acquisition Compensation
—

 
—

 
42

Total stock-based compensation
$
10,395

 
$
13,655

 
$
12,283


As of December 31, 2013, there was $2.6 million, $5.8 million and $0.3 million of total unrecognized compensation expense related to stock options, restricted stock units and the ESPP, respectively. This expense related to stock options, restricted stock units and the ESPP and is expected to be recognized over a weighted average period of 3.3 years, 1.4 years and 0.6 years, respectively.
The table below sets forth the functional classification of stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
Years Ended December 31,
 
2013
 
2012
 
2011
Stock-based compensation:
 
 
 
 
 
Cost of recurring revenue
$
783

 
$
1,550

 
$
3,339

Cost of services and other revenue
1,060

 
2,070

 
1,495

Sales and marketing
2,420

 
3,778

 
1,987

Research and development
1,797

 
1,782

 
1,548

General and administrative
4,335

 
4,475

 
3,914

Total stock-based compensation
$
10,395

 
$
13,655

 
$
12,283


Determination of Fair Value
The fair value of each restricted stock unit, relating to both performance and service-based awards, is estimated based on the market value of the Company's stock on the date of grant and the average historical forfeiture rate. The fair value of the performance award assumes that performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any recognized compensation cost is reversed.
The fair value of each stock option is estimated on the date of grant and the fair value of each ESPP share is estimated on the beginning date of the offering period using the Black-Scholes-Merton valuation model and the assumptions noted in the following table.
 
Years Ended December 31,
 
2013
 
2012
 
2011
Stock Option Plans
 
 
 
 
 
Expected life (in years)
5.0 to 6.1
 
5.0 to 6.0
 
2.5 to 6.0
Risk-free interest rate
1.41% to 1.93%
 
0.72% to 1.33%
 
0.50% to 1.12%
Volatility
61% to 63%
 
60% to 65%
 
59% to 69%
Dividend Yield
—
 
—
 
—
Employee Stock Purchase Plan
 
 
 
 
 
Expected life (in years)
0.5 to 1.0
 
0.5 to 1.0
 
0.5 to 1.0
Risk-free interest rate
0.08% to 0.17%
 
0.13% to 0.20%
 
0.07% to 0.29%
Volatility
41% to 62%
 
56% to 62%
 
39% to 53%
Dividend Yield
—
 
—
 
—

Expected Dividend Yield—The Company has never paid dividends and does not expect to pay dividends.
Risk-Free Interest Rate—The risk-free interest rate was based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term.
Expected Term—Expected term represents the period that the Company's stock-based awards are expected to be outstanding. The Company's assumptions about the expected term have been based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards. The expected term for stock options was estimated using the simplified method allowed under SEC guidance.
Expected Volatility—Expected volatility is based on the historical volatility over the expected term.
Forfeiture Rate—The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. The impact from a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual number of future forfeitures differs from that estimated by the Company, the Company may be required to record adjustments to stock-based compensation expense in future periods.
Stockholder-Approved Stock Option and Incentive Plans
In June 2013, the 2013 Stock Incentive Plan ("2013 Plan") became effective upon the approval of the Company's Board of Directors and stockholders, and as a result, the 2003 Stock Incentive Plan ("2003 Plan") was expired and replaced. All outstanding shares available for grant under the 2003 Plan were expired upon the adoption of the 2013 Plan.
The Company was authorized to issue 3,469,500 shares of common stock under the 2013 Plan. Under the 2013 plan, the Company's board of directors (or an authorized subcommittee) may grant stock options or other types of stock awards, such as restricted stock, restricted stock units, stock bonus awards or stock appreciation rights. Incentive stock options may be granted only to the Company's employees. Nonstatutory stock options and other stock-based awards may be granted to employees, consultants or non-employee directors. These options vest as determined by the board of directors (or an authorized subcommittee), generally over four years. The restricted stock units also vest as determined by the board, generally over three years. The vesting period generally equals the requisite service period of the individual grantees.
A summary of the Company's shares available for grant and the status of options and awards are as follows:
Shares Available for Grant
 
2013
 
2012
 
2011
 
(Number of Shares)
Beginning Available
2,578,940

 
2,014,218

 
3,423,496

Authorized
3,469,500

 
1,756,431

 
1,598,985

Granted
(2,024,798
)
 
(2,519,851
)
 
(3,434,971
)
Cancelled
1,335,591

 
1,328,142

 
426,708

Expired
(2,880,435
)
 
—

 
—

Ending Available
2,478,798

 
2,578,940

 
2,014,218


Stock Options
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic Value
(in thousands)
Outstanding as of December 31, 2010
5,470,729

 
$
4.51

 
 
 
 

Granted
300,200

 
5.65

 
 
 
 

Exercised
(1,168,957
)
 
3.85

 
 
 
$
2,653

Forfeited
(122,769
)
 
5.92

 
 
 
 

Expired
(76,200
)
 
5.02

 
 
 
 

Outstanding as of December 31, 2011
4,403,003

 
4.71

 
 
 
 

Granted
120,200

 
5.86

 
 
 
 

Exercised
(714,820
)
 
5.16

 
 
 
1,358

Forfeited
(134,346
)
 
3.52

 
 
 
 

Expired
(638,555
)
 
7.64

 
 
 
 

Outstanding as of December 31, 2012
3,035,482

 
4.09

 
 
 
 

Granted
815,500

 
6.79

 
 
 
 

Exercised
(1,427,456
)
 
3.54

 
 
 
6,151

Forfeited
(108,306
)
 
5.10

 
 
 
 

Expired
(367,006
)
 
5.30

 
 
 
 

Outstanding as of December 31, 2013
1,948,214

 
$
5.34

 
5.04
 
$
16,374

Vested and Expected to Vest as of December 31, 2013
1,791,076

 
$
5.20

 
4.67
 
$
15,291

Exercisable as of December 31, 2013
1,211,511

 
$
4.53

 
2.70
 
$
11,170


Restricted Stock Units
 
Number of
Shares
 
Weighted
Average
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic Value
(in thousands)
Unreleased as of December 31, 2010
2,268,610

 
 
 
 

Granted
3,134,771

 
 
 
 

Released
(1,316,100
)
 
 
 
 

Forfeited
(227,989
)
 
 
 
 

Unreleased as of December 31, 2011
3,859,292

 
 
 
 

Granted
2,399,651

 
 
 
 

Released
(2,597,880
)
 
 
 
 

Forfeited
(551,380
)
 
 
 
 

Unreleased as of December 31, 2012
3,109,683

 
 
 
 

Granted
1,209,298

 
 
 
 

Released
(1,754,872
)
 
 
 
 

Forfeited
(856,695
)
 
 
 
 

Unreleased as of December 31, 2013
1,707,414

 
0.91
 
$
23,443

Vested and Expected to Vest as of December 31, 2013
1,520,513

 
0.85
 
$
18,051


Restricted stock units are not considered outstanding at the time of grant, as the holders of these units are not entitled to dividends and voting rights. Unvested restricted stock units are not considered outstanding in the computation of basic net loss per share.
As of December 31, 2013, the range of exercise prices and weighted average remaining contractual life of outstanding options are as follows:
 
 
 
Options Outstanding
 
Options Exercisable
Range of Exercise Prices
Number of
Shares
 
Weighted Average Remaining
Contractual Life
(Years)
 
Weighted Average
Exercise Price
 
Number of
Shares
 
Weighted
Average
Exercise Price
$2.62 - $3.20
285,007

 
1.03
 
$
3.08

 
279,473

 
$
3.08

$3.21 - $3.90
215,707

 
0.97
 
3.65

 
202,759

 
3.67

$4.00 - $4.15
226,000

 
1.95
 
4.15

 
226,000

 
4.15

$4.31 - $4.84
232,750

 
2.46
 
4.61

 
168,843

 
4.62

$5.27 - $6.01
272,000

 
7.21
 
5.72

 
150,000

 
5.49

$6.25 - $6.42
80,700

 
9.37
 
6.26

 
79,100

 
6.25

$6.59 - $6.59
299,444

 
9.49
 
6.59

 
37,429

 
6.59

$6.67 - $7.22
77,000

 
5.87
 
6.89

 
33,354

 
7.17

$7.69 - $7.69
211,556

 
9.66
 
7.69

 
17,337

 
7.69

$7.92 - $16.03
48,050

 
5.21
 
10.93

 
17,216

 
13.01

$2.62 - $16.03
1,948,214

 
5.04
 
$
5.34

 
1,211,511

 
$
4.53


For the year ended December 31, 2013, the weighted-average fair value of stock options and restricted stock units granted by the Company was $3.87 and $5.68 per share, respectively. For the year ended December 31, 2012, the weighted-average fair value of stock options and restricted stock units granted was $3.19 and $6.80 per share, respectively. For the year ended December 31, 2011, the weighted-average fair value of stock options and restricted stock units granted was $2.54 and $5.93 per share, respectively. The total intrinsic value of stock options exercised was $6.2 million, $1.4 million and $2.7 million for 2013, 2012 and 2011, respectively. The total cash received from employees as a result of stock option exercises was $5.1 million, $3.7 million and $4.5 million for 2013, 2012 and 2011, respectively.
Employee Stock Purchase Plan
The Company's Employee Stock Option Plan, which was adopted in 2003 and amended and restated in 2013, is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. The ESPP is designed to enable eligible employees to purchase shares of the Company's common stock at a discount on a periodic basis through payroll deductions. Each offering period under the ESPP will be for 12 months and will consist of two consecutive six-month purchase periods. The purchase price for shares of common stock purchased under the ESPP will be 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable offering period and the fair market value of the Company's common stock on the last day of each purchase period. The Company issued approximately 435,000, 407,000 and 325,000 shares during the years ended December 31, 2013, 2012 and 2011 under the ESPP. The weighted-average fair value of stock purchase rights granted under the ESPP during 2013, 2012 and 2011 was $1.96 per share, $1.76 per share and $1.62 per share, respectively.