Spansion Inc. - 10-Q/A filing on 2011-09-02

Equity Incentive Plan and Stock-Based Compensation

6 Months Ended

Jun. 26, 2011

Equity Incentive Plan and Stock-Based Compensation

Equity Incentive Plan and Stock-Based Compensation

3. Equity Incentive Plan and Stock-Based Compensation

Valuation and Expense Information

The following table sets forth the total recorded stock-based compensation expense by financial statement caption resulting from the Company's stock options and Restricted Stock Unit (RSU) awards for the three and six months ended June 26, 2011 and for the Predecessor period from December 28, 2009 through May 10, 2010 and the Successor period from May 11, 2010 through June 27, 2010, respectively.


			Three Months Ended June 27, 2010						Six Months Ended June 27, 2010
	Successor		Successor		Predecessor		Successor		Successor		Predecessor
	Three Months Ended June 26, 2011		Period from May 11, 2010 ⁽¹⁾ to June 27, 2010		Period from March 29, 2010 to May 10, 2010 ⁽¹⁾		Six Months Ended June 26, 2011		Period from May 11, 2010 ⁽¹⁾ to June 27, 2010		Period from December 28, 2009 to May 10, 2010 ⁽¹⁾
					(in thousands)
Cost of sales	$	831	$	722	$	73	$	1,447	$	722	$	346
Research and development		1,160		398		172		1,974		398		683
Sales, general and administrative		3,057		825		55		6,175		825		566
Expense on cancellation of old equity incentive plans		—		—		5,457		—		—		5,457

Stock-based compensation expense before income taxes		5,048		1,945		5,757		9,596		1,945		7,052
Income tax benefit		—		—		—		—		—		—

Stock-based compensation expense after income taxes	$	5,048	$	1,945	$	5,757	$	9,596	$	1,945	$	7,052

(1)	May 10, 2010 is the date on which all Predecessor equity incentive plans were cancelled and the Successor's 2010 Plan became effective.

Predecessor

No stock options were granted in the Predecessor period ended December 28, 2009 to May 10, 2010 under the Predecessor's equity plans, all of which were cancelled upon emergence from the Chapter 11 cases.

Successor

The weighted average fair value of the Company's stock options granted under the Successor's 2010 Plan during the three months ended June 26, 2011 and the period from May 11, 2010 to June 27, 2010 was $8.24 and $5.04 per share, respectively. The weighted average fair value during the six months ended June 26, 2011 was $8.73 per share. The fair value of each stock option was estimated at the date of grant using a Black-Scholes option pricing model, with the following assumptions for grants:


	Three Months Ended June 26, 2011			Six Months Ended June 26, 2011			For the period from May 11, 2010 to June 27, 2010
Expected volatility		56.43	%		56.08	%		58.00	%
Risk-free interest rate		1.12	%		1.55	%		1.88	%
Expected term (in years)		4.35			4.35			4.30
Dividend yield		0	%		0	%		0.00	%

As of June 26, 2011, the total unrecognized compensation cost related to unvested stock options and RSU awards was approximately $55.0 million after reduction for estimated forfeitures. These stock options and RSU awards will generally vest ratably through 2015.

Shares available for Grant

The numbers of shares of common stock available for grant as of June 26, 2011 under the 2010 Plan are shown as follows:


Number of shares available for grant:
Shares reserved for grant under the 2010 Plan as of December 26, 2010	511,731
Additional shares issuable under 2010 Plan (annual increase for 2011)	4,321,911
Stock options granted through June 26, 2011, net of forfeitures	(2,009,750	)
RSU awards granted through June 26, 2011, net of forfeitures	(933,183	)
Key executive RSU awards granted through June 26, 2011, net of forfeitures	(212,448	)

Shares available for grant under the 2010 Plan as of June 26, 2011	1,678,261

Stock Option and Restricted Stock Unit Activity

The following table summarizes stock option activity and related information under the 2010 Plan for the six months ended June 26, 2011:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
Options:
Outstanding as of December 26, 2010		3,027,943		$	10.93		6.40	$	27,875
Granted		2,308,610		$	18.99
Forfeited		(298,860	)	$	14.16
Exercised		(420,493	)	$	10.51

Total option outstanding as of June 26, 2011		4,617,200		$	14.79		6.44	$	17,404

Total Exercisable as of June 26, 2011		622,471		$	10.51		5.81	$	5,011

The following table summarizes RSU award activity and related information for the six months ended June 26, 2011:


RSUs:	Number of Shares			Weighted-Average Grant-date Fair Value
Unvested as of December 26, 2010		1,841,559		$	10.88
Granted		1,055,795		$	19.60
Forfeited		(122,612	)	$	12.90
Vested		(379,401	)	$	19.89

Unvested as of June 26, 2011		2,395,341		$	13.19

The following table summarizes key executive RSU award activity and related information for the six months ended June 26, 2011:


Key executive RSUs:	Number of Shares			Weighted-Average Grant-date Fair Value
Unvested as of December 26, 2010		1,127,015		$	10.88
Granted		331,000		$	19.84
Forfeited		(118,552	)	$	20.11
Vested		(281,450	)	$	19.88

Unvested as of June 26, 2011		1,058,013		$	10.25

Key executive RSUs have both a service and a performance vesting condition: 50 percent of a RSU award will vest based on continued service with the Company and 50 percent will vest only upon achievement of certain performance conditions.