9. Stockholders’ Equity

Authorized Shares

On June 14, 2012, our stockholders approved an amendment (Charter Amendment) to our Second Amended and Restated Certificate of Incorporation to reduce the number of authorized shares of common stock from 100,000,000 to 37,000,000 shares and of undesignated preferred stock from 5,000,000 to 3,000,000 shares. The Charter Amendment was previously approved by our Board of Directors on April 12, 2012, subject to approval by our stockholders. The Charter Amendment was filed with the Secretary of State of the State of Delaware on June 14, 2012.

Under the terms of our certificate of incorporation, our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Currently, we have no shares of preferred stock outstanding.

Share Offering

On June 4, 2014, we issued 1,644,500 shares of our common stock, $0.01 par value per share, at a price to the public of $7.00 per share less underwriting discounts. The net proceeds, after deducting the underwriting discounts and other estimated offering expenses, were approximately $10.5 million. We have deployed a portion of the net proceeds from the offering on our recent acquisitions and expect to use the remainder for general corporate purposes, including continued development of our products, working capital and capital expenditures, payments under our quarterly dividend program, deferred payments related to prior acquisitions, and to fund future acquisitions.

Stock Award Plans

Under our 1997, 1998, 2000, and 2004 stock option plans, we authorized the granting of options in the form of incentive stock options or non-qualified stock options to employees, directors, and consultants to purchase up to 1,688,702 shares of common stock. The stock options provide the holder the right to purchase common stock at a specific exercise price and the expected term will not exceed ten years. Incentive stock options are required to be issued at not less than fair market value at the date of the grant and generally vest over four or five years. The term of the options is determined by our Board of Directors but in no event will exceed ten years from date of grant, except with respect to one non-qualified option issued under our 1997 stock option plan.

In May 2006 we approved a 2006 Stock Option and Incentive Plan (as subsequently amended, the 2006 Plan), which became effective upon the initial public offering. In 2010 we amended the 2006 Plan to increase the aggregate pool of available shares to 3,000,000 of common stock, and in 2015 the 2006 Plan was amended to increase the aggregate pool to 5,500,000 shares. The 2006 Plan allows for granting of incentive stock options, non-qualified stock options, stock appreciation rights, RSUs, unrestricted stock awards, and deferred stock awards to our officers, employees, directors, and consultants. In connection with the adoption of the 2006 Plan, no further option grants are permitted under the 1997, 1998, 2000, and 2004 stock option plans and any expirations, cancellations, or terminations under the previous plans are available for issuance under the 2006 Plan. We may satisfy awards upon exercise of stock options or RSUs with either newly issued or treasury shares. The total number of shares currently authorized for the 2006 Plan is 7,118,003 shares, of which 2,329,104 remain available for grant as of December 31, 2015.

 

We have computed the fair value of employee stock options using the following weighted average assumptions:

 

		2015				2014				2013
Dividend yield			1.4	%			1.8	%			1.8	%
Volatility			28.6	%			45.2	%			57.8	%
Risk-free interest rate			1.8	%			2.0	%			1.5	%
Weighted average expected option term (in years)			5.6				5.5				5.5
Weighted average fair value per share of options granted		$	2.80			$	2.81			$	3.01
Aggregate intrinsic value of options exercised		$	6,534,800			$	819,478			$	1,009,726

A summary of option activity as of December 31, 2015 and the year then ended is presented below:

 

		Number of Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value
										(in years)
Balance outstanding at December 31, 2014			2,238,734			$	6.42				4.41			$	3,767,658
Granted			511,227			$	11.72
Exercised (1)			(906,936	)		$	5.33							$	6,534,800
Canceled / Expired			(107,045	)		$	9.06
Balance outstanding at December 31, 2015 (2)			1,735,980			$	8.39				4.28			$	15,381,584
Vested and exercisable at December 31, 2015			517,932			$	6.35				2.71			$	5,645,756
Expected to vest at December 31, 2015 (3)			902,258			$	9.11				4.85
Total			1,420,190

 

(1)	The aggregate intrinsic value represents the difference between the exercise price and the closing price of our stock on the date of exercise.

(2)	The aggregate intrinsic value represents the difference between the exercise price and $17.25, the closing price of our stock on December 31, 2015, for all in-the-money options outstanding.

(3)	Options outstanding that are expected to vest are net of estimated future option forfeitures

Restricted Stock Units

A summary of our RSU activity is as follows:

 

						Weighted
						Average
						Grant Date
		Shares				Fair Value
Balance outstanding at December 31, 2014			220,298			$	7.04
Granted			62,942			$	11.32
Vested (1)			(61,362	)		$	6.84
Canceled			(30,533	)		$	7.47
Balance outstanding at December 31, 2015			191,345			$	8.45

 

(1)	The number of RSUs vested includes the shares that we withheld on behalf of employees to satisfy minimum statutory tax withholding requirements.

 

The fair values of the RSUs that vested during 2015, 2014, and 2013 were $0.7 million, $0.5 million, and $0.8 million, respectively.

We repurchase shares of our common stock in order to cover any minimum tax withholding liability associated with RSU vestings. A summary of our repurchases is as follows:

 

		2015				2014
Shares of common stock repurchased			23,928				27,092
Average per share repurchase price		$	11.12			$	7.80
Aggregage purchase price		$	266,090			$	211,379

Stock-based Compensation

The components of stock-based compensation expense included in the consolidated statements of operations are as follows:

 

		2015				2014				2013
						(in thousands)
Stock option awards		$	992			$	917			$	789
Restricted stock units			432				385				464
Total stock-based compensation		$	1,424			$	1,302			$	1,253

Stock-based compensation is included in our statements of operations as follows:

 

		2015				2014				2013
						(in thousands)
Cost of sales		$	165			$	150			$	148
Sales and marketing			284				309				295
General and administrative			869				757				726
Research and development			106				86				84
Total stock-based compensation		$	1,424			$	1,302			$	1,253

We expect to record the unamortized portion of share-based compensation expense of $3.2 million for existing stock options and RSUs outstanding at December 31, 2015, over a weighted-average period of 3.5 years.

Stock Repurchase Plan

In July 2009, our Board of Directors authorized a repurchase of our common stock from time to time on the open market or in privately negotiated transactions. In November 2011, our Board of Directors increased this authorization to $10.0 million and extended the program through December 31, 2013. The repurchase program concluded as of December 31, 2013. The following is a summary of the stock repurchase activity for the year ended December 31, 2013:

 

		December 31, 2013
		Shares				Total
		Purchased				Purchased
		( $ in thousands)
Share repurchases			15,323			$	88

 

Dividends

In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows:

 

Record Date		Payment Date		Per Share Amount				Dividend Payment
								(in thousands)
Fiscal Year 2015
March 20, 2015		April 3, 2015		$	0.040			$	700
May 22, 2015		June 5, 2015		$	0.040			$	705
August 20, 2015		September 3, 2015		$	0.040			$	715
November 20, 2015		December 4, 2015		$	0.040			$	725
Fiscal Year 2014
March 20, 2014		April 3, 2014		$	0.035			$	546
May 22, 2014		June 5, 2014		$	0.035			$	547
August 21, 2014		September 4, 2014		$	0.035			$	607
November 20, 2014		December 4, 2014		$	0.035			$	608

On February 22, 2016, our Board of Directors approved a quarterly cash dividend on our common stock of $0.045 per share payable on April 4, 2016, to stockholders of record at the close of business on March 21, 2016, which will total approximately $0.8 million in payments.