Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Stock-Based Compensation | ' |
Note Five — Stock-Based Compensation |
The Company has two stock-based compensation plans, the Mattersight Corporation 1999 Stock Incentive Plan (the “1999 Plan”) and the Mattersight Corporation Employee Stock Purchase Plan (the “ESPP”), each as described more fully in Note Thirteen in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2012. |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 29, | | | September 30, | | | September 29, | |
2013 | 2012 | 2013 | 2012 |
Stock-based compensation expense (in millions) | | $ | 1.7 | | | $ | 0.9 | | | $ | 5 | | | $ | 2.8 | |
The Company recognizes stock-based compensation expense on a straight-line basis over the vesting period. The Company has established its forfeiture rate based on historical experience. |
As of September 30, 2013, there were a total of 1,413,493 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), available for future grants under the 1999 Plan and from treasury stock. The Common Stock is traded on the NASDAQ Global Market under the symbol MATR. |
Restricted Stock |
Restricted stock award activity was as follows for the nine months ended September 30, 2013: |
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| | | | | Weighted | | | | | | | | | |
| | | | | Average | | | | | | | | | |
| | Shares | | | Price | | | | | | | | | |
Nonvested balance at December 31, 2012 | | | 821,363 | | | $ | 6.81 | | | | | | | | | |
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Granted | | | 173,661 | | | $ | 4.56 | | | | | | | | | |
Vested | | | (279,383 | ) | | $ | 6.34 | | | | | | | | | |
Forfeited | | | (192,414 | ) | | $ | 6.62 | | | | | | | | | |
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Nonvested balance at September 30, 2013 | | | 523,227 | | | $ | 6.39 | | | | | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
(In millions) | | September 30, | | | September 29, | | | September 30, | | | September 29, | |
2013 | 2012 | 2013 | 2012 |
Total fair value of restricted and installment stock awards vested | | $ | 0.3 | | | $ | 0.5 | | | $ | 1.1 | | | $ | 3.1 | |
Compensation expense related to restricted stock awards | | | 0.6 | | | | 0.5 | | | | 1.7 | | | | 1.9 | |
As of September 30, 2013, there remained $2.6 million of unrecognized compensation expense related to restricted stock awards. These costs are expected to be recognized over a weighted average period of 1.4 years. |
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Stock Options |
Option activity was as follows for the nine months ended September 30, 2013: |
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| | | | | Weighted | | | | | | | | | |
| | | | | Average | | | | | | | | | |
| | Options | | | Exercise Price | | | | | | | | | |
Outstanding as of December 31, 2012 | | | 1,766,236 | | | $ | 9.03 | | | | | | | | | |
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Granted | | | 417,500 | | | $ | 4.54 | | | | | | | | | |
Exercised | | | (4,498 | ) | | $ | 3.47 | | | | | | | | | |
Forfeited | | | (100,625 | ) | | $ | 5.7 | | | | | | | | | |
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Outstanding as of September 30, 2013 | | | 2,078,613 | | | $ | 8.31 | | | | | | | | | |
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Exercisable as of September 30, 2013 | | | 1,243,477 | | | $ | 10.13 | | | | | | | | | |
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Outstanding intrinsic value at September 30, 2013 (in millions) | | $ | — | | | | | | | | | | | | | |
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Exercisable intrinsic value at September 30, 2013 (in millions) | | $ | — | | | | | | | | | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 29, | | | September 30, | | | September 29, | |
2013 | 2012 | 2013 | 2012 |
Compensation expense related to option awards (in millions) | | $ | 0.3 | | | $ | 0.3 | | | $ | 0.9 | | | $ | 0.8 | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
(In millions) | | September 30, | | | September 29, | | | September 30, | | | September 29, | |
2013 | 2012 | 2013 | 2012 |
Total fair value of stock options vested | | $ | 0.4 | | | $ | 0.2 | | | $ | 0.9 | | | $ | 0.7 | |
Intrinsic value of stock options exercised | | | — | | | | 0.1 | | | | — | | | | 0.3 | |
Proceeds received from option exercises | | | — | | | | 0.1 | | | | — | | | | 0.3 | |
As of September 30, 2013, there remained $2.7 million of unrecognized compensation expense related to stock options. These costs are expected to be recognized over a weighted average period of 1.8 years. |
The fair value for options granted for the nine months ended September 30, 2013 and September 29, 2012 was estimated on the date of grant using a Black-Scholes option-pricing model. The following assumptions represent the year-to-date weighted average for all option grants issued: |
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| | For the Nine Months Ended | | | | | | | | | |
| | September 30, | | | September 29, | | | | | | | | | |
2013 | 2012 | | | | | | | | |
Risk-free interest rates | | | 0.62 | % | | | 0.58 | % | | | | | | | | |
Expected dividend yield | | | — | | | | — | | | | | | | | | |
Expected volatility | | | 67 | % | | | 67 | % | | | | | | | | |
Expected lives | | | 6 years | | | | 6 years | | | | | | | | | |
Historical Company information is the primary basis for the selection of expected life, expected volatility, and expected dividend yield assumptions. The risk-free interest rate is selected based on the yields from U.S. Treasury Strips with a remaining term equal to the expected term of the options being valued. |
Other Stock Compensation |
Employee Stock Purchase Plan |
The ESPP is intended to qualify as an employee stock purchase plan under section 423 of the Internal Revenue Code. Under the ESPP, eligible employees are permitted to purchase shares of Common Stock at below-market prices. The purchase period opens on the first day and ends on the last business day of each calendar quarter. The shares of Common Stock issued under the ESPP were as follows: |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 29, | | | September 30, | | | September 29, | |
2013 | 2012 | 2013 | 2012 |
Shares of Common Stock issued | | | 10,242 | | | | 6,918 | | | | 31,463 | | | | 21,221 | |
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Expense related to ESPP (in thousands) | | $ | 8 | | | $ | 12 | | | $ | 27 | | | $ | 36 | |
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The fair value for ESPP purchases for the nine months ended September 30, 2013 and September 29, 2012 was estimated using a Black-Scholes pricing model. The Company used the following year-to-date weighted average assumptions: |
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| | For the Nine Months Ended | | | | | | | | | |
| | September 30, | | | September 29, | | | | | | | | | |
2013 | 2012 | | | | | | | | |
Risk-free interest rates | | | 0.06 | % | | | 0.05 | % | | | | | | | | |
Expected dividend yield | | | — | | | | — | | | | | | | | | |
Expected volatility | | | 42 | % | | | 46 | % | | | | | | | | |
Expected lives | | | 0.25 years | | | | 0.24 years | | | | | | | | | |
Salary Replacement Program |
On May 9, 2013, the Compensation Committee of the Board of Directors (the “Compensation Committee”) approved the Salary Replacement Program (the “Program”) to be effective from July 1, 2013 through June 30, 2014 (the “Effective Period”). Participation was mandatory for any employee whose annual base salary was equal to or greater than $125,000 (each such employee, a “Participant”). Under the Program, Participants received periodic grants of unrestricted Common Stock (subject to Compensation Committee approval of each grant to the executive officers) in exchange for a 25% reduction in the cash salaries otherwise payable to Participants. |
On August 7, 2013, the Compensation Committee terminated the Program. The Company no longer reduces cash salaries for periodic grants of unrestricted Common Stock. Effective October 1, 2013, the Company’s executive officers and other affected employees received their full salaries in cash. |
A total of 146,267 shares of Common Stock were granted to employees under the Program during the nine months ended September 30, 2013. The Company recorded $0.6 million of expense for the Program during the three months and nine months ended September 30, 2013. |
Commissions |
The Company paid commissions with shares of unrestricted Common Stock from May 2013 to July 2013. A total of 149,364 and 345,324 shares of unrestricted Common Stock were granted to employees in payment of earned commissions during the three months and nine months ended September 30, 2013. In connection therewith, the Company recorded $0.1 million and $0.4 million of expense during the three months and nine months ended September 30, 2013. |