Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2014 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Stock-Based Compensation | ' |
Note Four — 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, 2013. |
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| | For the Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
Stock-based compensation expense (in millions) | | $ | 1.1 | | | $ | 1.4 | |
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 March 31, 2014, there were a total of 2,200,311 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 three months ended March 31, 2014: |
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| | | | | | | | |
| | | | | Weighted | |
| | | | | Average | |
| | Shares | | | Price | |
Nonvested balance at December 31, 2013 | | | 450,223 | | | $ | 6.25 | |
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Granted | | | 303,855 | | | $ | 5.68 | |
Vested | | | (282,781 | ) | | $ | 5.84 | |
Forfeited | | | (27,821 | ) | | $ | 5.98 | |
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Nonvested balance at March 31, 2014 | | | 443,476 | | | $ | 6.13 | |
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| | For the Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
(In millions) | | | | | | |
Total fair value of restricted and installment stock awards vested | | $ | 1.6 | | | $ | 0.5 | |
Compensation expense related to restricted stock awards | | | 0.5 | | | | 0.6 | |
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As of March 31, 2014, there remained $2.0 million of unrecognized compensation expense related to restricted stock awards. These costs are expected to be recognized over a weighted average period of 1.6 years. |
Stock Options |
During the three months ended March 31, 2014, one employee received options to purchase a total of 70,000 shares of Common Stock. The exercise price per share is $5.81, the closing price for shares of Common Stock on February 12, 2014, the grant date. The options will vest 25% on February 28, 2015, and the balance will vest ratably over the following 12 quarters, with a maximum exercise term of 10 years. |
Option activity was as follows for the three months ended March 31, 2014: |
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| | | | | | | | |
| | | | | Weighted | |
| | | | | Average | |
| | Options | | | Exercise Price | |
Outstanding as of December 31, 2013 | | | 2,014,238 | | | $ | 7.98 | |
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Granted | | | 70,000 | | | $ | 5.81 | |
Exercised | | | — | | | $ | — | |
Forfeited | | | (3,125 | ) | | $ | 7.99 | |
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Outstanding as of March 31, 2014 | | | 2,081,113 | | | $ | 7.91 | |
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Exercisable as of March 31, 2014 | | | 1,281,423 | | | $ | 9.42 | |
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Outstanding intrinsic value at March 31, 2014 (in millions) | | $ | 2.7 | | | | | |
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Exercisable intrinsic value at March 31, 2014 (in millions) | | $ | 1.4 | | | | | |
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| | | | | | | | |
| | For the Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
Compensation expense related to option awards (in millions) | | $ | 0.3 | | | $ | 0.3 | |
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| | | | | | | | |
| | For the Three Months Ended | |
(In millions) | | March 31, | | | March 31, | |
2014 | 2013 |
Total fair value of stock options vested | | $ | 0.3 | | | $ | 0.2 | |
Intrinsic value of stock options exercised | | | — | | | | — | |
Proceeds received from option exercises | | | — | | | | — | |
As of March 31, 2014, there remained $2.5 million of unrecognized compensation expense related to stock options. These costs are expected to be recognized over a weighted average period of 1.7 years. |
The fair value for options granted for the three months ended March 31, 2014 and March 31, 2013 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 Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
Risk-free interest rates | | | 1.22 | % | | | 0.62 | % |
Expected dividend yield | | | — | | | | — | |
Expected volatility | | | 64 | % | | | 67 | % |
Expected lives | | | 6 years | | | | 6 years | |
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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 in respect of employee purchases under the ESPP were as follows: |
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| | | | | | | | |
| | For the Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
Shares of Common Stock issued | | | 8,706 | | | | 9,590 | |
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Expense related to ESPP (in thousands) | | $ | 10 | | | $ | 9 | |
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The fair value for ESPP purchases for the three months ended March 31, 2014 and March 31, 2013 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 Three Months Ended | |
| | March 31, | | | March 31, | |
2014 | 2013 |
Risk-free interest rates | | | 0.07 | % | | | 0.07 | % |
Expected dividend yield | | | — | | | | — | |
Expected volatility | | | 40 | % | | | 28 | % |
Expected lives | | | 0.24 years | | | | 0.24 years | |