Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stock-Based Compensation | ' |
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Note Four — Stock-Based Compensation |
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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 on Form 10-K for the year ended December 31, 2013. |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 30, | | | September 30, | | | September 30, | |
2014 | 2013 | 2014 | 2013 |
Stock-based compensation expense (in millions) | | $ | 1.2 | | | $ | 1.7 | | | $ | 3.4 | | | $ | 5 | |
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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. |
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As of September 30, 2014, there were a total of 1,579,019 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”. |
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Restricted Stock |
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During the three months ended September 30, 2014, the Company granted 76,500 shares of Common Stock. On September 11, 2014, 70,000 shares of Common Stock were granted to the Company’s Board of Directors. The shares will vest in four equal quarterly increments commencing on November 30, 2014. On August 14, 2014, the Company granted 6,500 shares of Common Stock to certain employees. The shares will vest in 16 equal quarterly increments commencing on November 30, 2014. |
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Restricted stock award activity was as follows for the nine months ended September 30, 2014: |
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| | | | | Weighted | | | | | | | | | |
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| | Shares | | | Price | | | | | | | | | |
Unvested balance at December 31, 2013 | | | 450,223 | | | $ | 6.25 | | | | | | | | | |
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Granted | | | 509,355 | | | $ | 5.73 | | | | | | | | | |
Vested | | | (390,085 | ) | | $ | 6.08 | | | | | | | | | |
Forfeited | | | (36,432 | ) | | $ | 6.12 | | | | | | | | | |
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Unvested balance at September 30, 2014 | | | 533,061 | | | $ | 5.89 | | | | | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 30, | | | September 30, | | | September 30, | |
2014 | 2013 | 2014 | 2013 |
(In millions) | | | | | | | | | | | | | | | | |
Total fair value of restricted stock awards vested | | $ | 0.3 | | | $ | 0.3 | | | $ | 2.2 | | | $ | 1.1 | |
Compensation expense related to restricted stock awards | | | 0.4 | | | | 0.6 | | | | 1.3 | | | | 1.7 | |
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As of September 30, 2014, there remained $2.2 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. |
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Stock Options |
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During the three months ended September 30, 2014, the Company granted options to purchase a total of 19,500 shares of Common Stock to certain employees. The exercise price per share is $4.88, the closing price for shares of Common Stock on August 14, 2014, the grant date. The options will vest in 16 equal quarterly increments commencing on November 30, 2014. The options expire on August 14, 2024. |
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Option activity was as follows for the nine months ended September 30, 2014: |
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| | | | | Weighted | | | | | | | | | |
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| | Options | | | Exercise Price | | | | | | | | | |
Outstanding as of December 31, 2013 | | | 2,014,238 | | | $ | 7.98 | | | | | | | | | |
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Granted | | | 554,000 | | | $ | 5.64 | | | | | | | | | |
Exercised | | | (2,400 | ) | | $ | 5.2 | | | | | | | | | |
Forfeited | | | (20,507 | ) | | $ | 5.83 | | | | | | | | | |
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Outstanding as of September 30, 2014 | | | 2,545,331 | | | $ | 7.49 | | | | | | | | | |
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Exercisable as of September 30, 2014 | | | 1,481,077 | | | $ | 8.91 | | | | | | | | | |
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Outstanding intrinsic value at September 30, 2014 (in millions) | | $ | 0.9 | | | | | | | | | | | | | |
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Exercisable intrinsic value at September 30, 2014 (in millions) | | $ | 0.5 | | | | | | | | | | | | | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
| | September 30, | | | September 30, | | | September 30, | | | September 30, | |
2014 | 2013 | 2014 | 2013 |
(In millions) | | | | | | | | | | | | | | | | |
Compensation expense related to option awards | | $ | 0.4 | | | $ | 0.3 | | | $ | 1 | | | $ | 0.9 | |
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| | For the Three Months Ended | | | For the Nine Months Ended | |
(In millions) | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
2014 | 2013 | 2014 | 2013 |
Total fair value of stock options vested | | $ | 0.4 | | | $ | 0.4 | | | $ | 1 | | | $ | 0.9 | |
Intrinsic value of stock options exercised | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Proceeds received from option exercises | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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As of September 30, 2014, there remained $3.3 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. |
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The fair value of options granted during the nine months ended September 30, 2014 and September 30, 2013 was estimated on the grant date using a Black-Scholes option-pricing model. The following assumptions represent the year-to-date weighted average for all options granted: |
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| | For the Nine Months Ended | | | | | | | | | |
| | September 30, | | | September 30, | | | | | | | | | |
2014 | 2013 | | | | | | | | |
Risk-free interest rates | | | 1.36 | % | | | 0.62 | % | | | | | | | | |
Expected dividend yield | | | — | | | | — | | | | | | | | | |
Expected volatility | | | 65 | % | | | 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. |
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Other Stock Compensation |
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Employee Stock Purchase Plan |
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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 | | | For the Nine Months Ended | |
| | September 30, | | | September 30, | | | September 30, | | | September 30, | |
2014 | 2013 | 2014 | 2013 |
Shares of Common Stock issued | | | 8,212 | | | | 10,242 | | | | 25,247 | | | | 31,463 | |
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Expense related to ESPP (in thousands) | | $ | 10 | | | $ | 8 | | | $ | 32 | | | $ | 27 | |
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The fair value of ESPP purchases for the nine months ended September 30, 2014 and September 30, 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 Nine Months Ended | | | | | | | | | |
| | September 30, | | | September 30, | | | | | | | | | |
2014 | 2013 | | | | | | | | |
Risk-free interest rates | | | 0.05 | % | | | 0.06 | % | | | | | | | | |
Expected dividend yield | | | — | | | | — | | | | | | | | | |
Expected volatility | | | 44 | % | | | 42 | % | | | | | | | | |
Expected lives | | | 0.25 years | | | | 0.25 years | | | | | | | | | |