Stockholders' Equity | 9 Months Ended |
Sep. 30, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stockholders' Equity | ' |
Note 3 – Stockholders’ Equity |
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Stock Plans—On June 12, 2014, upon approval at the Annual Meeting of Stockholders, we adopted the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan replaced the 2006 Equity Incentive Plan and 4,500,000 shares were authorized for issuance under the 2014 Plan. The 2014 Plan does not include an evergreen provision to automatically increase the number of shares available under it and increases in the number of shares authorized for issuance under the 2014 Plan require stockholder approval. Also, under the 2014 Plan the following shares are not recycled for future grant under the 2014 Plan: (i) shares used in connection with the exercise of an option and/or stock appreciation right to pay the exercise price or purchase price of such award or satisfy applicable tax withholding obligations; and (ii) the gross number of shares subject to stock appreciation rights that are exercised. Furthermore, the 2014 Plan included a provision that prohibits repricing of outstanding stock options or stock appreciation rights and formalized and updated procedures to qualify awards as “performance-based” compensation under Section 162(m) of the Internal Revenue Code in order to preserve full tax deductibility of such awards. |
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The following table summarizes activity under our 2014 Plan, 2006 Equity Incentive Plan, 1998 Stock Plan and 2005 Stock Plan (collectively, the “Stock Plans”) (in thousands): |
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| Shares Available for Grant | | | | | | | | | | | | | |
Shares available for grant December 31, 2013 | 4,085 | | | | | | | | | | | | | | |
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Additional shares authorized (1) | 751 | | | | | | | | | | | | | | |
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Restricted stock units granted | (462 | ) | | | | | | | | | | | | | |
Options granted | (41 | ) | | | | | | | | | | | | | |
Restricted stock units cancelled | 14 | | | | | | | | | | | | | | |
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Options cancelled | 16 | | | | | | | | | | | | | | |
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2014 Equity Incentive Plan adjustment (2) | (98 | ) | | | | | | | | | | | | | |
Shares available for grant September 30, 2014 | 4,265 | | | | | | | | | | | | | | |
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-1 | On January 1, 2014, the number of shares authorized for issuance under the 2006 Equity Incentive Plan was automatically increased pursuant to the terms of the 2006 Equity Incentive Plan. | | | | | | | | | | | | | | |
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-2 | On June 12, 2014, shares available for grant were adjusted to 4,500,000 pursuant to the terms of the 2014 Plan. | | | | | | | | | | | | | | |
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We maintain our 2006 Equity Incentive Plan, 2005 Stock Plan and 1998 Stock Plan, under which we previously granted options to purchase shares of our common stock and restricted stock units. The 2006 Equity Incentive Plan was terminated with respect to the grant of additional awards on June 12, 2014, upon adoption of our 2014 Plan. The 2005 Stock Plan and 1998 Stock Plan were terminated with respect to the grant of additional awards upon the effectiveness of the 2006 Equity Incentive Plan. We will continue to issue new shares of common stock upon vesting of restricted stock units and the exercise of stock options previously granted under the 2006 Equity Incentive Plan, 2005 Stock Plan and 1998 Stock Plan. |
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The following table summarizes stock option activity under the Stock Plans (in thousands, except per share amounts and weighted average remaining contractual life data): |
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| Number of Stock Options | | Weighted Average Exercise Price | | Weighted-Average Remaining Contractual Life (years) | | Aggregate Intrinsic Value (1) | | | |
Balance outstanding at December 31, 2013 | 1,979 | | | $ | 17.91 | | | 4.2 | | $ | 56,569 | | | | |
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Granted | 41 | | | $ | 40.31 | | | | | | | | | |
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Exercised | (243 | ) | | $ | 16.02 | | | | | $ | 6,350 | | | | |
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Cancelled | (34 | ) | | $ | 26.99 | | | | | | | | | |
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Balance outstanding at September 30, 2014 | 1,743 | | | $ | 18.52 | | | 3.56 | | $ | 11,836 | | | | |
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Vested and expected to vest at September 30, 2014 | 1,694 | | | $ | 18.38 | | | 3.52 | | $ | 11,612 | | | | |
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Exercisable at September 30, 2014 | 1,214 | | | $ | 16.95 | | | 2.92 | | $ | 9,172 | | | | |
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-1 | The aggregate intrinsic value is calculated as the difference between eHealth’s closing stock price as of December 31, 2013, the date of options exercised and September 30, 2014 and the exercise price of in-the-money options as of those dates. | | | | | | | | | | | | | | |
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The total fair value of stock options vested during the three and nine months ended September 30, 2013 was $0.7 million and $2.6 million, respectively. The total fair value of stock options vested during the three and nine months ended September 30, 2014 was $0.7 million and $1.8 million, respectively. |
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The following table summarizes restricted stock unit activity, including performance-based restricted stock unit activity, under the Stock Plans (in thousands, except weighted average remaining contractual life data): |
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| Number of Restricted Stock Units (1) | | Weighted-Average Grant Date Fair Value | | Weighted-Average Remaining Contractual Life (years) | | Aggregate Intrinsic Value (2) | | | |
Balance outstanding as of December 31, 2013 | 779 | | | $ | 19.57 | | | 2.3 | | $ | 36,220 | | | | |
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Granted | 462 | | | $ | 40.72 | | | | | | | | | |
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Vested | (218 | ) | | $ | 19.51 | | | | | | | | | |
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Cancelled | (19 | ) | | $ | 28.13 | | | | | | | | | |
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Balance outstanding as of September 30, 2014 | 1,004 | | | $ | 29.16 | | | 2.31 | | $ | 24,223 | | | | |
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-1 | Includes restricted stock units with both service and performance-based vesting criteria granted to our executive officers. | | | | | | | | | | | | | | |
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-2 | The aggregate intrinsic value is calculated as eHealth’s closing stock price as of December 31, 2013 and September 30, 2014 multiplied by the number of restricted stock units outstanding as of December 31, 2013 and September 30, 2014, respectively. | | | | | | | | | | | | | | |
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The fair value of the restricted stock units is based on eHealth’s stock price on the date of grant, and compensation expense related to these awards is recognized on a straight-line basis over the vesting period. The fair value of performance-based restricted stock units is based on eHealth’s stock price on the date of grant, and compensation expense related to these awards is recognized on an accelerated basis over the vesting period. The amount of expense recorded for performance-based restricted stock units is based on expected attainment of performance criteria. The total fair value of restricted stock units vested during the three and nine months ended September 30, 2013 was $0.2 million and $3.5 million, respectively. The total fair value of restricted stock units vested during the three and nine months ended September 30, 2014 was $0.4 million and $10.3 million, respectively. |
Stock Repurchase Programs—On September 10, 2012, we announced that our board of directors approved a stock repurchase program authorizing us to purchase up to $30 million of our common stock and on March 6, 2013, we announced that our board of directors increased the approved repurchase amount under this program to $60 million. Purchases under this program were made in the open market. The cost of the repurchased shares was funded from available working capital. We completed repurchasing common stock under this program in June 2013 having repurchased 2,957,179 shares for $60.0 million at an average price of $20.29 per share. |
On March 31, 2014, we announced that our board of directors approved a stock repurchase program authorizing us to purchase up to $50 million of our common stock. Purchases under this program were made in the open market. We completed this stock repurchase program in July 2014 having repurchased in the aggregate 1.4 million shares for approximately $50.0 million at an average price of $36.91 per share including commissions. The cost of the repurchase was funded from available working capital. |
For accounting purposes, common stock repurchased under our stock repurchase programs is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. |
Stock repurchase activity under our stock repurchase programs during the nine months ended September 30, 2014 is summarized as follows (dollar in thousands, except share and per share amounts): |
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| Total Number of Shares Repurchased | | Average Price Paid Per Share (3) | | Amount of Repurchase | | | | | |
Cumulative balance at December 31, 2013 (1) | 9,309,269 | | | $ | 16.11 | | | $ | 149,998 | | | | | | |
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Repurchases of common stock during 2014 | 1,354,619 | | | $ | 36.91 | | | $ | 50,000 | | | | | | |
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Cumulative balance at September 30, 2014 (2) | 10,663,888 | | | $ | 18.75 | | | $ | 199,998 | | | | | | |
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-1 | Cumulative balances at December 31, 2013 consist of shares repurchased in connection with our previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008. | | | | | | | | | | | | | | |
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-2 | Cumulative balances at September 30, 2014 consist of shares repurchased in connection with our stock repurchase program announced on March 31, 2014, as well as previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008. | | | | | | | | | | | | | | |
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-3 | Average price paid per share includes commissions. | | | | | | | | | | | | | | |
In addition to the shares repurchased under our repurchase programs as of September 30, 2014, we have in treasury 281,322 shares that were previously surrendered by employees to satisfy tax withholdings due in connection with the vesting of certain restricted stock units. As of December 31, 2013 and September 30, 2014, we had a total of 9,519,286 shares and 10,945,210 shares, respectively, held in treasury. |
Stock-Based Compensation—The fair value of stock options granted to employees for the three and nine months ended September 30, 2013 and 2014 was estimated using the following weighted average assumptions: |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2014 | | 2013 | | 2014 |
Expected term | 4.3 years | | | 4.2 years | | | 4.3 years | | | 4.2 years | |
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Expected volatility | 39.8 | % | | 46.9 | % | | 39.7 | % | | 46.3 | % |
Expected dividend yield | — | % | | — | % | | — | % | | — | % |
Risk-free interest rate | 1.13 | % | | 1.37 | % | | 0.79 | % | | 1.4 | % |
Weighted-average fair value | $ | 8.39 | | | $ | 13.09 | | | $ | 7.02 | | | $ | 15.5 | |
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The following table summarizes stock-based compensation expense recorded during the three and nine months ended September 30, 2013 and 2014 (in thousands): |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2014 | | 2013 | | 2014 |
Common stock options | $ | 654 | | | $ | 523 | | | $ | 2,103 | | | $ | 1,729 | |
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Restricted stock units | 1,291 | | | 1,767 | | | 3,258 | | | 4,856 | |
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Total stock-based compensation expense | $ | 1,945 | | | $ | 2,290 | | | $ | 5,361 | | | $ | 6,585 | |
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The following table summarizes stock-based compensation expense by operating function for the three and nine months ended September 30, 2013 and 2014 (in thousands): |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2014 | | 2013 | | 2014 |
Marketing and advertising | $ | 517 | | | $ | 721 | | | $ | 1,446 | | | $ | 1,957 | |
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Customer care and enrollment | 92 | | | 116 | | | 261 | | | 283 | |
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Technology and content | 425 | | | 559 | | | 1,129 | | | 1,550 | |
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General and administrative | 911 | | | 894 | | | 2,525 | | | 2,795 | |
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Total stock-based compensation expense | $ | 1,945 | | | $ | 2,290 | | | $ | 5,361 | | | $ | 6,585 | |
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