Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2014 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Stock-Based Compensation | ' |
6. Stock-Based Compensation |
Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include stock option grants and restricted stock awards. |
Stock-based compensation expense related to internal legal labor is capitalized to patent costs based on direct labor hours charged to capitalized patent costs. |
Determining Fair Value |
Stock Options |
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model. The Company amortizes the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods. |
Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and pre-vesting and post-vesting forfeitures. Stock options granted generally vest over three to four years for employee grants and one to two years for director grants, and have contractual terms of ten years. |
Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the expected life of the award. |
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Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the expected life of the award. |
Expected Dividend Yield. The expected dividend yield is derived by the Company’s expected annual dividend rate over the expected term divided by the fair value of the Company’s common stock at the grant date. |
There were no stock options granted during the three- and six-month periods ended June 30, 2014 and 2013. |
The Company records stock-based compensation expense for stock option awards only for those awards that are expected to vest. |
Restricted Stock |
The fair value of restricted stock awarded is based on the fair market value of the Company’s common stock on the date of the grant (measurement date), and is recognized over the vesting period using the straight-line method. |
The Company records stock-based compensation expense for restricted stock awards only for those awards that are expected to vest. |
Stock-based Compensation Expense |
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| | Three | | | Three | | | Six | | | Six | |
Months | Months | Months | Months |
Ended | Ended | Ended | Ended |
June 30, | June 30, | June 30, | June 30, |
2014 | 2013 | 2014 | 2013 |
Stock-based compensation: | | | | | | | | | | | | | | | | |
Cost of revenue | | $ | 129 | | | $ | 139 | | | $ | 270 | | | $ | 296 | |
Sales and marketing | | | 175 | | | | 83 | | | | 318 | | | | 195 | |
Research, development and engineering | | | 364 | | | | 232 | | | | 720 | | | | 488 | |
General and administrative | | | 607 | | | | 560 | | | | 1,156 | | | | 1,066 | |
Intellectual property | | | 97 | | | | 63 | | | | 167 | | | | 124 | |
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Stock-based compensation expense | | | 1,372 | | | | 1,077 | | | | 2,631 | | | | 2,169 | |
Capitalized to patent costs | | | 42 | | | | 31 | | | | 87 | | | | 64 | |
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Total stock-based compensation expense | | $ | 1,414 | | | $ | 1,108 | | | $ | 2,718 | | | $ | 2,233 | |
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The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under all equity compensation plans, including stock options and restricted stock: |
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| | As of | | | As of | | | | | | | | | |
June 30, | December 31, | | | | | | | | |
2014 | 2013 | | | | | | | | |
Total unrecognized compensation costs | | $ | 9,416 | | | $ | 9,711 | | | | | | | | | |
Total unrecognized compensation costs will be adjusted for any future changes in estimated forfeitures. |
The Company expects to recognize the total unrecognized compensation costs as of June 30, 2014 for stock options and restricted stock over weighted average periods through June 2018 as follows: |
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| | Stock | | | Restricted | | | | | | | | | |
Options | Stock | | | | | | | | |
Weighted average period | | | 0.6 years | | | | 1.6 years | | | | | | | | | |
Stock Option Activity |
As of June 30, 2014, under all of the Company’s stock-based compensation plans, equity awards to purchase an additional 607,794 shares were authorized for future grants under the plans. The Company issues new shares upon option exercises. |
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The following table reconciles the outstanding balance of stock options: |
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Three-months ended June 30, 2014: | | Options | | | Weighted | | | Weighted | | | Aggregate | |
Average | Average | Intrinsic |
Exercise | Grant Date | Value |
Price | Fair Value | |
Outstanding at March 31, 2014 | | | 691,738 | | | $ | 16.22 | | | $ | 8.2 | | | | | |
Options granted | | | — | | | | — | | | | — | | | | | |
Options exercised | | | (48,000 | ) | | | 9.64 | | | | 6.3 | | | | | |
Options canceled or expired | | | — | | | | — | | | | — | | | | | |
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Outstanding at June 30, 2014 | | | 643,738 | | | $ | 16.71 | | | $ | 8.34 | | | $ | 10,229 | |
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Six-months ended June 30, 2014: | | Options | | | Weighted | | | Weighted | | | Aggregate | |
Average | Average | Intrinsic |
Exercise | Grant Date | Value |
Price | Fair Value | |
Outstanding at December 31, 2013 | | | 813,522 | | | $ | 15.44 | | | $ | 7.96 | | | | | |
Options granted | | | — | | | | — | | | | — | | | | | |
Options exercised | | | (169,784 | ) | | | 10.64 | | | | 6.52 | | | | | |
Options canceled or expired | | | — | | | | — | | | | — | | | | | |
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Outstanding at June 30, 2014 | | | 643,738 | | | $ | 16.71 | | | $ | 8.34 | | | $ | 10,229 | |
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Exercisable at June 30, 2014 | | | 603,913 | | | $ | 16.03 | | | | | | | $ | 10,008 | |
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Unvested at June 30, 2014 | | | 39,825 | | | $ | 27.04 | | | | | | | $ | 221 | |
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The aggregate intrinsic value is based on the closing price of $32.60 per share of Digimarc common stock on June 30, 2014, which would have been received by the optionees had all of the options with exercise prices less than $32.60 per share been exercised on that date. |
Restricted Stock Activity |
The following table reconciles the unvested balance of restricted stock: |
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Three-months ended June 30, 2014: | | Number of | | | Weighted | | | | | | | | | |
Shares | Average | | | | | | | | |
| Grant Date | | | | | | | | |
| Fair Value | | | | | | | | |
Unvested balance, March 31, 2014 | | | 455,883 | | | $ | 21.17 | | | | | | | | | |
Granted | | | 25,520 | | | $ | 33.43 | | | | | | | | | |
Vested | | | (54,784 | ) | | $ | 27.37 | | | | | | | | | |
Canceled | | | (5,922 | ) | | $ | 21.4 | | | | | | | | | |
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Unvested balance, June 30, 2014 | | | 420,697 | | | $ | 21.1 | | | | | | | | | |
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Six-months ended June 30, 2014: | | Number of | | | Weighted | | | | | | | | | |
Shares | Average | | | | | | | | |
| Grant Date | | | | | | | | |
| Fair Value | | | | | | | | |
Unvested balance, December 31, 2013 | | | 448,126 | | | $ | 19.89 | | | | | | | | | |
Granted | | | 82,320 | | | $ | 32.83 | | | | | | | | | |
Vested | | | (96,754 | ) | | $ | 25.44 | | | | | | | | | |
Canceled | | | (12,995 | ) | | $ | 21.54 | | | | | | | | | |
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Unvested balance, June 30, 2014 | | | 420,697 | | | $ | 21.1 | | | | | | | | | |
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