Stockholders’ Equity


(a)	Employee Stock Options

Options are granted with an exercise price equal to the fair market value of the common stock on the date of grant and generally vest in equal annual amounts over four years beginning on the first anniversary of the date of the grant. No options are exercisable for periods of more than 5 years after date of grant. Under the Company’s Amended and Restated 2006 Stock Incentive Plan, each share issued under awards other than options will reduce the number of shares reserved for issuance by two shares. Shares issued under options will reduce the shares reserved for issuance on a share-for-share basis. All plans were approved by the Company’s shareholders, pursuant to which 9,415,000 shares of the Company’s common stock were reserved for issuance. As of December 31, 2013, 6,645,081 options and awards to purchase shares of common stock had been issued net of expired, canceled or forfeited options and 2,769,919 were available for future grants. The Compensation Committee of the Board of Directors administers the plans, approves the individuals to whom options will be granted and determines the number of shares and exercise price of each option. Outstanding options under the plans at December 31, 2013 expire from January 2014 through September 2018. None of the Company’s outstanding options includes performance-based or market-based vesting conditions as of December 31, 2013.

The Company has estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model. The expected volatility assumption is based on the historical daily price data of the Company’s common stock over a period equivalent to the weighted average expected life of the Company’s options. The expected term of options granted is derived using assumed exercise rates based on historical exercise patterns and represents the period of time the options granted are expected to be outstanding. The risk-free interest rate is based on the actual U.S. Treasury zero-coupon rates for bonds matching the expected term of the option as of the option grant date. The dividend yield of zero is based upon the fact that the Company has not historically declared or paid cash dividends, and does not expect to declare or pay dividends in the foreseeable future.

The per share weighted-average fair values of stock options granted during 2013, 2012 and 2011 were $5.45, $4.97, and $6.36, respectively. The weighted-average assumptions used to value options as of their grant date were as follows:



	Year Ended December 31,
	2013		2012		2011
Risk-free interest rate	1.06	%	0.69	%	1.65	%
Expected volatility	50.9	%	64.6	%	60.4	%
Expected life (in years)	4.24		4.22		4.23
Dividend yield	0	%	0	%	0	%

The changes in outstanding stock options for the year ended December 31, 2013, are as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2012	1,077,798		$	10.93
Granted	138,183		13.20
Exercised	(160,944	)	8.35
Expired, canceled or forfeited	(33,246	)	13.74
Outstanding at December 31, 2013	1,021,791		$	11.55	2.83	$	1,958
Exercisable at December 31, 2013	349,449		$	11.90	2.21	$	619

The total aggregate intrinsic value of options exercised was $933, $173, and $183 in 2013, 2012 and 2011, respectively. The total aggregate intrinsic value of options outstanding at December 31, 2012 and 2011 was $112 and $1,254, respectively. The total aggregate intrinsic value of options exercisable at December 31, 2012 and 2011 was $85 and $851, respectively.

As of December 31, 2012 and 2011, the number of options exercisable was 290,911 and 361,994, respectively, and the weighted average exercise price of those options was $10.52 and $9.36 per share, respectively. The weighted average remaining contractual term for options exercisable at December 31, 2012 and 2011 was 1.78 and 1.18 years, respectively. The weighted average remaining contractual term for options outstanding at December 31, 2012 and 2011 was 3.28 and 2.63 years, respectively.

As of December 31, 2013, there was $2,556 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.23 years. In 2013, 2012 and 2011, the Company recorded compensation charges of $1,438, $1,130 and $709, respectively, related to stock options. Compensation costs for options subject only to service conditions that vest ratably are recognized on a straight-line basis over the requisite service period for the entire award. During 2013, 2012 and 2011, cash received under stock option plans for exercises was $1,344, $689 and $652, respectively.


(b)	Restricted Stock

The Company granted 265,625, 43,340 and 167,500 restricted stock awards to employees under the terms of the Amended and Restated 2006 Stock Incentive Plan for the years ended December 31, 2013, 2012, and 2011, respectively. The restricted stock awards vest annually over four years from the date of grant subject to the recipient remaining an employee through the applicable vesting dates. Compensation expense for restricted stock awards is measured at fair value on the date of grant based on the number of shares granted and the quoted market closing price of the Company’s common stock. Such value is recognized as expense over the vesting period of the award, net of estimated forfeitures. The weighted-average grant-date fair value of restricted stock granted during 2013, 2012 and 2011 was $13.61, $12.53 and $13.29 per share, respectively.

As of December 31, 2013, there was $3,217 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.17 years. Compensation costs for awards subject only to service conditions that vest ratably are recognized on a straight-line basis over the requisite service period for the entire award. Compensation cost for awards initially subject to certain performance conditions are recognized on a ratable basis over the requisite service period for the entire award. In 2013, 2012 and 2011, the Company recorded compensation charges of $2,613, $2,495 and $2,728, respectively, related to restricted stock awards.

Restricted stock activity under the Amended and Restated 2006 Stock Incentive Plan for 2013 is as follows:



	Number of Shares		Weighted- average grant date fair value
Outstanding at December 31, 2012, unvested	371,611		$	11.05
Granted	265,625		13.61
Vested	(245,020	)	9.73
Forfeited	(13,209	)	13.54
Outstanding at December 31, 2013, unvested	379,007		$	13.61


(c)	Employee Stock Purchase Plan

Under the Company’s Amended and Restated Employee Stock Purchase Plan (ESPP), the Company is authorized to issue up to 650,000 shares of common stock, of which 58,973 shares remain available as of December 31, 2013.

The ESPP covers all of the Company’s employees. Under the terms of the ESPP, eligible employees can elect to have up to six percent of their pre-tax compensation withheld to purchase shares of the Company’s common stock on a semi-annual basis. The ESPP allows eligible employees the right to purchase the Company’s common stock on a semi-annual basis at 85% of the market price at the end of each purchase period. During 2013, 2012 and 2011, 27,027, 27,308, and 38,718 shares, respectively, were issued under this plan. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of these discounted purchases. The fair value of the 15% discount is recognized as compensation expense over the purchase period. The Company applies a graded vesting approach because the ESPP provides for multiple purchase periods and is, in substance, a series of linked awards. In 2013, 2012 and 2011, the Company recorded compensation charges of $73, $54 and $96, respectively, related to the ESPP. During 2013, 2012 and 2011, cash received under the ESPP was $308, $270 and $289, respectively.