Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 11. Stock-Based Compensation

The Company maintains an equity incentive plan to provide long-term incentives for employees, contractors, and members of its Board of Directors. The plan allows for the issuance of non-statutory and incentive stock options, restricted stock, restricted stock units, stock appreciation rights, other stock-related awards, and performance awards which may be settled in cash, stock, or other property. The Company also maintains an active employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code. Under the Purchase Plan, the Company's Board of Directors may authorize participation by eligible employees, including officers, in periodic offerings.

The Company has granted restricted stock units to its Senior Management. Subject to each grantee's continued employment, shares underlying the grants vest in three annual installments and are issuable at the end of the three-year vesting term.

The Company currently uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options and employee stock purchase plan shares. The Black-Scholes option pricing model is affected by the Company's stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected term of the grants, the Company's expected stock price volatility, actual and projected employee stock option exercise behaviors, including forfeitures, the risk-free interest rate and expected dividends.

Total stock-based compensation recognized on the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Stock-based compensation expense by caption:
Research and development	$	112	$	104	$	332	$	266
Selling, general and administrative		351		398		1,054		1,034
Total stock-based compensation expense	$	463	$	502	$	1,386	$	1,300

The Company did not record any stock-based compensation associated with the stock options exercisable for 50,000 shares of Common Stock with performance based vesting during the three and nine months ended September 30, 2011 and 2010 as the performance criteria was not probable of being achieved. These performance-based stock options remain outstanding at September 30, 2011.

Activity under the Company's equity incentive plans is set forth below (in thousands except per share amounts):

	Number of Options Outstanding			Weighted Average Exercise Price per Share
Balances at December 31, 2010		7,007		$	6.42
Granted		1,954			2.30
Cancelled		(1,674	)		8.51
Exercised		(111	)		0.81
Balances at September 30, 2011		7,176		$	4.90