Stock Compensation Plans

12 Months Ended

Dec. 31, 2012

Stock Compensation Plans [Abstract]

Stock Compensation Plans

Note 9 – Stock Compensation Plans

In June 2009, our stockholders approved the VASCO Data Security International, Inc. 2009 Equity Incentive Plan (the “2009 Equity Plan”). The 2009 Equity Plan permits the issuance of awards in a variety of forms, including (1) shares of our common stock, (2) nonqualified and incentive stock options for the purchase of our common stock, (3) stock appreciation rights, (4) deferred stock, (5) other stock-based awards (including restricted shares, performance shares, performance units and other stock unit awards), and (6) cash incentive awards.

Upon approval of the 2009 Equity Plan, our 1997 Stock Compensation Plan, as amended and restated (the “1997 Compensation Plan”) was suspended. No additional awards will be issued under the 1997 Compensation Plan, however, all outstanding awards under the 1997 Compensation Plan were unaffected by the approval of the 2009 Equity Plan. The 1997 Compensation Plan permitted the award of stock compensation in various forms.

The 2009 Equity Plan and the 1997 Compensation Plan were designed and intended to provide performance incentives to employees and non-employee directors, consultants and other key persons of the company. Both plans are administered by the Compensation Committee as appointed by the Board of Directors and are intended to be non-qualified plans.

As of December 31, 2012, the number of shares allowed to be issued under the 2009 Equity Plan was 6,633 shares of the company’s common stock, representing 16.9% of the issued and outstanding shares of the company as of such date.

The following table summarizes compensation expense recorded under the two plans.

	2012		2011		2010
Compensation expense included in income:
Stock Option	$	—	$	—	$	—
Restricted stock		2,804		3,140		1,054
Long-term compensation plan		922		2,977		(33	)
Total expense	$	3,726	$	6,117	$	1,021

Stock Options

We have not granted stock options since 2005; however, compensation expense was recognized for the unvested options as required by ASC 718-10. This statement requires the company to estimate the fair value of stock options granted and to record compensation expense equal to the estimated fair value. The fair value of stock options at the date of grant is estimated using the Black-Scholes option pricing model, with the expected life adjusted to reflect the effect of post-vesting restrictions. This compensation expense was recorded on a straight-line basis over the vesting period of the options. The vesting period for all granted options concluded prior to 2010. Accordingly, there is no expense related to stock options recorded for the three years ended December 31, 2012.

All options granted under the 1997 Compensation Plan were issued with a strike price equal to market value on the date of grant, with terms of six to ten years and vesting periods ranging from one to five years. The company may issue new shares or treasury shares for option exercises. The following table summarizes option activity for the year ended December 31, 2012. All options outstanding at December 31, 2012, 2011, and 2010 were fully vested.

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,028		$	2.66		1.05	$	3,968
Exercised		(602	)		2.78				3,146
Expired		(127	)		2.51
Outstanding at December 31, 2012		299			2.49		1.00		1,695
At December 31, 2012:
Fully vested, exercisable options		299		$	2.49		1.00	$	1,695

Exercise of options to purchase 602 shares resulted in the issuance of 444 shares, net of shares withheld in satisfaction of exercise price and mandatory minimum tax withholdings.

The intrinsic value of options exercised and the fair value of shares vested over the last three years were:

	2012		2011		2010
Intrinsic value of options exercised	$	3,146	$	1,094	$	2
Fair value of shares vested		0		0		0

Time-Based Restricted Stock

Time-based restricted stock awards were granted to executive officers, employees and non-employee directors. Awards to non-employee directors vest on the first anniversary date of the grant. Awards to executive officers and employees vest annually over three or four year periods. Shares are subject to forfeiture if the service period requirement is not met. Compensation expense equal to the market value of the stock on the grant date is recorded on a straight-line basis over the vesting period as required by ASC 718-10. Compensation expense was $1,849, $1,415, and $905, for 2012, 2011, and 2010. The following table summarizes the time-based restricted stock activity for the year ended December 31, 2012:

	Shares			Weighted average remaining term (years)		Aggregate intrinsic value
Outstanding at January 1, 2012		505			2.48	$	3,295
Shares vested		(190	)				1,534
Shares awarded		229					1,793
Outstanding at December 31, 2012		544			2.21		4,436

The unamortized future compensation expense for time-based restricted stock awards was $2,671 at December 31, 2012.

Performance-Based Restricted Stock

Performance-based restricted stock awards were granted to executive officers and employees and are earned over a three or four year period. Awards are variable subject to achievement of company performance targets established by the Board of Directors. For awards granted in 2012 performance targets relate to the results of our services platform. For 2011, performance targets relate to earnings per share and revenues for the respective year. For awards granted in 2010, performance targets relate to three year cumulative earnings per share.

The estimated number of shares to be earned from awards granted in 2012, 2011, and 2010 were 0, 276, and 221, respectively. Compensation expense, equal to the market value of the stock on the grant date, is recorded on a straight-line basis over the vesting period at the performance level deemed probable, as required by ASC 718-10. Compensation expense in 2012, 2011, and 2010 was $956, $1,725, and $149. Unamortized future compensation expense for performance-based restricted stock was $1,200 at December 31, 2012.

The following table summarizes activity related to unvested performance restricted stock shares during 2012:

	Shares			Weighted average remaining term (years)		Aggregate intrinsic value
Outstanding at January 1, 2012		534			1.91	$	3,482
Shares vested		(136	)				1,273
Shares awarded		123					812
Outstanding at December 31, 2012		521			1.37		4,255

Included in shares outstanding at January 1, 2012 are 339 shares issued during 2012 comprised of 136 shares vested and 203 shares earned and not yet vested.

Long-term Incentive Compensation

During 2012 and 2010 long-term incentive awards were granted to key employees, other than named executive officers. Awards are variable subject to achievement of company performance targets established by the Board of Directors. For awards granted in 2012, performance targets relate to the results of our services platform. For awards granted in 2010, performance targets relate to three year cumulative earnings per share.

Awards are designated in U.S. Dollars however, at the option of the company, may be paid in our common stock. If paid in stock, the corresponding number of unrestricted shares will be issued to recipients based on the stock price on the date the awards are earned. Compensation expense equal to the award level deemed probable is recorded on a straight-line basis over the vesting period as required by ASC 718-10. At December 31, 2012, $0, and $2,424 have been accrued for the 2012 and 2010 awards, respectively.

Employees forfeit awards if they terminate employment prior to the completion of the performance period. Expensed amounts are reported as liabilities on the balance sheet. The unamortized future compensation expense for the long-term incentive awards was $0 at December 31, 2012.