Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity Attributable to Parent [Abstract]

Stockholders' Equity

STOCKHOLDERS' EQUITY

Common Stock

As of December 31, 2011, the Company had 75.0 million authorized shares of common stock, no par value, of which 30.7 million shares were issued and outstanding and 1.5 million shares were reserved for future issuance under our equity compensation plans.

2005 Long-Term Incentive Plan

In 2005 Nautilus shareholders approved the 2005 Long-Term Incentive Plan (the “2005 Plan”) to enhance the Company's ability to attract and retain highly qualified personnel and align the long-term interests of participants with those of the shareholders. The 2005 Plan, which is administered by the Company's Compensation Committee of the Board of Directors, authorizes the Company to grant various types of stock-based awards including: stock options, stock appreciation rights, restricted stock, stock units and performance stock grants. Stock options granted under the 2005 Plan shall not have an exercise price less than the fair market value of the Company's common shares on the date of the grant. The exercise price of an option or stock appreciation right may not be reduced without shareholder approval. Stock options generally vest over four years of continuous service, commencing on the date of grant. Stock options granted after the adoption of the 2005 Plan have a seven-year contractual term. Stock options granted under the preceding plan expire after ten years.

Upon its adoption, there were approximately 4.0 million shares available for issuance under the 2005 Plan. The number of shares available for issuance is increased by any shares of common stock which were previously reserved for issuance under the Company's preceding stock option plan, and were not subject to grant on June 6, 2005, or as to which the stock based compensation award is forfeited on or after June 6, 2005. The number of shares available for issuance is reduced by (i) two shares for each share delivered in settlement of any stock appreciation rights, for each share of restricted stock, and for each stock unit or performance unit award, and (ii) one share for each share delivered in settlement of a stock option award. In no event shall more than 1.0 million aggregate shares of common stock subject to stock options, stock appreciation rights, restricted stock or performance stock unit awards be granted to any one participant in any one year under the 2005 Plan. As of December 31, 2011, 4.1 million shares remained available for future grant under the 2005 Plan.

Stock Options

Stock option activity in the years ended December 31, 2011 and 2010 was as follows (in thousands, except exercise price and contractual life):

	Total Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value ($000s)
Options outstanding, January 1, 2010	1,414		$	10.50
Granted	258		2.73
Forfeited, cancelled or expired	(472	)	10.34
Exercised	—		—
Options outstanding, December 31, 2010	1,200		8.80		4.3	$	22
Vested and expected to vest, as of December 31, 2010	1,171		8.88		4.3	22
Options outstanding, January 1, 2011	1,200		8.80
Granted	124		2.69
Forfeited, cancelled or expired	(287	)	6.52
Exercised	(3	)	1.68
Options outstanding, December 31, 2011	1,034		8.72		3.2	18
Vested and expected to vest, as of December 31, 2011	1,032		8.73		3.2	18

Aggregate intrinsic value in the above table represents the aggregate amount, for all options, by which closing share prices exceed the exercise price of the stock options. This value will fluctuate in the future based on the fair market value of our common stock.

Stock option expense was less than $0.1 million in 2011 and $0.4 million in 2010, primarily included in general and administrative expense. The weighted average grant-date fair values of stock options granted during 2011 and 2010 were $1.86 and $1.89, respectively. As of December 31, 2011, the unamortized compensation expense for unvested stock options totaled approximately $0.3 million, which is expected to be recognized over a weighted average period of 2.0 years.

Stock options outstanding as of December 31, 2011 were as follows: (in thousands, except contractual life and exercise price):

		Options Outstanding			Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Options Exercisable	Weighted- Average Exercise Price
$0.95 - $2.53	210	4.5	$	2.05	86	$	2.03
$2.97 - $3.40	207	4.6	2.99		56	3.02
$4.15 - $6.61	218	2.8	4.63		181	4.62
$9.53 - $16.10	267	1.8	14.91		267	14.91
$17.36 - $27.72	132	2.1	22.39		132	22.39
$0.95 - $27.72	1,034	3.2	8.72		722	11.25

Restricted Stock Units

On April 21, 2011, the Company granted to an executive an award of 59,000 restricted stock units with an average grant date fair value of $2.97 per share. The restricted stock units vest equally over a period of four years, with 14,750 units vesting each year on the anniversary date of the grant.

On May 30, 2011, the Company granted to an executive an award of 316,206 restricted stock units with an average grant date fair value of $2.53 per share. The restricted stock units vest over four years, with 93,874 units vesting after one year and 6,176 units vesting each month thereafter for 36 consecutive months.

No restricted stock unit activity occurred and no compensation expense was incurred in 2010. Restricted stock unit compensation expense in 2011 was $0.2 million, included in general and administrative expense. Following is a summary of restricted stock unit activity in the year ended December 31, 2011 (in thousands, except fair value per share):

	Restricted Stock Units	Weighted Average Grant Date Fair Value per Share
Restricted stock units outstanding, January 1, 2011	—	$	—
Granted	375	2.60
Restricted stock units outstanding, December 31, 2011	375	2.60

Performance Stock Units

In April 2010 the Company granted 146,000 performance stock unit awards to key members of its executive team. The performance stock unit awards are subject to both time-based vesting (one-third annually over three years) and achievement of a stock price target of two times the grant date price. If, over the three-year period, the stock price does not close at or above two times the grant date price over any 20 of 30 consecutive days, the entire award is forfeited. Compensation expense for the 2010 performance stock unit grant is recognized over the estimated requisite service period based on the number of performance stock units ultimately expected to vest. Performance stock unit compensation expense was $0.1 million in each of the years 2011 and 2010, primarily included in general and administrative expense.

Following is a summary of performance stock unit activity in the years ended December 31, 2011 and 2010 (in thousands, except fair value per share):

	Performance Stock Units		Weighted Average Grant Date Fair Value per Share
Performance stock units outstanding, January 1, 2010	—		$	—
Granted	146		2.32
Performance stock units outstanding, December 31, 2010	146		2.32
Cancelled	(73	)	2.32
Performance stock units outstanding, December 31, 2011	73		2.32

The Company receives income tax deductions as a result of the exercise of certain stock options and vesting of restricted stock units and performance stock units.