Stockholders’ Equity

Common Stock

As of September 30, 2015, there were 100,000,000 shares of common stock authorized, and 57,268,489 shares issued and outstanding. As of December 31, 2014, there were 100,000,000 shares of common stock authorized, and 56,701,331 shares issued and outstanding. The par value for common shares is $0.001.

Preferred Stock

As of September 30, 2015 and December 31, 2014, there were 5,000,000 shares of preferred stock authorized, and zero shares issued and outstanding. The par value for preferred shares is $0.001.

Stock Repurchase Program

On December 10, 2012, the Company’s Board of Directors approved a stock repurchase program through June 30, 2014. Under the stock repurchase program, the Company is authorized to repurchase shares of its common stock, in the open market or privately negotiated transactions, at times and prices considered appropriate by the Board of Directors depending upon prevailing market conditions and other corporate considerations. On March 13, 2014, the Company’s Board of Directors increased the aggregate purchase price of the stock repurchase program from $30.0 million to $40.0 million. On July 23, 2014, the Company’s Board of Directors increased the aggregate purchase price of the stock repurchase program from $40.0 million to $50.0 million. On March 5, 2015, the Company’s Board of Directors extended the expiration date of the program out to December 31, 2016. There were 386,812 shares repurchased under this program during 2015, of which 277,360 shares were recorded in treasury stock at par on the condensed consolidated balance sheets as of September 30, 2015. As of September 30, 2015, approximately $6.1 million remained available for purchase under the program.

Stock-Based Compensation

The Company follows FASB ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The following table summarizes stock-based compensation expense related to employee stock options and restricted stock units (“RSUs”) (under ASC 718-10 included in Company’s statements of operations for the periods presented (amounts in thousands):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Cost of revenue	$	288	$	365	$	1,092	$	1,209
Sales and marketing expense	760		1,030		2,292		2,766
General and administrative expense	911		1,088		2,590		2,800
Product development expense	927		1,171		2,819		2,783
Total stock-based compensation included in costs and expenses	$	2,886	$	3,654	$	8,793	$	9,558

The per share weighted average fair value of stock options granted during the three and nine months ended September 30, 2015 was $4.10 and $4.47, respectively. The per share weighted average fair value of stock options granted during the three and nine months ended September 30, 2014 was $4.57 and $4.99, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2015	2014	2015	2014
Dividend yield	0.0%	0.0%	0.0%	0.0%
Risk-free interest rate	1.7%	1.7%	1.3% - 1.7%	1.5% - 1.7%
Expected life (in years)	5	5	5	5
Historical volatility	47.4%	50.9%	47.4% - 49.7%	50.9% - 53.7%

A description of the methods used in the significant assumptions used to estimate the fair value of stock-based compensation awards follows:

Dividend yield – The Company uses 0% as it has never issued dividends and does not anticipate issuing dividends in the near term.

Risk-free interest rate – The Company uses the market yield on U.S. Treasury securities at five years with constant maturity, representing the current expected life of stock options in years.

Expected life – The Company uses historical data to estimate the expected life of a stock option.

Historical volatility – The Company uses a trailing five year from grant date to determine volatility.

Stock Option Plans

During 1998, the Company established the Stock Option and Restricted Stock Purchase Plan (the “1998 Plan”). Under the 1998 Plan, the Board of Directors could issue incentive stock options or nonqualified stock options to purchase up to 5,850,000 shares of common stock. The 2000 Stock Incentive Plan (the “2000 Plan”) succeeded the 1998 Plan. Under the 2000 Plan, the options which had been outstanding under the 1998 Plan were incorporated in the 2000 Plan increasing the number of shares available for issuance under the plan by approximately 4,150,000, thereby reserving for issuance 10,000,000 shares of common stock in the aggregate.

The Company established the 2009 Stock Incentive Plan (as amended and restated, the “2009 Plan”) as a successor to the 2000 Plan. Under the 2009 Plan, the options which had been outstanding under the 2000 Plan were incorporated into the 2009 Plan and the Company increased the number of shares available for issuance under the plan by 6,000,000. The Company amended the 2009 stock incentive plan (the “Amended 2009 Plan”) effective June 7, 2012. The Amended 2009 Plan increased the number of shares authorized for issuance under the plan by an additional 4,250,000, thereby reserving for issuance 23,817,744 shares of common stock in the aggregate. Options to acquire common stock granted thereunder have 10-year terms. As of September 30, 2015, approximately 12,962,000 shares of common stock were reserved for issuance under the 2009 Plan (taking into account all option exercises through September 30, 2015).

Employee Stock Purchase Plan

In June 2010, the Company’s stockholders approved the 2010 Employee Stock Purchase Plan with 1,000,000 shares of common stock initially reserved for issuance. As of September 30, 2015, approximately 427,113 shares of common stock were reserved for issuance under the Employee Stock Purchase Plan (taking into account all share purchases through September 30, 2015).

Stock Option Activity

A summary of the Company’s stock option activity and weighted average exercise prices follows:



	Stock Option Activity				Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance outstanding at December 31, 2014	10,769,149		$	10.95
Granted	792,250		10.22
Exercised	(576,577	)	4.37
Cancelled or expired	(1,415,553	)	12.20
Balance outstanding at September 30, 2015	9,569,269		$	11.09	6.83	$	3,155
Options vested and expected to vest at September 30, 2015	8,582,041		$	11.11	6.61	$	3,155
Options exercisable at September 30, 2015	5,448,479		$	10.91	5.64	$	3,155

The total fair value of stock options exercised during the nine months ended September 30, 2015 was approximately $1.5 million. As of September 30, 2015, there was approximately $18.2 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.4 years.

A summary of the status of the Company’s nonvested shares as of December 31, 2014, and changes during the nine months ended September 30, 2015 is as follows:



	Options		Weighted Average Grant- Date Fair Value
Nonvested Shares at December 31, 2014	6,032,315		$	5.66
Granted	792,250		4.47
Vested	(1,288,222	)	5.29
Cancelled or expired	(1,415,553	)	6.24
Nonvested Shares at September 30, 2015	4,120,790		$	5.35

There was no intrinsic value of nonvested options at September 30, 2015.

Restricted Stock Unit Activity

A summary of the Company’s restricted stock units (“RSUs”) activity and weighted average exercise prices follows:



	Restricted Stock Unit Activity
	Number of Shares		Weighted Average Grant Date Fair Value (Per Share)		Aggregate Fair Value (in thousands)
Balance outstanding at December 31, 2014	—		$	—	$	—
Granted	1,256,500		10.31		—
Exercised	—		—		—
Forfeited	(36,000	)	10.31		—
Non-vested and outstanding at September 30, 2015	1,220,500		$	10.31	$	9,227
Expected to vest at September 30, 2015	893,956		$	10.31	$	6,758

RSUs granted to employees generally vest over a four-year period. As of September 30, 2015, total unrecognized compensation cost, adjusted for estimated forfeitures, related to nonvested RSUs was approximately $11.1 million and the weighted-average remaining vesting period was 3.5 years.

In the three months ended September 30, 2015, we issued restricted stock units to certain employees and performance-based restricted stock units to certain executives. Restricted stock units will be eligible to vest based on the employee’s continued employment through the vesting date. The performance-based restricted stock units will be eligible to vest based on our attainment of the 2015 financial performance goal as well as each executive’s continued employment through the vesting date. In order to earn the performance-based restricted stock units, the predetermined goal must be met. Shares earned will vest in March 2016 contingent on the continuous employment of each executive. We recognize stock-based compensation expense associated with these awards over the vesting period, after assessing the probability of achieving the 2015 financial performance goal.