Stock Plans

The Company has two active stock-based compensation plans as of March 31, 2014: the 2004 Employee Stock Purchase Plan and the 2013 Omnibus Equity Incentive Plan under which incentive stock options, non-qualified stock options, restricted stock awards and restricted stock units can be granted to employees and non-employee directors.

Stock Options

Compensation expense recognized from employee stock options for the three months ended March 31, 2014 and 2013 was a benefit of $2,000 and an expense of $177,000, respectively. The benefit for the three months ended March 31, 2014 is a result of cancellations of previously issued options. Beginning in 2011, the Company ceased granting stock options and began granting restricted stock awards to employees as part of its annual equity incentive award program. However, during 2013, the Company granted stock options related to the retention of a new chief operating officer as well as certain other one-time stock option awards to various employees. The Company may determine to grant stock options in the future under its equity incentive plan.

Restricted Stock Awards

During the three months ended March 31, 2014 and 2013 the Company issued 255,600 and 305,143 shares, respectively, under restricted stock awards which had an average grant date fair value per share of $14.20 and $10.58, respectively. The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three months ended March 31, 2014 and 2013 (in thousands):



	Three Months Ended
	March 31,
	2014		2013
Service-based restricted stock	$	433	$	648
Performance-based restricted stock	6		18
Total compensation expense recognized for restricted stock awards	$	439	$	666

Restricted Stock Units

Non-employee directors receive an annual restricted stock unit award, normally in February of each year, as part of their annual retainer compensation which vests one year from the date of grant. During the three months ended March 31, 2014 and 2013, non-employee directors were granted a total of 65,891 and 56,616 restricted stock units, respectively, with an average grant date fair value per share of $9.03 and $10.51, respectively.

Total compensation expense recognized for service-based restricted stock unit awards was $176,000 and $114,000 during the three months ended March 31, 2014 and 2013, respectively.

Employee Stock Purchase Plan

The 2004 Employee Stock Purchase Plan (“ESPP”) permits substantially all employees to purchase common stock through payroll deductions, at 85% of the lower of the trading price of the stock at the beginning or at the end of each six month offering period commencing on January 1 and July 1. The number of shares purchased is based on participants’ contributions made during the offering period.

Compensation expense recognized for the ESPP for the three months ended March 31, 2014 was $142,000. For the three months ended March 31, 2013, compensation expense was zero under the ESPP as the plan had been temporarily suspended. The fair value of the ESPP shares was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:



	Three Months Ended
	March 31,
	2014
Expected dividends	$	—
Exercise price	$	7.77
Expected volatility	82		%
Average risk-free interest rate	0.04		%
Expected life/term (in years)	0.3
Fair value per share	$	5.75

Stock-based Compensation Expense

Compensation cost for restricted stock, restricted stock units, stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):



	Three Months Ended
	March 31,
	2014		2013
Cost of revenue	$	251	$	273
Selling, general and administrative	255		497
Research and development	249		187
Total stock-based compensation expense	$	755	$	957