Stock-Based Compensation and Other Incentive Compensation

We offer stock-based compensation through the use of stock options and RSUs. We also offer an ESPP.

We grant stock options to employees and directors under our equity-based compensation plans with exercise prices that are not less than the fair market value of our common stock on the date of grant. The terms of the stock option and RSU awards, including the vesting schedule of such awards, are determined at our discretion subject to the terms of the applicable equity-based compensation plan.

Options granted over the last several years have generally been exercisable in four or five equal installments beginning on the first anniversary of the date of grant with a maximum term of ten years. RSUs typically vest in four or five equal installments beginning on the first anniversary of the date of grant or when certain performance targets are met. There are 13,500 shares of common stock authorized for awards under our 2003 Incentive Compensation Plan (the “Plan”) plus available shares from a pre-existing equity-based compensation plan, which plans were approved by our stockholders. We also have outstanding stock options granted as part of inducement stock option awards that are not required to be approved by stockholders, as permitted by applicable stock exchange rules. We record compensation expense for all stock options and RSUs based on the fair value of the award at the grant date and the applicable vesting schedule.

The Company may grant certain awards with respect to which vesting is contingent upon the Company achieving certain performance targets. Upon determining that the performance target is probable, the fair value of the award is recognized over the service period, subject to potential adjustment.

On February 22, 2012, the Company granted approximately 494 RSUs to certain executives, which awards have a four-year vesting schedule, with 25% scheduled to vest each year if specified performance targets are met subject to certain “carryover” vesting provisions. The performance targets and carryover vesting provisions are consistent with those applicable to the performance-conditioned sign-on RSUs and options awarded to our Chief Executive Officer in December 2010, which are described in Note 12 of the Notes to Consolidated Financial Statements in our 2011 Annual Report on Form 10-K. The performance-conditioned RSUs will be forfeited on March 15, 2016 to the extent that such awards remain unvested on such date.

Stock Options

A summary of the changes in stock options outstanding during the nine months ended September 30, 2012 is presented below:



	Number of Options		Weighted Average Remaining Contract Term (Years)	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding as of December 31, 2011	3,868		8.3	$	9.67	$	3,876
Granted	10			11.10		—
Exercised	(4	)		6.16		20
Canceled	—			—		—
Options outstanding as of March 31, 2012	3,874		8.1	$	9.68	$	10,735
Granted	—			—		—
Exercised	—			—		—
Canceled	—			—		—
Options outstanding as of June 30, 2012	3,874		7.9	$	9.68	$	1,050
Granted	10			7.27		—
Exercised	—			—		—
Canceled	—			—		—
Options outstanding as of September 30, 2012	3,884		7.6	$	9.67	$	699
Options exercisable as of September 30, 2012	938		5.5	$	12.42	$	317

The weighted average grant date fair value of options granted during the three months ended September 30, 2012 was $3.80. No options were granted during the three months ended June 30, 2012 and the weighted average grant date fair value of options granted during the three months ended March 31, 2012 was $5.81. For the three and nine months ended September 30, 2012, we recognized stock-based compensation expense of approximately $900 and $2,900, respectively, related to the vesting of stock options and the related tax benefit of approximately $340 and $1,100, respectively, prior to consideration of any valuation allowance recorded against the tax benefit. For the three and nine months ended September 30, 2011, we recognized stock-based compensation expense of approximately $1,500 and $4,900, respectively, related to the vesting of stock options and the related tax benefit of approximately $600 and $1,800, respectively, prior to consideration of any valuation allowance recorded against the tax benefit.

As of September 30, 2012, we had unrecognized compensation expense of approximately $8,900 relating to stock option awards that will be amortized over a weighted average period of approximately two years.

Restricted Stock Units

A summary of the changes in RSUs outstanding during the nine months ended September 30, 2012 is presented below:



	Number of RSUs		Weighted Average Grant Date Fair Value Per RSU
Unvested units as of December 31, 2011	4,771		$	10.49
Granted	1,534		12.62
Vested	(660	)	13.92
Canceled	(20	)	12.02
Unvested units as of March 31, 2012	5,625		$	10.66
Granted	130		8.80
Vested	(41	)	19.91
Canceled	(30	)	11.66
Unvested units as of June 30, 2012	5,684		10.55
Granted	17		7.44
Vested	(483	)	8.72
Canceled	(2	)	12.62
Unvested units as of September 30, 2012	5,216		$	10.70

For the three and nine months ended September 30, 2012, we recognized stock-based compensation expense of approximately $4,900 and $14,500, respectively, related to the vesting of RSUs and the related tax benefit of approximately $1,860 and $5,520, respectively, prior to consideration of any valuation allowance recorded against the tax benefit. For the three and nine months ended September 30, 2011, we recognized stock-based compensation expense of approximately $4,100 and $10,300 related to the vesting of RSUs and the related tax benefit of approximately $1,600 and $3,900, respectively, prior to consideration of any valuation allowance recorded against the tax benefit.

As of September 30, 2012, we had unrecognized compensation expense of approximately $43,100 relating to RSUs that will be amortized over a weighted average period of approximately two years.

Other Incentive Compensation

In December 2010, the Company adopted a performance-based incentive compensation plan relating to our Asia-Pacific business ("the Asia-Pacific Plan"). The purpose of the Asia Pacific Plan is to provide an equitable and competitive compensation opportunity to certain key employees and consultants of the Company who are involved in the Company's operations in China (and potentially other jurisdictions in the Asia-Pacific region) (the "Asia-Pacific Business") and to promote the creation of long-term value for the Company's stockholders by directly linking Asia-Pacific Plan participants' compensation under the plan to the appreciation in value of such business. Each participant will be eligible to receive a cash payment following the end of 2014 equal to a pre-determined share of an Asia-Pacific Business incentive compensation pool. The incentive compensation pool will equal a certain percentage of the growth in the value of the Asia-Pacific Business over four years, calculated in the manner provided under the Asia-Pacific Plan and subject to a cap of (1) $35 million, in the event an Asia-Pacific Business liquidity event does not occur by December 31, 2014 or (2) $50 million, in the event an Asia-Pacific Business liquidity event occurs by December 31, 2014. An "Asia-Pacific Business liquidity event" means an initial public offering of at least 20% of the Asia-Pacific Business or a strategic investment by a third-party to acquire at least 20% of the Asia-Pacific Business, in each case, that is approved by the Company. As of September 30, 2012, we have recorded an accrual included in Other long-term liabilities of $2,652 related to the Asia-Pacific Plan.