Stock-Based Compensation

6 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 4.    Stock-Based Compensation

2011 Incentive Plan

On August 24, 2011, our shareholders approved the Rentrak Corporation 2011 Incentive Plan (the "2011 Plan") at the annual meeting of shareholders (the "Annual Meeting"). The 2011 Plan replaces the Rentrak Corporation 2005 Stock Incentive Plan, which we refer to as the "Prior Incentive Plan." No new awards will be granted under the Prior Incentive Plan.

The 2011 Plan authorizes the issuance of an additional 3 million shares of our common stock. In addition, up to approximately 1.9 million shares subject to awards outstanding under the Prior Incentive Plan may become available for issuance under the 2011 Plan to the extent that those shares cease to be subject to the awards (such as by expiration, cancellation or forfeiture of the awards) on or after August 24, 2011.

Awards may be granted under the 2011 Plan to employees, officers and directors, as well as advisors, independent contractors and other service providers. Under the 2011 Plan, we may grant incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock awards, restricted stock units, performance shares, performance units and other stock or cash-based awards.

2011 Employee Stock Purchase Plan

On August 24, 2011, our shareholders also approved the Rentrak Corporation 2011 Employee Stock Purchase Plan (the "ESPP") at the Annual Meeting. The ESPP provides a means by which eligible employees are provided an opportunity to purchase shares of our common stock at a discount using payroll deductions, and, for employees in the United States, is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The ESPP authorizes the issuance of up to 100,000 shares of our common stock, subject to adjustment as provided in the ESPP for stock splits, stock dividends, recapitalizations and other similar events.

Cancelation of Performance-Based Stock Appreciation Rights

During the first quarter of Fiscal 2012, the Compensation Committee of our Board of Directors determined that performance requirements relating to vesting of certain stock-based awards would not be achieved. Accordingly, 318,000 performance-based stock option awards and 220,250 stock appreciation rights were cancelled at the direction of our Board of Directors. The cancellation of these awards had no effect on our results of operations.

Deferred Stock Units

In the second quarter of Fiscal 2012, we granted DSUs under our 2011 Plan covering 42,252 shares of our common stock to members of our Board of Directors. These DSUs vest in eleven equal monthly installments. The fair value of these awards totaled $0.6 million and will be recognized over the vesting period of the awards, with approximately $0.4 million to be recognized in Fiscal 2012, of which $55,000 was recognized during the second quarter of Fiscal 2012 and was included in selling and administrative expense on our Condensed Consolidated Statements of Operations.

Option Grants

In the first quarter of Fiscal 2012, we granted options to purchase 250,000 shares of our common stock under our 2005 Plan to certain of our executive officers and other employees. The stock options were granted at the fair market value of our common stock on the dates of grant, which were $26.70 and $19.85 per share, respectively, and expire 10 years from the date of grant. The options vest annually from the date of grant in four equal installments. The value of all stock options granted, as determined using the Black-Scholes valuation model, was $2.7 million and is being recognized over the vesting periods. Approximately $0.7 million will be recognized in Fiscal 2012, of which $0.2 million was recognized during the second quarter of Fiscal 2012 and was included in selling and administrative expense on our Condensed Consolidated Statements of Operations.

We also granted options to purchase 40,000 shares of our common stock to non-employees in connection with internal software development services relating to our Essentials™ line of businesses. The options were granted at the fair market value of our common stock on the dates of grant, which ranged from $17.43 to $22.20 per share, and expire 10 years from the date of grant. The options vest annually from the date of grant in four equal installments and will be revalued at the end of each reporting period until they vest. The value recognized will be capitalized and included in property and equipment, net, in accordance with our policies relating to Capitalized Software as described in Note 2 of Notes to Consolidated Financial Statements in the Form 10-K for the fiscal year ended March 31, 2011. For the three and six months ending September 30, 2011, we capitalized $11,000 and $16,000, respectively, related to these awards.

During the second quarter of Fiscal 2012, we granted options to purchase an aggregate of 20,565 shares of our common stock to an employee and a member of our Board of Directors. The stock options were granted at the fair market values of our common stock on the dates of grant, which were $15.06 and $16.54 per share, respectively, and expire 10 years from the date of grant. The employee options will vest annually from the date of grant in four equal installments. The grant for the member of our Board of Directors will vest in eleven equal monthly installments. The value of the stock options granted, as determined using the Black-Scholes valuation model, was $0.1 million and is being recognized over the vesting periods. Approximately $61,000 will be recognized in Fiscal 2012, of which $9,000 was recognized during the second quarter of Fiscal 2012 and was included in selling and administrative expense on our Condensed Consolidated Statements of Operations.

Stock-Based Compensation

Stock-based compensation in the three and six month periods ended September 30, 2011 included a $0.5 million and a $2.4 million credit for the decrease in value of a stock award related to a compensation agreement entered into in the fourth quarter of Fiscal 2010 with a non-employee in connection with services provided relating to our Essentials™ lines of business. This award is revalued at the end of each reporting period utilizing the Black-Scholes valuation model and any change in value is recognized during the current period as a component of selling and administrative expenses in our Condensed Consolidated Statements of Operations. The decrease in the price of our common stock was the most significant factor in the reduction in value of the stock award in the first half of Fiscal 2012. The fair value of this award at September 30, 2011 and March 31, 2011 was $0.2 million and $2.6 million, respectively, and was recorded as a component of accrued compensation on our Condensed Consolidated Balance Sheets.

Total employee stock-based compensation in the three and six-month periods ended September 30, 2011 was $1.1 million and $2.4 million, respectively, of which $0.1 million and $0.1 million, respectively, was capitalized. These amounts were offset by the $0.5 million and $2.4 million credit, respectively, for non-employee stock-based compensation discussed above, for a net expense related to stock-based compensation of $0.5 million in the three month period ended September 30, 2011 and a benefit of $0.2 million in the six-month period ended September 30, 2011. These amounts have been included in selling and administrative expense on our Condensed Consolidated Statements of Operations.

During the six-month period ended September 30, 2011, we withheld a total of 28,752 shares, with a value of $0.5 million, relating to the net exercise of stock options as payment of the exercise price for such options and related withholding taxes.