Stockholders' Equity

12 Months Ended

Mar. 31, 2012

Stockholders' Equity Attributable to Parent [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Repurchase Program

In January 2006, our Board of Directors authorized the repurchase of up to 1.0 million shares of our common stock. As of March 31, 2012, 276,633 remained available for repurchase under this plan at a per share price not to exceed $12.75. This plan does not have an expiration date. In addition, in May 2011, our Board of Directors authorized a one-year share repurchase program for up to $5.0 million of our outstanding common stock. Common stock repurchases may be made from time to time in the open market at prevailing market prices or through privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, regulatory requirements and alternative investment opportunities.

We repurchased the following shares pursuant to these plans in the last three fiscal years:

	Number Repurchased	Average Price Per Share		Total Price
Fiscal 2012	304,922	$	14.24	$	4.3	million
Fiscal 2011	—	—		—
Fiscal 2010	29,850	$	10.13	$	0.3	million
	334,772	$	13.87	$	4.6	million

At March 31, 2012, $0.7 million remained available for repurchase under the May 2011 plan. However, no additional shares were repurchased pursuant to this program before it expired in May 2012.

Stock-Based Compensation

Certain information regarding our stock-based compensation was as follows (in thousands, except per share amounts):

	Year Ended March 31,
	2012		2011		2010
Weighted average grant-date per share fair value of stock options granted	$	7.85	$	11.16	$	6.07
Weighted average grant-date per share fair value of SSARs, RSUs, DSUs and SARs	14.20		22.00		8.49
Total intrinsic value of stock options exercised	1,861		10,845		1,387
Stock-based compensation recognized in results of operations as a component of selling and administrative expense	5,118		6,714		2,361
Stock-based compensation capitalized as a component of property and equipment	362		474		36
Cash received from options exercised and shares purchased under all share-based arrangements(1)	262		1,836		1,043
Tax deduction related to stock options exercised	102		1,253		461

(1) During Fiscal 2012, 2011 and 2010, we withheld $1.0 million, $3.4 million and $75,000, respectively, in shares to satisfy employment taxes on stock option exercises as well as the payment of the exercise price of stock options.

We use the Black-Scholes model to measure the grant-date fair value of employee stock options and shares associated with our Employee Stock Purchase Plan. We also use the Black-Scholes model to determine the fair value of our non-employee option grants on a periodic basis. Those calculations used the following assumptions for the years ended March 31:

	Employee Stock Options			Employee Stock Purchase Plan	Non-Employee Options
Year Ended March 31,	2012	2011	2010	2012	2012	2011	2010
Risk-free interest rate	1.39% - 5.19%	0.22% - 3.04%	1.67% - 2.75%	0.06%	0.01% - 3.17%	0.01% - 0.29%	0.26%
Expected dividend yield	0%	0%	0%	0%	0%	0%	0%
Expected lives	3.6 - 7.4 years	1.3 - 6.4 years	3.8 - 6.0 years	0.5 years	0.01 - 9.96 years	0.01 - 0.93 years	0.85 years
Expected volatility	35.23% - 44.19%	34.84% - 40.46%	32.96% - 37.59%	77.48%	34.97% - 94.23%	34.97% - 94.23%	39.45%

The risk-free rate used is based on the United States Treasury yield over the estimated term of the options granted. The expected term for each grant is estimated based on our historical experience with similar awards. The expected volatility for options granted is calculated based on our historical volatility for a period matching the term of the grant. We have not paid dividends in the past and we do not expect to pay dividends in the future and, therefore, the expected dividend yield is 0%.

We amortize stock-based compensation for stock options on a straight-line basis over the vesting period of the individual award, which is the requisite service period. For RSUs, we amortize stock-based compensation over the requisite service periods for each tranche, which is determined based on the median time horizon over which the tranche is estimated to vest. We have not reduced the stock-based compensation for estimated forfeitures as there is no basis for estimating future forfeitures as most unvested awards are held by members of senior management and the non-employee directors. 

Shares to be issued under stock-based awards will come from authorized but unissued shares.

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 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 advisers, 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.

As of March 31, 2012, awards covering 2,677,855 shares of our common stock remained available for grant under our 2011 Plan and 5,084,036 shares of our common stock were reserved for issuance pursuant to the 2011 Plan and the Prior Incentive Plan combined.

Fiscal 2012 Stock Option Activity

Stock option activity for Fiscal 2012 was as follows:

	Options Outstanding(1)		Weighted Average Exercise Price
Outstanding at March 31, 2011	1,685,656		$	18.55
Granted	690,565		18.51
Exercised	(158,308	)	6.31
Forfeited	(339,000	)	13.01
Outstanding at March 31, 2012	1,878,913		$	20.57

(1) Options outstanding includes performance based awards discussed below.

Certain information regarding options outstanding as of March 31, 2012 was as follows:

	Options Outstanding	Options Exercisable
Number	1,878,913	407,273
Weighted average exercise price	$20.57	$14.90
Aggregate intrinsic value	$38.6 million	$6.1 million
Weighted average remaining contractual term	8.2 years	5.9 years

Performance-Based Stock Options

In Fiscal 2010, we granted 109,750 performance-based stock options to three employees. These options vest based on the achievement of certain financial targets over three years. The options have exercise prices ranging between $15.44 and $20.89 per share. The fair value of the options is $0.7 million and was calculated using the Black-Scholes valuation model. On April 7, 2011, 41,000 of these options were canceled at the direction of our Board of Directors because the performance goals had not been met. As of March 31, 2012, no compensation cost had been recognized for the remaining options and, on May 23, 2012, an additional 31,250 of the options were canceled at the direction of our Board of Directors because the performance goals had not been met.

In Fiscal 2009, we granted performance-based nonqualified stock options exercisable for a total of 277,000 shares of our common stock to 15 employees. The options had an exercise price of $11.10 per share and were subject to vesting provisions based on attaining certain performance goals. No compensation cost was ever recognized for these awards and they were canceled at the direction of our Board of Directors on April 7, 2011.

Deferred Stock Units

DSU activity for Fiscal 2012 was as follows:

	DSUs Outstanding	Weighted Average Grant Date Fair Value
Outstanding at March 31, 2011	103,020	$	15.15
Granted	42,252	14.20
Issued	—	—
Forfeited	—	—
Outstanding at March 31, 2012(1)	145,272	$	14.88

⁽¹⁾  Of the 145,272 DSUs outstanding at March 31, 2012, 115,406 were vested, but not issued. The DSUs are not issued until the director holding such DSUs retires from the Board.

During the second quarter of Fiscal 2011, in connection with the departure of two members of our Board of Directors, we accelerated the vesting of their DSU awards representing a total of 24,750 shares. We recognized $0.5 million of compensation expense related to these accelerations, which was included in selling and administrative expense in our Consolidated Statements of Operations.

Restricted Stock Units

RSU activity for Fiscal 2012 was as follows:

	RSUs Outstanding	Weighted Average Grant Date Fair Value per RSU
Outstanding at March 31, 2011	238,816	$	8.64
Granted	—	—
Vested and issued	—	—
Forfeited	—	—
Outstanding at March 31, 2012(1)	238,816	$	6.08

(1) Change in weighted average grant date fair value per RSU as of March 31,2012 reflects revaluation of the outstanding awards as of the modification date of November 2011.

All of the outstanding RSUs vest based on meeting certain performance and market conditions. In Fiscal 2011, 237,280 RSUs vested upon achieving one of the conditions related to the trading price of our common stock. We recognized $0.4 million of additional compensation expense, included in selling and administrative expense, as the awards vested prior to the completion of the initially estimated requisite service period. In conjunction with the issuance of shares in settlement of these RSUs, we withheld 84,173 shares to pay the associated withholding taxes on behalf of the employees.

In November 2011, Mr. Livek’s and Mr. Chemerow’s employment agreements were amended to extend the terms of the agreements and to modify the termination related provisions under certain circumstances. The fair value of the modifications to the RSU awards was estimated to be $0.6 million, based on a Monte Carlo simulation, and will be recognized over the requisite service period.

Stock-Settled Stock Appreciation Rights

SSARs activity for Fiscal 2012 was as follows:

	SSARs Outstanding	Weighted Average Base Price		Weighted Average Grant Date per SSAR Fair Value
Outstanding at March 31, 2011	75,000	$	14.50	$	5.33
Granted	—	—		—
Issued	—	—		—
Forfeited	—	—		—
Outstanding at March 31, 2012	75,000	$	14.50	$	5.33

Stock-Based Compensation Agreement with Non-Employees

During the fourth quarter of Fiscal 2010, we entered into a compensation agreement with a non-employee in connection with services provided relating to our Entertainment Essentials™ lines of business. This award has a strike price of $15.48 and vests in equal annual installments over a three-year period, subject to certain restrictions. Each annual payment will be based on the increase in stock price from the base price multiplied by 200,000 and will be settled in cash. Vesting of the award is accelerated under certain conditions.

We utilized the Black-Scholes valuation model to determine the fair value of this award at the end of each reporting period, with the change in value being recognized during the current period. Annual installments which have vested totaled 200,000 and 400,000, respectively, resulting in a fair value of this award at March 31, 2012 and 2011 of approximately $3.2 million and $2.6 million, respectively, which was recorded as a component of accrued compensation on our Consolidated Balance Sheets. The increase in value of this award during Fiscal 2012 is the result of the additional amount which vested during Fiscal 2012, offset by the decrease in the price of our common stock.

In the first quarter of Fiscal 2012, we granted options to purchase 40,000 shares of our common stock to non-employees in connection with internal software development services related to our Entertainment Essentials™ lines of business. 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, plant and equipment, net, in accordance with our policies relating to Capitalized Software as described in Note 2. For the year ended March 31, 2012, we capitalized $0.1 million related to these awards.

Unrecognized Stock-Based Compensation Expense

As of March 31, 2012, the unrecognized compensation expense related to unvested stock-based awards, exclusive of the performance-based awards not currently expected to vest, was $10.4 million, and will be recognized over the weighted average remaining vesting period of 3.0 years.

2011 Employee Stock Purchase Plan

On August 24, 2011, our shareholders 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. As of March 31, 2012, no shares have been issued pursuant to the ESPP. We have received a total of $0.2 million in cash for the purchase of the shares and have recorded this amount as a component of accrued compensation on our Consolidated Balance Sheets.

Shareholders’ Rights Plan

In May 2005, our Board of Directors approved a replacement shareholders’ rights plan designed to ensure that all of our shareholders receive fair and equal treatment in the event of certain proposals to acquire control of Rentrak. Under the rights plan, each shareholder received a dividend of one right for each share of our outstanding common stock, entitling the holders to purchase common stock having a market value equal to twice the exercise price. The rights become exercisable after any person or group acquires 15% or more of our outstanding common stock, or announces a tender offer which would result in the offeror becoming the beneficial owner of 15% or more of our outstanding common stock. Prior to the time that a person or group acquires beneficial ownership of 15% or more of our outstanding common stock, the Board of Directors, at their discretion, may amend the rights plan, redeem the rights for $0.001 per right or waive application of the rights plan with respect to a merger or other acquisition of Rentrak. This rights plan expires May 18, 2015.