Equity

6 Months Ended

Mar. 31, 2012

Equity [Abstract]

Equity [Text Block]

Equity

Reverse Stock Split

See Footnote 1 - Basis of Presentation for disclosures related to our four-to-one reverse common stock split.

Equity Plans

We provide long-term incentives to eligible officers, directors, and employees in the form of equity-based awards.  We maintain three equity incentive compensation plans, collectively described below as our Equity Plans:

• the 2000 Stock Option Plan (2000 Plan),

• the 2010 Equity Incentive Plan (2010 Equity Plan),

• the 2012 Equity Incentive Plan (2012 Equity Plan).

The 2000 Plan expired in February 2010 and no additional shares are available for grant under this plan. However certain stock options issued under the 2000 Plan are still outstanding and exercisable.

The total number of stock-based awards that may be granted under the 2010 Equity Plan is 1,750,000 stock-based awards.

On March 9, 2012, our shareholders approved the 2012 Equity Plan at our 2012 Shareholder Annual Meeting and authorized the reservation of 1,000,000 shares of EMCORE common stock for issuance under the 2012 Equity Plan. Employees, non-employee directors and consultants of EMCORE and its subsidiaries will be eligible to receive awards of EMCORE common stock, stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, or stock purchase rights at the Compensation Committee's discretion.

We issue new shares of common stock to satisfy awards issued under our Equity Plans.

Stock Options

Most of our stock options vest and become exercisable over four to five years and have a contractual life of ten years. Certain stock options awarded are intended to qualify as incentive stock options pursuant to Section 422A of the Internal Revenue Code. The following tables summarize the activity related to stock options under the Stock Plans:

Stock Option Activity	Number of Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)
Outstanding as of September 30, 2011	2,259,197		$17.76	6.43
Granted	8,613		$4.22
Exercised	(4,480	)	4.76
Forfeited	(39,039	)	$10.24
Cancelled	(57,477	)	$18.50
Outstanding as of March 31, 2012	2,166,814		$17.85	5.94
Exercisable as of March 31, 2012	1,512,766		$21.01	5.24
Vested and expected to vest as of March 31, 2012	2,098,849		$18.21	5.86

As of March 31, 2012, there was approximately $1.4 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested stock options granted under the Stock Plans which is expected to be recognized over an estimated weighted average life of 1.8 years.

Intrinsic value for stock options represents the “in-the-money” portion or the positive variance between a stock option's exercise price and the underlying stock price. The total intrinsic value related to stock options exercised during the six months ended March 31, 2012 was approximately $3,000. The intrinsic value related to fully vested and expected to vest stock options as of March 31, 2012 was approximately $119,000. The intrinsic value related to exercisable stock options as of March 31, 2012 was approximately $37,000.

Restricted Stock

Restricted stock awards (RSAs) and restricted stock units (RSUs) granted under the 2010 Equity Plan and 2012 Equity Plan typically vest over three years and are subject to forfeiture if employment terminates prior to the lapse of the restrictions. RSAs are considered issued and outstanding shares on the grant date and have the same dividend and voting rights as other common stock. RSUs are not considered issued or outstanding common stock until they vest. The following table summarizes the activity related to RSAs and RSUs:

Restricted Stock Activity	Restricted Stock Awards			Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2011	410,650		$5.80	308,048		$6.20
Granted	—		—	806,134		$3.88
Vested	(128,665	)	$5.68	(192,448	)	$3.84
Cancelled	(15,146	)	$5.68	(34,964	)	$4.72
Non-vested as of March 31, 2012	266,839		$5.87	886,770		$4.66

Restricted stock awards: As of March 31, 2012, there was approximately $1.2 million of remaining unamortized stock-based compensation expense, net of estimated forfeitures, associated with RSAs, which will be expensed over a weighted average remaining service period of approximately 1.8 years.

Restricted stock units: As of March 31, 2012, there was approximately $3.0 million of remaining unamortized stock-based compensation expense, net of estimated forfeitures, associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 2.6 years. Of the total outstanding non-vested RSUs, approximately 750,000 RSUs are expected to vest and have an aggregate intrinsic value of approximately $3.6 million and a weighted average remaining contractual term of 1.5 years. The total outstanding non-vested RSUs have an aggregate intrinsic value of approximately $4.2 million and a weighted average remaining contractual term of 1.6 years.

Stock Option Valuation Assumptions

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach using the following weighted-average assumptions. The option-pricing model requires the input of highly subjective assumptions, including the option's expected life and the price volatility of the underlying stock. The weighted-average grant date fair value of stock options granted during the three and six months ended March 31, 2012 was $3.46 and $3.23, respectively. The weighted-average grant date fair value of stock options granted during the three and six months ended March 31, 2011 was $6.32 and $3.52, respectively.

Black-Scholes Weighted Average Assumptions	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2012		2011		2012		2011
Expected dividend yield	—	%	—	%	—	%	—	%
Expected stock price volatility	103.9	%	101.0	%	105.2	%	98.6	%
Risk-free interest rate	1.0	%	1.9	%	0.9	%	1.4	%
Expected term (in years)	5.0		4.7		5.0		4.9

Employee Stock Purchase Plan

At the 2012 Annual Meeting, our shareholders approved an amendment to our 2000 Employee Stock Purchase Plan (ESPP) that increased the total number of shares of common stock on which options may be granted under the ESPP by 500,000, from a prior limit of 1,750,000 shares to a new limit of 2,250,000 shares.

Stock-based compensation

The effect of recording stock-based compensation expense was as follows:

Stock-based Compensation Expense (in thousands, except per share data)	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2012			2011			2012			2011
Stock-based compensation expense by award type:
Employee stock options	$	1,088		$	1,039		$	2,135		$	1,721
Restricted stock awards and units	946			90			1,521			90
Employee stock purchase plan	189			77			413			212
401(k) match in common stock	245			231			475			464
Outside director fees	74			51			178			124
Total stock-based compensation expense	$	2,542		$	1,488		$	4,722		$	2,611
Stock-based compensation expense by expense category:
Cost of revenue	$	593		$	236		$	1,069		$	453
Selling, general, and administrative	1,233			925			2,246			1,556
Research and development	716			327			1,407			602
Total stock-based compensation expense	$	2,542		$	1,488		$	4,722		$	2,611
Net effect on net loss per basic and diluted share	$	(0.11	)	$	(0.07	)	$	(0.20	)	$	(0.12	)

Loss Per Share. Our loss per share amounts were calculated by dividing net loss applicable to common stock by the weighted average number of common stock shares outstanding for the period and it is presented in the accompanying condensed consolidated statements of operations and comprehensive loss. For the three and six months ended March 31, 2012, stock options representing 2,166,814 shares of common stock, restricted stock units representing 886,770 shares of common stock, and warrants representing 750,010 shares of common stock were excluded from the computation of diluted earnings per share since we incurred a net loss for these periods and any effect would have been anti-dilutive. For the three and six months ended March 31, 2011, stock options representing 2,264,496 shares of common stock and warrants representing 750,010 shares of common stock were excluded from the computation of diluted earnings per share since we incurred a net loss for these periods and any effect would have been anti-dilutive.

Future Issuances

As of March 31, 2012, we had common stock reserved for the following future issuances:

Future Issuances	Number of Common Stock Shares Available for Future Issuances
For future exercise of outstanding stock options	2,166,814
For future issuances to employees under the employee stock purchase plan	900,956
For future stock-based awards under the Equity Plans	1,043,005
For future exercise of warrants	750,010
For future issuance under the officer and director share purchase plan	101,401
Total reserved	4,962,186