Share Based Compensation

12 Months Ended

Oct. 31, 2011

Share-based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Share Based Compensation

Versant accounts for share-based compensation costs in accordance with ASC 718, Compensation, Stock Compensation. The Company utilizes the Black-Scholes option pricing model to estimate the fair value of employee stock option compensation at the date of grant.

Versant bases the expected term of its options on historical exercise data, while considering other factors that could possibly impact the future life of the options. As of October 31, 2011, the Company determined that the estimated expected life of an employee share option granted under the Company's Equity Incentive Plan was 4.2 years. The expected life for the options granted under the Directors' Plans to the board members who are not full time employees of Versant is 5.75 years. Versant used the simplified method allowed by SEC Staff Accounting Bulletin Nos.107 and 110 to arrive at this calculation. Under the simplified method,the expected term is equal to vesting term plus original contractual term divided by two. As of October 31, 2011, Versant uses historical volatility as the best estimate of the future volatility of its common stock.

Versant does not expect to realize any current tax benefits in fiscal year 2011 related to stock options or shares issued under its ESPP. Versant currently provides a full valuation allowance for its domestic deferred tax assets and accordingly, a valuation allowance is also provided for any tax effects of share based compensation expense.

The fair values of each option granted and each share issued under the ESPP are estimated on the date of grant, using the Black-Scholes Option Pricing Model, based on the following weighted average assumptions:
	Stock Options			ESPP
	Fiscal Year Ended October 31,			Fiscal Year Ended October 31,
	2011	2010	2009	2011	2010	2009
Assumptions:
Volatility	46% - 53%	53% - 65%	56% - 73%	23% - 31%	33% - 42%	59% - 65%
Expected life	3.6 - 5.75 years	3.3 - 5.75 years	2.4 - 5.75 years	6 - 12 months	6 - 12 months	6 - 12 months
Weighted average risk-free interest rate	1.14% - 1.95%	1.43% - 1.87%	.82% - 2.58%	0.10% - 0.28%	0.15% - 0.35%	0.29% - 0.45%
Dividend yield	—	—	—	—	—	—

Share based compensation expense recognized in the consolidated statements of income related to the Company’s stock option plans and the ESPP for fiscal years 2011, 2010 and 2009 was as follows (in thousands):
	Fiscal Year Ended October 31,
	2011		2010		2009
Share based compensation expense:
Stock options	$	932	$	1,022	$	933
ESPP	57		45		37
Total	$	989	$	1,067	$	970

Share based compensation recognized in the consolidated statements of income, by income statement caption, was as follows (in thousands):
	Fiscal Year Ended October 31,
	2011		2010		2009
Share based compensation expense:
Cost of revenues	$	64	$	76	$	59
Sales and marketing	255		224		137
Research and development	207		232		218
General and administrative	463		535		556
Total	$	989	$	1,067	$	970

Note 11. Share Based Compensation (Continued)

The following table summarizes significant ranges of outstanding and exercisable options as of October 31, 2011:
	As of October 31, 2011
	Options Outstanding								Options Exercisable
	Number of Options (in thousands)			Weighted average remaining life (in years)		Weighted average exercise price			Number of Options (in thousands)			Weighted average remaining life (in years)		Weighted average exercise price
Exercise Prices:
From $3.00 - $11.12		107			4.39		$	8.69		107			4.39		$	8.69
From $11.13 - $11.81		134			8.33		11.81			48			7.03		11.81
From $11.82 - $15.06		135			6.62		13.26			113			6.18		13.19
From $15.07 - $18.80		145			6.74		18.42			108			6.28		18.33
From $18.81 - $30.50		130			5.03		22.50			130			5.03		22.50
		651			6.32		$	15.20		506			5.61		$	15.59
Options expected to vest as of October 31, 2011		638
Aggregate intrinsic value of options (in thousands)		$	327							$	327
Aggregate intrinsic value of shares expected to vest (in thousands)		$	327

The aggregate intrinsic value of stock options outstanding and exercisable, and vested or expected to vest, at October 31, 2011 was based on the closing price of our common stock on October 31, 2011 of $11.75 per share.

The summary of the status of Versant's nonvested shares as of October 31, 2011 and changes during the fiscal year ended October 31, 2011 is as follows:

	Shares (in thousands)			Weighted average  grant date fair value
Nonvested shares:
Nonvested shares as of October 31, 2010		167			$	6.81
Granted		177			4.73
Vested		(163	)		5.60
Forfeited		(16	)		5.25
Nonvested shares as of October 31, 2011		165			$	5.47

Additional information related to the fair value of Versant's stock options as of October 31, 2011, 2010 and 2009 is as follows (in thousands, except for per share amounts):

	Fiscal Year Ended October 31,
	2011		2010		2009
Weighted average grant date fair value of options granted (per share)	$	4.73	$	7.23	$	5.52
Total value of options granted	$	837	$	1,183	$	844
Total fair value of shares vested	$	913	$	1,030	$	898
Total intrinsic value of options exercised	$	63	$	8	$	89

Note 11. Share Based Compensation (Continued)

The total unrecognized compensation costs related to nonvested options were $813,000 at October 31, 2011 and will be recognized over a weighted average period of approximately 1.5 years. Future stock option grants and the intrinsic value of ESPP shares will increase the unrecognized compensation, whereas quarterly amortization and the vesting of the existing stock option grants will reduce it.