Share-Based Compensation

12 Months Ended

Dec. 31, 2012

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

Share-Based Compensation

Share-Based Compensation

MRV records share-based compensation expense in accordance with ASC Topic 718 Compensation - Stock Compensation. The following table summarizes the impact on MRV's results of operations of recording share-based compensation for the years ended December 31, 2012, 2011 and 2010 (in thousands):

	2012		2011		2010
Cost of goods sold		$39		$62	$	40
Product development and engineering	40		118		207
Selling, general and administrative	1,050		2,208		1,532
Total share-based compensation expense (1)		$1,129		$2,388	$	1,779

(1) Income tax benefits realized from stock option exercises and similar awards were immaterial in all periods.

The Company granted 17,736, 95,953 and 240,774 stock options during the years ended December 31, 2012, 2011 and 2010. The related average fair value was $9.65, $20.12 and $18.56 per share. The Company granted restricted shares of 39,326, 5,146 and 6,028 at average fair values of $16.18, $23.62 and $24.82 per share during the years ended December 31, 2012, 2011 and 2010. As of December 31, 2012, the total unrecorded deferred share-based compensation balance for unvested securities, net of expected forfeitures, was $833.2 thousand, which is expected to be amortized over a weighted-average period of 1.4 years.

The following table summarized the activity that relates to the Company's restricted stock awards:

	2012	2011	2010
Restricted stock units at January 1	5,148	5,528	0
Granted	39,326	5,146	6,028
Vested	(5,148)	(5,526)	0
Forfeited	(1,812)	0	(500)
Restricted stock units as of December 31	37,514	5,148	5,528

Valuation Assumptions

MRV uses the Black-Scholes option pricing model to estimate the fair value of stock option awards or related modifications. The Black-Scholes model requires the use of subjective and complex assumptions including the option's expected life and the underlying stock price volatility. MRV expects future volatility to approximate historical volatility. The following weighted average assumptions were used for estimating the fair value of options granted during the year ended December 31, 2012:

Year ended December 31,	2012		2011		2010
Risk-free interest rate	0.8	%	1.9	%	1.6	%
Dividend yield	—		—		—
Volatility	89.0	%	87.0	%	93.9	%
Expected life (in years)	5.5		5.9		5.2

Share-Based Payment Award Activity

The following table summarizes option share-based payment award activity for the one-year period ended December 31, 2012 (in thousands, except per share amounts):

	Shares under option		Weighted average exercise price			Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding, January 1, 2012	591			$	36.33
Granted	18			$	13.60
Exercised	—			$	—
Canceled and forfeited	(186	)		$	36.02
Outstanding, December 31, 2012	423			$	35.52		3.62	$	—
Vested and expected to vest, December 31, 2012	414			$	35.70		3.53	$	—
Exercisable, December 31, 2012	362			$	37.26		2.86	$	—

The aggregate intrinsic value represents the total pre-tax intrinsic value, based on MRV's closing stock price of $10.30 at December 31, 2012, which would have been received by award holders had all award holders exercised in-the-money awards as of that date.

A summary of the Company's nonvested options as of December 31, 2012 (in thousands, except per share amounts):

	Shares under option		Weighted average exercise price
Nonvested options outstanding, January 1, 2012	163			$	26.60
Granted	18			$	13.60
Vested	(63	)		$	25.38
Canceled and forfeited	(57	)		$	25.42
Nonvested outstanding, December 31, 2012	61			$	25.18

The following table summarizes significant ranges of outstanding and exercisable options at December 31, 2012:

Range of Exercise prices	Options outstanding as of December 31, 2012	Weighted average remaining contractual life (years)	Weighted average exercise price		Options exercisable as of December 31, 2012	Weighted average exercise price of exercisable options
$13.60 - $22.20	31,158	5.04	$	16.84	20,388	$	18.48
$23.80 - $23.80	54,523	4.74	$	23.80	39,275	$	23.80
$25.00 - $25.00	87,500	2.93	$	25.00	87,500	$	25.00
$27.60 - $27.60	49,147	6.31	$	27.60	27,414	$	27.60
$29.00 - $33.20	50,014	4.89	$	31.41	38,598	$	31.28
$34.60 - $48.80	53,747	2.32	$	42.93	52,060	$	43.20
$51.20 - $54.80	45,015	2.75	$	50.91	45,015	$	52.91
$55.00 - $73.40	45,439	1.02	$	64.37	45,439	$	64.37
$74.00 - $76.40	4,650	1.03	$	74.85	4,650	$	74.85
$79.20 - $79.20	1,400	3.25	$	79.20	1,400	$	79.20
$13.60 - $79.20	422,593	3.62	$	33.52	361,739	$	37.26

The following table summarizes certain stock option exercise activity during the periods presented (in thousands):

	2012		2011		2010
Total intrinsic value of stock options exercised	$	—	$	139	$	481
Cash received from stock options exercised	$	—	$	234	$	995