Share-Based Compensation

6 Months Ended

Jun. 30, 2014

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

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 three and six months ended June 30, 2014 and 2013 (in thousands):



	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of goods sold	$	33	$	26	$	53	$	43
Product development and engineering	50		15		73		25
Selling, general and administrative	245		42		349		234
Total share-based compensation expense (1)	$	328	$	83	$	475	$	302


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

The Company granted 173,722 stock options during the three months ended June 30, 2014 and the related fair value was $7.16 per option. The Company granted 85,907 restricted shares during the three months ended June 30, 2014 and the related fair value was $14.40 per share. The Company granted 80,242 stock options during the three months ended June 30, 2013 and the related fair value was $4.89 per share. The Company granted 90,387 restricted shares during the three months ended June 30, 2013 and the related fair value was $9.99 per share. No options and restricted shares were granted during the three months ended March 31, 2014, and 2013. As of June 30, 2014, the total unrecognized share-based compensation balance for unvested securities, net of expected forfeitures, was $1.9 million, which is expected to be amortized over a weighted-average period of 2.4 years.

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 bases volatility on the Company's historical quoted prices and peer company data. The following weighted average assumptions were used for estimating the fair value of options granted during the six months ended June 30, 2014 and the options modified during the six months ended June 30, 2013, respectively.




Six months ended June 30,	2014		2013
Risk-free interest rate	2.0	%	1.2	%
Dividend yield ₍₁₎	—		—
Volatility	51	%	52	%
Expected life (in years)	5.9		5.7


(1)	As the Company does not pay a dividend on a regular basis, and dividends paid in the past have been special in nature, a dividend rate of zero was used.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details