Share-Based Compensation

9 Months Ended

Sep. 30, 2016

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

MRV records share-based compensation expense at fair value. The following table summarizes the impact on MRV's results of operations of recording share-based compensation for the three and nine months ended September 30, 2016 and 2015 (in thousands):



	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Cost of goods sold	$	39	$	35	$	109	$	90
Product development and engineering	24		68		163		161
Selling, general and administrative	346		213		834		507
Total share-based compensation expense (1)	$	409	$	316	$	1,106	$	758


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

No stock options or restricted shares were granted during the three months ended September 30, 2016. During the nine months ended September 30, 2016, the Company granted 240,039 stock options with a related fair value of $4.86 per option and 88,869 restricted shares with a related fair value $10.95 per share.

During the three months ended September 30, 2015, the Company granted 31,000 stock options with a related fair value of $5.28 per option and 11,000 restricted shares with a related fair value of $12.12 per share. During the nine months ended September 30, 2015, the Company granted 228,848 stock options with a related fair value of $4.31 per option and 82,872 restricted shares with a related fair value of $9.96 per share.

As of September 30, 2016, the total unrecognized share-based compensation balance for unvested options, net of expected forfeitures, was $2.4 million and is expected to be amortized over a weighted-average period of 2.0 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.



Nine months ended September 30,	2016		2015
Risk-free interest rate	1.4	%	1.7	%
Dividend yield ₍₁₎	—		—
Volatility	46	%	43	%
Expected life (in years)	5.9		6.0


(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.

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