Share-Based Compensation

3 Months Ended

Mar. 31, 2017

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

Share-Based Compensation

Share-Based Compensation

MRV records share-based compensation expense based on fair value at the grant date. The following table summarizes the impact on MRV's results of operations of recording share-based compensation for the three months endedMarch 31, 2017 and 2016 (in thousands):

	Three months ended
	March 31,
	2017		2016
Cost of goods sold	$	15	$	42
Product development and engineering	59		76
Selling, general and administrative	341		229
Total share-based compensation expense (1)	$	415	$	347

(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 endedMarch 31, 2017 and 2016.

As of March 31, 2017, the total unrecognized share-based compensation balance for unvested options, net of expected forfeitures, was $2.0 million and is expected to be amortized over a weighted-average period of 1.6 years.

Valuation Assumptions

MRV uses the Black-Scholes option pricing model to estimate the fair value of stock option awards. 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 expected term of options granted is based on the simplified method, using the mid-point between the vesting term and the original contractual term. The risk free interest rate is determined based on U.S. Treasury yields with equivalent remaining terms in effect at the time of the grant.