Share Based Payments

3 Months Ended

Mar. 31, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share Based Payments

5. Share Based Payments

The Company’s 2005 Stock Plan is the only existing equity compensation plan from which the Company may make equity-based awards to employees, directors and consultants. The maximum number of shares that may be issued under the 2005 Stock Plan is approximately 4.9 million shares. Shares subject to outstanding awards under the 2005 Stock Plan totaled 2.4 million as of March 31, 2014. At March 31, 2014, there were 1.0 million shares remaining available for grant under the 2005 Stock Plan.

The Company uses the Black-Scholes option pricing model to measure the fair value of its option awards. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The expected life assumption is based on the limited exercise historical experience at the Company, management’s expectations based on the length of time that an employee will stay at the Company, the vesting period of four years and the contractual term of ten years. The Company estimates volatility using a blended approach encompassing: (i) Historical experience and peer group (including industry, size, life cycle and financial leverage), and (ii) Implied volatility from publicly traded options with the longest available contractual terms. The risk-free interest rate is based on the U.S. Treasury zero coupon rate with a remaining term approximating the expected term used as the input to the Black-Scholes option pricing model.

The Company also maintains an Employee Stock Purchase Plan (the ESPP), which allows eligible employees to use payroll deductions to purchase shares of the Company’s common stock at a discount of 15% to the lesser of the fair market value of the Company’s stock on (i) the date on which an employee elects to participate in the ESPP and (ii) the closing price on the last day of the ESPP option period. The plan is considered a compensatory employee stock purchase plan, results in incremental stock-based compensation expense in future periods. Option periods under the ESPP run from January 1 to June 30 and July 1 to December 31 of each year.

A summary of stock option activity under all equity plans for the three months ended March 31, 2014 is as follows:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2013		2,710		$	34.05
Options granted		100			97.93
Options exercised		(202	)		14.71
Options canceled or expired		(34	)		46.61
Outstanding at March 31, 2014		2,574		$	37.88

The Company recognized stock-based compensation expense on all stock option awards for the three months ended March 31, 2014 and 2013, as follows:

	Three Months Ended March 31,
	2014		2013
Research and development	$	1,467	$	664
Selling, general and administrative		1,714		1,052
	$	3,181	$	1,716