Enom 2014 Annual Report Download - page 88

F-24
Our policy for recording interest and penalties associated with audits and uncertain tax positions is to record such items as a
component of income tax expense, and amounts recognized to date are insignificant. No uncertain income tax positions were recorded
during 2014 or 2013 and we do not expect its uncertain tax position to change during the next twelve months.
The aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
Year ended December 31,
2014 2013
Beginning balance .................................................................................................................................. $ 85 $ 85
Gross increase in unrecognized tax benefits - prior year tax position .......................................... — —
Ending balance ....................................................................................................................................... $ 85 $ 85
We file a U.S. federal and many state tax returns. The tax years 2007 to 2014 remain subject to examination by the Internal
Revenue Service (“IRS”) and most tax years since our incorporation are subject to examination by various state authorities. Tax year
2012 is currently under examination by the IRS.
10. Employee Benefit Plan
We have a defined contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) covering all full-time
employees who meet certain eligibility requirements. Eligible employees may defer up to 90% of their pre-tax eligible compensation,
up to the annual maximum allowed by the Internal Revenue Service. Under the 401(k) Plan, we may, but are not obligated to, match a
portion of the employee contributions up to a defined maximum. We made matching contributions of $1.7 million and $2.0 million for
the year ended 2014 and 2013, respectively. We did not make any matching contributions for the years ended December 31, 2012.
11. Stock-based Compensation Plans and Awards
Stock Incentive Plans
Under our 2010 Incentive Award Plan (the “2010 Plan”), the Administrator of the 2010 Plan, which is the compensation
committee of our board of directors, may grant up to 3.1 million stock options, restricted stock, restricted stock unit and other
incentive awards to employees, officers, non-employee directors, and consultants, and such options or awards may be designated as
incentive or non-qualified at the discretion of the Administrator. In connection with the adoption of the 2010 Plan on August 5, 2010,
0.06 million stock-based awards then available for grant under the 2006 Plan were canceled. Any stock-based awards outstanding
under the 2006 Plan when the 2010 Plan was adopted that subsequently are forfeited, expire or lapse are available for future grants
under the 2010 Plan. In addition, awards available for grant under the 2010 Plan shall be increased on an annual basis as of January 1st
of each fiscal year by an amount equal to the lesser of (i) 1.2 million (ii) 5% of the total shares outstanding as of the end of the prior
fiscal year and (iii) such lesser amount as determined by the Administrator of the 2010 Plan. As of December 31, 2014, 2.5 million
stock-based awards were available for future grant under the 2010 Plan. Generally, stock option grants have 10-year terms and
employee stock options vest 1/4th on the anniversary of the vesting commencement date and 1/48th monthly thereafter, over a 4-year
period, but the Administrator has recently granted stock options that vest over a 3-year period with 1/3rd vesting on the anniversary of
the vesting commencement date and 1/36th monthly thereafter. Restricted stock unit awards generally vest either annually or quarterly
over a 3 or 4-year period, depending on the terms established by the Administrator at the time of grant after considering the
recommendation of management. Certain stock options and restricted stock awards have accelerated vesting provisions in the event of
a change in control.
Valuation of Awards
The per share fair value of stock options granted with service and/or performance conditions was determined on the date of
grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions:
Year ended December 31,
2014 2013 2012(1)
Expected life (in years) ........................................................................................................... 5.89 5.50 NA
Risk-free interest rate .............................................................................................................. 1.82 % 0.83% NA
Expected volatility range ........................................................................................................ 54.1 % 51% NA
Expected dividend yield .......................................................................................................... — — NA
(1) We did not grant any stock options to employees during the year ended December 31, 2012.