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Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2008, 2009 and 2010
NOTE 12: SHARE BASED PAYMENT (Continued)
Restricted Stock
During the year ended December 31, 2008 the Company issued 0.5 million shares of restricted stock in connection with the Skylight
acquisition. The fair value of these shares was not included in the Skylight purchase price, and is being recognized as compensation expense on
a straight-line basis as the forfeiture restrictions lapse over three to five year time periods.
The Company did not issue any restricted stock during the year ended December 31, 2009.
During the year ended December 31, 2010, the Company issued 0.7 million shares of restricted stock to its employees that vest annually
over three or four year periods. Upon completion of the Company's initial public offering, the vesting of 0.3 million restricted shares
accelerated to vest on the date six months following the completion of the initial public offering.
Activity related to the Company's restricted stock awards during the year ended December 31, 2010 is as follows:
Stock-Based Compensation Expense
During the years ended December 31, 2008, 2009 and 2010, the Company recorded total stock-based compensation expense of
$2.5 million, $4.5 million and $7.3 million, respectively.
At December 31, 2010, the Company's outstanding options had a weighted average remaining contractual term of 7.8 years. As of
December 31, 2010, unrecognized compensation cost related to stock options amounted to $13.7 million and is expected to be recognized over
a weighted average period of 1.8 years. At December 31, 2010, unrecognized stock-based compensation cost related to restricted stock
amounted to $2.6 million and is expected to be recognized over a weighted average period of 2.2 years. The amount of unrecognized stock-
based compensation will be affected by any future stock option or restricted stock grants.
The Company considers the type of awards, employee class and historical experience in estimating the annual forfeiture rate. The
following table summarizes the Company's estimated annualized forfeiture rates for the years ended December 31, 2008, 2009 and 2010:
92
Shares of Unvested
Restricted Stock
Outstanding
Weighted Average
Grant Date
Fair Value
Balance at December 31,
2009
262,073
$
3.47
Granted
674,043
5.76
Vested
(215,050
)
3.47
Forfeited
(30,703
)
3.62
Balance at December 31,
2010
690,363
$
5.70
2008 2009 2010
Executive Officer level
3.0
%
8.0
%
9.0
%
Vice President and Director level
10.0
%
10.0
%
15.0
%
Below Director level
23.6
%
12.5
%
12.5
%