Rosetta Stone 2009 Annual Report Download - page 102

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Table of Contents
ROSETTA STONE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. STOCK-BASED COMPENSATION (Continued)
Restricted Stock—The following table summarizes the Company's restricted stock activity for the year ended December 31, 2009:
Nonvested
Outstanding
Weighted
Average
Grant Date
Fair Value
Aggregate
Fair
Value
Nonvested Awards, January 1, 2009 — — $ —
Awards granted 191,468 18.72
Awards vested —
Awards cancelled (11,666) 19.55
Nonvested Awards, December 31, 2009 179,802 18.67 3,356,903
During 2009, 191,468 shares of restricted stock were granted. The aggregate grant date fair value of the awards was $3.6 million, which will be
recognized as expense on a straight-line basis over the requisite service period of the awards, which is also the vesting period. The Company's restricted stock
grants are accounted for as equity awards. The grant date fair value is based on the market price of the Company's common stock at the date of grant. The
Company did not grant any restricted stock prior to April 2009.
Restricted stock awards are considered outstanding at the time of grant as the stock holders are entitled to voting rights and to receive any dividends
declared subject to the loss of the right to receive accumulated dividends if the award is forfeited prior to vesting. Unvested restricted stock awards are not
considered outstanding in the computation of basic earnings per share.
Restricted Stock Units—During 2009, 9,858 restricted stock units were granted. The aggregate grant date fair value of the awards was $180,000, which
was recognized as expense on the grant date, as the awards were immediately vested. The Company's restricted stock units are accounted for as equity awards.
The grant date fair value is based on the market price of the Company's common stock at the date of grant. The Company did not grant any restricted stock
units prior to April 2009.
Common Stock Grant—In May 2006, the Company adopted the Rosetta Stone Inc. Liquidity Performance Award Plan. The Company amended this plan
by resolution dated December 31, 2008. This plan provides a bonus to its key employees in the event of an acquisition of the Company, an acquisition of
substantially all of the assets of the Company, a liquidation of the Company or any other transaction resulting in liquidating distributions to any holders of its
preferred stock. This plan terminates upon completion of an initial public offering. In April 2009, the Company's Board of Directors awarded 10 of the
Company's key employees a total of 591,491 shares of common stock. This grant is net of the number of shares required to be withheld to satisfy the federal,
state and local tax withholding obligations, which were paid by the Company to the respective taxing authorities in cash. Thus, the grant is referred to as a
"net issuance." The aggregate grant date fair value of the awards was $18.5 million, which was recognized as expense on the grant date, as the grants were
immediately vested.
F-26