Enom 2011 Annual Report Download - page 105

10. Employee Benefit Plan
The Company has 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, the Company may, but is not obligated to, match a portion of the employee contributions up to a
defined maximum. The Company did not make any matching contributions for the years ended December 31, 2009, 2010 and 2011.
11. Share-based Compensation Plans and Awards
Stock Incentive Plans
Under the Company's 2010 Incentive Award Plan (the "2010 Plan"), the Administrator of the 2010 Plan, which is the compensation committee of the
Company's board of directors, may grant up to 15,500 stock option, 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 stock options at the discretion of the
Administrator. In connection with the adoption of the 2010 Plan on August 5, 20101, 334 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) 6,000 (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, 2011, 9,842 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. Restricted stock unit awards generally vest quarterly over a 3 or 4-year period. Certain stock options and
restricted stock awards have accelerated vesting provisions in the event of a change in control or termination without cause.
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 option pricing model with the following assumptions:
Year ended
December 31,
2009
Year ended
December 31,
2010
Year ended
December 31,
2011
Expected life (in years) 5.72 6.27 5.5
Risk-free interest rate 1.37-2.86 1.31-2.83 1.46-2.30
Expected volatility range 60-62 54-56 56
Weighted average expected volatility 61% 56% 56%
Expected dividend yield —% —% —%
The expected term of stock options granted represents the weighted average period that the stock options are expected to remain outstanding. The
Company determines the expected term assumption based on the Company's historical exercise behavior combined with estimates of the post-vesting holding
period. Expected volatility is based on historical volatility of peer companies in the Company's industry that have similar vesting and contractual terms. The
risk free interest rate is based on the implied yield currently available on U.S. Treasury issues with terms approximately equal to the expected life of the
option. The Company currently has no history or expectation of paying cash dividends on its common stock.
The expected term for performance-based and non-employee awards is based on the period of time for which each award is expected to be outstanding,
which is typically the remaining contractual term.
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