Enom 2014 Annual Report Download - page 91

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F-27
Also included in the table above includes $1.1 million of expense related to warrants granted to non employees for the year
ended December 31, 2012.
In connection with the Separation and subsequent 1-for-5 reverse stock split, all of our outstanding equity-based compensation
awards were adjusted as follows.
Stock Options. Immediately prior to the Separation, each stock option that had an exercise price greater than 120% of the trading
price of our common stock on the New York Stock Exchange on July 31, 2014, was adjusted by reducing the per share exercise price
and making a corresponding reduction in the number of shares of common stock subject to the stock option, so that the value of the
such stock option was approximately equal before and after such adjustment. Immediately prior to the Separation (but following the
adjustment), each stock option that was vested, or was unvested and held by an individual who was employed or engaged by us
following the Separation, was split into a Demand Media stock option and a Rightside stock option with a combined value that
approximately equaled the value of the Demand Media stock option immediately prior to the Separation. Unvested DM stock options
held by a Rightside employee were accelerated then split equally between DM and NAME stock options.
Restricted Stock Units. Immediately prior to the Separation, each restricted stock unit (“RSU”) award that was held by an
individual who was employed or engaged by us following the Separation and was granted prior to March 1, 2014, was split into a
Demand Media RSU award and a Rightside RSU award with a combined value that approximately equaled the value of the underlying
Demand Media RSU award immediately prior to the Separation. Each RSU award held by an individual who was employed or
engaged by Rightside or its affiliates following the Separation was converted into a Rightside RSU award covering a number of
Rightside shares such that the pre-distribution value of the pre-Separation value of the Demand Media RSU award was approximately
preserved.
12. Stockholders’ Equity
Reverse Stock Split
On August 1, 2014, we completed the Separation of Rightside from Demand Media, Inc. The Separation was structured as a pro
rata tax-free dividend involving the distribution of all outstanding shares of Rightside common stock to holders of Demand Media
common stock as of the record date (the “Distribution”). Immediately following the Distribution, we enacted a 1-for-5 reverse stock
split with respect to all of our outstanding shares of common stock, which is reflected retrospectively throughout the consolidated
financial statements.
Stock Repurchases
Under our February 8, 2012 stock repurchase plan, as amended, we are authorized to repurchase up to $50.0 million of its
common stock from time to time. Since April 2013, we have not repurchased any shares of common stock. Approximately $19.2
million remains available under the repurchase plan at December 31, 2014. The timing and actual number of shares repurchased will
depend on various factors including price, corporate and regulatory requirements, debt covenant requirements, alternative investment
opportunities and other market conditions.
Shares repurchased by us are accounted for when the transaction is settled. As of December 31, 2014, there were no unsettled
share repurchases. The par value of shares repurchased and retired is deducted from common stock and any excess over par value is
deducted from additional paid in capital. Direct costs incurred to repurchase the shares are included in the total cost of the shares.
Other
Each share of common stock has the right to one vote per share.
13. Fair Value of Financial Instruments
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. We measure our financial assets and liabilities in three levels, based on the markets in which the assets and
liabilities are traded and the reliability of the assumptions used to determine fair value.
y Level 1—valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that
allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from
readily available pricing sources for market transactions involving identical assets, liabilities or funds.