Enom 2015 Annual Report Download - page 92

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F-28
Stock-based Compensation Expense
Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows
(in thousands):
Year ended December 31,
2015
2014
2013
Service costs ...................................................
$
1,084
$
1,422
$
2,420
Sales and marketing .............................................
588
683
3,823
Product development .............................................
1,836
4,745
3,835
General and administrative ........................................
4,054
12,016
12,525
Discontinued operations ..........................................
—
2,949
4,781
Total stock-based compensation .................................
7,562
21,815
27,384
Income tax benefit related to stock-based compensation included in net
income (loss) ...................................................
—
(706)
(782)
$
7,562
$
21,109
$
26,602
There was no income tax benefit related to stock-based compensation included in net income (loss) for the year-
ended December 31, 2015 as the Company generated current year taxable losses without stock-based compensation.
During the years ended December 31, 2015, 2014 and 2013, $0.4 million, $1.0 million and $2.0 million
respectively, of stock-based compensation expense related to stock options was capitalized, primarily as part of
internally developed software projects.
Stock-based compensation expense for accelerations and modifications was immaterial for the year ended
December 31, 2015. During the year ended December 31, 2014, we accelerated the vesting of certain outstanding equity
instruments for three employees, resulting in the recognition of $3.5 million of expense.
In connection with the Separation completed in the year ended December 31, 2014, 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 Demand Media stock options held by a Rightside
employee were accelerated then split equally between Demand Media and Rightside stock options.
Restricted Stock Units. Immediately prior to the Separation, each 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.