LeapFrog 2013 Annual Report Download - page 69
Download and view the complete annual report
Please find page 69 of the 2013 LeapFrog annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
13. Stock-based Compensation − (continued)
2002 EIP on the effective date of the 2011 EIP became available for issuance under the 2011 EIP. In addition,
any shares subject to outstanding stock awards granted under the 2002 EIP that expired or terminated for any
reason prior to exercise or settlement, were forfeited because of the failure to meet a contingency or condition
required to vest such shares, or were reacquired or withheld by the Company to satisfy a tax withholding
obligation or as consideration for the exercise of a stock option became available for issuance pursuant to
awards granted under the 2011 EIP. All outstanding stock awards granted under the 2002 EIP continue to be
subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms
of the 2002 EIP. On June 5, 2012, the 2011 EIP was amended to add an additional 2,700 new shares to the
share reserve.
The Company used its NEDSAP as its primary plan to issue stock-based incentive compensation to the
Company’s non-employee directors until 2012. Upon depletion of the share reserve in June 2012, the
NEDSAP was suspended and no new equity awards are being granted thereunder. The board of directors
resolved that all future equity awards to members of the board of directors would be made under the
Company’s 2011 EIP.
The Company currently has outstanding two types of stock-based compensation awards to its employees,
directors and certain consultants: stock options and RSUs. Both stock options and RSUs can be used to
acquire shares of the Company’s Class A common stock, are exercisable or convertible, as applicable, over a
period not to exceed ten years, and are most commonly assigned four-year vesting periods.
The Company is authorized to issue up to a total of 33,950 shares of Class A common stock for any of the
types of awards authorized under the 2011 EIP, 2002 EIP or NEDSAP. The Company also has an ESPP under
which it is authorized to issue up to 2,000 shares. At December 31, 2013, the remaining availability for future
grants was 6,829 for stock-based awards and 964 for the ESPP.
Valuation of Stock-based Compensation
The Company calculates employee stock-based compensation expense based on those awards ultimately
expected to vest and reduces compensation expense as necessary for estimated forfeitures. Stock-based
compensation expense is recorded as a non-cash charge to employee compensation expense with a
corresponding credit to additional paid-in capital.
Stock Options
Stock-based compensation expense is calculated based on the fair value of each award on the grant date. In
general, the fair value for stock option grants with only a service condition is estimated using the
Black-Scholes option pricing model.
The assumptions underlying the calculation of grant-date fair value of the stock options using the
Black-Scholes option pricing model comprise:
• Volatility: Expected stock price volatility is based on the Company’s historical stock prices over
the most recent period commensurate with the estimated expected term of the stock options.
• Risk-Free Interest Rate: The risk-free interest rate is based on the yield of the treasury security at
grant date with a maturity closest to the expected term of the stock option.
• Expected Term: The expected life of the options represents the period of time the options are
expected to be outstanding.
• Expected Dividend: The dividend yield is zero as the Company does not expect to pay dividends.
61