LeapFrog 2013 Annual Report Download - page 70
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Please find page 70 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)
• Annual Forfeiture Rate: When estimating pre-vesting forfeitures, the Company considers voluntary
termination behavior as well as potential future workforce reduction programs. Through
August 2010, the Company reflected the impact of forfeitures for stock options in expense only
when they actually occurred based on analyses showing that the majority of all stock options vested
on a monthly basis. Beginning September 2010, based on a shift in granting practice toward more
options with longer vesting periods, the Company applied a forfeiture rate of 11% based on
historical experience. In January 2012, the Company updated the forfeiture rate to 14.6%. Effective
January 2013, the Company updated the forfeiture rate to 14.2%.
The assumptions used in the Black-Scholes option valuation model and the weighted-average grant-date fair
value per share for the years ended December 31, 2013, 2012 and 2011 were as follows:
Years Ended December 31,
2013 2012 2011
Estimate of fair value for total awards using Black-Scholes . . $10,348 $11,711 $4,075
Expected term (years) ............................ 4.60 4.49 4.86
Volatility ..................................... 72.4% 74.3% 58.5%
Risk-free interest rate ............................ 0.8% 0.7% 1.7%
Expected dividend yield .......................... —% —% —%
RSUs
RSUs are payable in shares of the Company’s Class A common stock. The fair value of these stock-based
awards is equal to the closing market price of the Company’s stock on the date of grant. The grant-date fair
value is recognized on a straight-line basis in compensation expense over the vesting period of these
stock-based awards, which is generally four years.
With regard to RSUs, a forfeiture assumption of approximately 21.6% is currently being used, reflecting
historical and expected future forfeiture rate.
Stock-based compensation expense related to RSUs is calculated based on the market price of the Company’s
common stock on the grant date. The total market value of RSUs granted in 2013, 2012 and 2011, as
measured on the grant date, was $7,147, $8,006 and $2,750, respectively.
ESPP
Effective September 1, 2011, the Company increased the discount from the fair market value of the
Company’s common stock offered to participants from 5% to 15%, which resulted in stock-based
compensation expense due to departure from the IRS safe harbor. Stock-based compensation expense related
to the ESPP is estimated using the Black-Scholes option pricing model with the following assumptions for the
years ended December 31, 2013 and 2012:
Years Ended December 31,
2013 2012
Expected term (years) ..................... 0.5 0.5
Volatility .............................. 36.0% − 57.5% 44.2% − 59.8%
Risk-free interest rate ..................... 0.05% − 0.14% 0.05% − 0.14%
Expected dividend yield ................... —% —%
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