Stamps.com 2015 Annual Report Download - page 72

Year ended December 31,
2015 2014 2013
Anti-dilutiveshares  3,596  134  65
2015 2014 2013
Stock-basedcompensationexpenserelatingto:      
Employeeanddirectorstockoptions $ 16,644 $ 4,473 $ 3,751
Employeestockpurchases  582  326  741
Totalstock-basedcompensationexpense $ 17,226(1) $ 4,799 $ 4,492
Stock-basedcompensationexpenserelatingto:      
Costofrevenues $ 995 $ 402 $ 406
Salesandmarketing  4,549  955  864
Researchanddevelopment  3,149  998  990
Generalandadministrative  8,533  2,444  2,232
Totalstock-basedcompensationexpense $ 17,226(1) $ 4,799 $ 4,492
2015 2014 2013
Risk-freeinterestrate  1.00%  0.87%  0.53%
Expectedvolatility  46%  50%  48%
Expectedlife(inyears)  3.4  3.5  3.6
Expectedforfeiturerate  6%  6%  7%
TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Thecalculationofdilutivesharesexcludestheeffectofthefollowingoptionsthatareconsideredanti-dilutive(inthousands):
Stock-Based Compensation
Weestimatethefairvalueofshare-basedpaymentawardsonthedateofgrantusinganoption-pricingmodelandrecognizestock-
basedcompensationexpenseduringeachperiodbasedonthevalueofthatportionofshare-basedpaymentawardsthatisultimately
expectedtovestduringtheperiod,reducedforestimatedforfeitures.Weestimateforfeituresatthetimeofgrantbasedonhistorical
dataandrevise,ifnecessary,insubsequentperiodsifactualforfeituresdifferfromthoseestimates.Compensationexpenserecognized
forallemployeestockoptionsgrantedisrecognizedusingthestraight-linemethodovertheirrespectivevestingperiodsofthreetofive
years.
Thefollowingtablesetsforththestock-basedcompensationexpensethatwerecognizedfortheperiodsindicated(inthousands):
(1) Includedinthisamountis$1.3millionofstock-basedcompensationexpenserelatingtochangeinthefairvalueofourcontingent
considerationliabilityinconnectionwithouracquisitionofShipStation.SeeNote-3“Acquisition”inthenotestoour
consolidatedfinancialstatementsforfurtherdescription.
WeusetheBlack-Scholesoptionvaluationmodeltoestimatethefairvalueofshare-basedpaymentawardsonthedateofgrant,
whichrequiresustomakeanumberofhighlycomplexandsubjectiveassumptions,includingstockpricevolatility,expectedterm,
risk-freeinterestratesandprojectedemployeestockoptionexercisebehaviors.Inthecaseofoptionswegrant,ourassumptionof
expectedvolatilityisbasedonthehistoricalvolatilityofourstockpriceoverthetermequaltotheexpectedlifeoftheoptions.Webase
therisk-freeinterestrateonU.S.Treasuryzero-couponissueswitharemainingtermequaltotheexpectedlifeoftheoptionsassumed
atthedateofgrant.Theestimatedexpectedliferepresentstheweighted-averageperiodthestockoptionsareexpectedtoremain
outstanding,determinedbasedonananalysisofhistoricalexercisebehavior.
ThefollowingaretheweightedaverageassumptionsusedintheBlack-Scholesvaluationmodelfortheperiodsindicated:
F-13