Vonage 2008 Annual Report Download - page 82

V
O
NA
G
EH
O
LDIN
GS CO
RP
.
N
O
TE
S
T
OCO
N
SO
LIDATED FINAN
C
IAL
S
TATEMENT
S
—
(C
ontinued
)
(
In thousands, except per share amounts
)
B
e
g
innin
g
January 1, 2006, we estimated the vola-
t
ility of our stock usin
g
historical volatility of comparable
public companies in accordance with
g
uidance in
S
FA
S
123
(
R
)
and
S
taff Accounting Bulletin No. 107
(
“
S
AB 107”
),
s
i
nce we
h
a
d
as
h
ort
hi
stor
i
ca
l
vo
l
at
ili
ty.
B
eg
i
nn
i
ng
i
nt
he
f
irst quarter o
f
2008, we used the historical volatility o
f
ou
r
common stock to measure expected volatilit
yf
or
f
utur
e
option
g
rants.
T
he risk-
f
ree interest rate assumption is based upo
n
observed interest rates appropriate
f
or the term o
f
ou
r
emplo
y
ee stock options. The expected term o
f
emplo
y
ee
stoc
k
opt
i
ons represents t
h
ewe
igh
te
d
-avera
g
e per
i
o
d
th
at t
h
e stoc
k
o
p
t
i
ons are ex
p
ecte
d
to rema
i
n out-
stan
di
ng, w
hi
c
h
we
d
er
i
ve
b
ase
d
on our
hi
stor
i
ca
l
sett
l
e
-
ment ex
p
erience.
S
FA
S
No. 123
(
R
)
requires all share-based payment
s
t
o emp
l
oyees,
i
nc
l
u
di
ng stoc
k
awar
d
s, to
b
e recogn
i
ze
d
as ex
p
enses in the issuer’s
f
inancial statements based o
n
t
he
f
air values o
f
those pa
y
ments, reduced as appropriate
based on an
y
estimated forfeitures. Share-base
d
compensation expense reco
g
nized durin
g
a period is
based on the value of the portion of share-based pa
y
men
t
awar
d
st
h
at
i
su
l
t
i
mate
l
y expecte
d
to vest
d
ur
i
n
g
t
h
e per
i
-
od. However,
S
FA
S
No. 123
(
R
)
re
q
uires that com
p
ensa-
t
ion cost recognized at any date must be at least equal to
t
he amount attributable to awards that are vested at that
date
.
2001
S
tock Incentive Plan
In Februar
y
2001, we adopted the 2001 Stoc
k
I
ncent
i
ve
Pl
an
,
w
hi
c
hi
s an amen
d
ment an
d
restatemen
t
of the 2000 Stock Incentive Plan of MIN-X.COM, INC. The
2
001 Stock Incentive Plan provides for the granting of
o
p
tions or restricted stock awards to our officers, direc
-
t
ors and emplo
y
ees. The objectives of the 2001 Stoc
k
I
ncent
i
ve
Pl
an
i
nc
l
u
d
e attract
i
ng an
d
reta
i
n
i
ng personne
l,
providin
g
for additional performance incentives, and
promoting our success by providing employees th
e
opportunity to acquire stock. Durin
g
2005, the number of
shares authorized
f
or issuance pursuant to options or
r
estricted stock awards was increased from 7
,
503 to
2
8,286.
I
n mana
g
ement
’
sop
i
n
i
on, a
ll
stoc
k
opt
i
ons wer
e
granted with an exercise price at or above the
f
air market
value of our common stock at the date of
g
rant with th
e
exception o
f
a
g
rant in 2005
f
or 125 shares. Initially, we
r
ecorded deferred com
p
ensation in 2005 related to thi
s
option
g
rant.
O
n January 1, 2006, we reversed the remain
-
ing de
f
erred compensation balance in accordance with
S
FA
S
123
(
R
)
. There weren’t any options available for
f
uture
g
rant under the 2001 Stock Incentive Plan since ou
r
b
oard of directors terminated the
p
lan in 2008.
2
006
In
ce
ntiv
e
Pl
an
I
n May 2006 we adopted the 2006 Incentive Plan
.
The 2006 Incentive Plan permits the
g
rant of stock
options, restricted stock, restricted stock units, stock
appreciation rights, performance stock, performanc
e
u
n
i
ts, annua
l
awar
d
san
d
ot
h
er awar
d
s
b
ase
d
on, o
r
r
elated to, shares of our common stock. O
p
tions awarde
d
u
n
d
er our 2006
I
ncent
i
ve
Pl
an may
b
e nonstatutory stoc
k
options or ma
y
quali
fy
as incentive stock options under
S
ection 422 of the Internal Revenue
C
ode of 1986
,
a
s
amended. Our 2006 Incentive Plan contains various limit
s
with respect to the types o
f
awards, as
f
ollows:
>
a maximum o
f
20,000 shares ma
y
be issued under the
pl
an
p
ursuant to
i
ncent
i
ve stoc
k
o
p
t
i
ons
;
>
a maximum of 10,000 shares may be issued pursuant to
opt
i
ons an
d
stoc
k
apprec
i
at
i
on r
igh
ts
g
rante
d
to an
y
participant in a calendar year;
>
a maximum of
$
5,000 ma
y
be paid pursuant to annua
l
awar
d
s
g
rante
d
to any part
i
c
i
pant
i
naca
l
en
d
ar year;
an
d
>
a maximum of $10,000 ma
y
be paid (in the case o
f
awards denominated in cash
)
and a maximum of 10,00
0
shares ma
y
be issued (in the case of awards denomi
-
n
ated in shares
)p
ursuant to awards, other than o
p
tions
,
stoc
k
apprec
i
at
i
on r
igh
ts or annua
l
awar
d
s,
g
rante
d
to
any participant in a calendar year
.
The maximum number o
f
shares o
f
our common
s
t
oc
kth
a
t
a
r
eau
th
o
riz
ed
f
o
ri
ssua
n
ce u
n
de
r
ou
r2
006
I
ncentive Plan is determined under a
f
ormula set
f
orth i
n
t
he plan, and is equal to approximately 17.65% of the
n
umber o
f
shares that are issued and outstanding
f
rom
t
ime to time.
S
hares issued under the plan may b
e
authorized and unissued shares or ma
y
be issued shares
t
hat we have reacquired.
S
hares covered by awards tha
t
are
f
or
f
eited, cancelled or otherwise expire without having
b
een exerc
i
se
d
or sett
l
e
d
,ort
h
at are sett
l
e
db
y cas
h
o
r
other non-share consideration
,
will become available
f
or
i
ssuance
p
ursuant to a new award.
S
hares that are ten-
dered or withheld to pa
y
the exercise price o
f
an award o
r
t
o satisfy tax withholding obligations will not be availabl
e
f
or issuance pursuant to new awards. At December 31
,
2008, 4,903 shares were available for future grant under
t
he 2006 Stock Incentive Plan
.
F
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V
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