Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.5.0.2
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation and Employee Benefit Plans
Stock-Based Compensation and Employee Benefit Plans
Refer to the Company’s Annual Report for a summary of the stock-based compensation and equity plans. There have been no material changes to such plans during the six months ended June 30, 2016.
Stock-Based Compensation
The Company uses the Black-Scholes valuation model to calculate the fair value of stock options and employee stock purchase rights granted to employees. The Company calculates the fair value of RSUs, and restricted stock awards, or RSAs, based on the fair market value of our Class A common stock on the grant date. The weighted-average grant date fair value per share of the RSUs and RSAs granted in the six months ended June 30, 2016 was $18.15. The weighted-average grant date fair value per share of the RSUs and RSAs granted in the six months ended June 30, 2015 was $9.98. No stock options were granted during the six months ended June 30, 2016 and 2015.
The Company recognized stock-based compensation in the consolidated statements of operations, based on the department to which the related employee reports, as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(in thousands)
 
(in thousands)
Cost of net revenue
$
51

 
$
61

 
$
94

 
$
96

Research and development
3,305

 
3,053

 
6,584

 
5,393

Selling, general and administrative
1,746

 
1,680

 
3,533

 
3,024

 
$
5,102

 
$
4,794

 
$
10,211

 
$
8,513


The total unrecognized compensation cost related to unvested stock options as of June 30, 2016 was $1.1 million, and the weighted average period over which these equity awards are expected to vest is 1.44 years. The total unrecognized compensation cost related to unvested RSUs and RSAs as of June 30, 2016 was $45.3 million, and the weighted average period over which these equity awards are expected to vest is 2.92 years.
In connection with the acquisition of Entropic, the Company assumed stock options and RSUs originally granted by Entropic. Stock-based compensation expense related to assumed Entropic stock options and RSUs included $0.2 million in the three and six months ended June 30, 2016, and $2.4 million in the three and six months ended June 30, 2015.
Employee Incentive Bonus
In connection with the Company's bonus programs, in May 2016, we issued 0.2 million freely-tradable shares of our Class A common stock in settlement of bonus awards to employees, including executives, for the July 1, 2015 to December 31, 2015 performance period. In August 2015, we issued 0.3 million shares of our Class A common stock in settlement of bonus awards for the January 1, 2015 to June 30, 2015 performance period under our bonus plan. In May 2015, we issued 0.2 million freely-tradable shares of our Class A common stock in settlement of bonus awards for the fiscal 2014 performance period under our bonus plan.
Restricted Stock Units and Restricted Stock Awards
A summary of the Company’s restricted stock unit and restricted stock award activity is as follows:
 
Number of Shares
(in thousands)
 
Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2015
3,642

 
$
9.19

Granted
2,081

 
18.15

Vested
(1,300
)
 
10.32

Canceled
(234
)
 
10.87

Outstanding at June 30, 2016
4,189

 
13.20


The intrinsic value of restricted stock units and restricted stock awards vested was $15.7 million and $23.1 million in the three and six months ended June 30, 2016, respectively, and $12.3 million and $15.2 million in the three and six months ended June 30, 2015, respectively. The intrinsic value of restricted stock units and restricted stock awards outstanding at June 30, 2016 was $75.3 million.
Stock Options
A summary of the Company’s stock options activity is as follows:
 
Number of Shares
(in thousands)
 
Weighted-Average Exercise Price
 
Weighted-Average Contractual Term (in years)
 
Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2015
3,572

 
$
6.83

 
 
 
 
Granted(1)
—

 
—

 
 
 
 
Exercised
(408
)
 
5.18

 
 
 
 
Canceled
(38
)
 
24.32

 
 
 
 
Outstanding at June 30, 2016
3,126

 
$
6.83

 
3.19
 
$
35,481

Vested and expected to vest at June 30, 2016
3,115

 
$
6.83

 
3.19
 
$
35,367

Exercisable at June 30, 2016
2,808

 
$
6.67

 
3.05
 
$
32,376


____________________________
(1) No options were granted during the six months ended June 30, 2016.

The intrinsic value of stock options exercised was $3.2 million and $5.2 million in the three and six months ended June 30, 2016, respectively, and $1.1 million and $1.3 million in the three and six months ended June 30, 2015, respectively.
Employee Stock Purchase Rights

The fair values of employee stock purchase rights were estimated using the Black-Scholes option pricing model at their respective grant date using the following assumptions:
 
Six Months Ended June 30, 2016
Weighted-average grant date fair value per share
$5.02 - $7.44

Risk-free interest rate
0.33 - 0.38%

Dividend yield
—
%
Expected life (in years)
0.50

Volatility
59.14 - 83.71%


The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The expected life is the duration of the offering period for each grant date, which occurs on a semi-annual basis. In addition, the estimated volatility incorporates the historical volatility of the Company's daily share closing price.