Stockholders' Equity and Share-Based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders' Equity and Share-Based Compensation

3. Stockholders' Equity and Share-Based Compensation

2011 Stock Incentive Plan

On August 3, 2011, our stockholders approved the adoption of our 2011 Stock Incentive Plan (the “2011 Plan”). The total number of shares of our common stock that are reserved for issuance under the 2011 Plan is 17.75 million shares. The 2011 Plan also provides that the following shares of our common stock will not be returned to the 2011 Plan or otherwise become available for issuance under the 2011 Plan: (i) shares of common stock tendered by participants as full or partial payment to the Company upon exercise of options granted under the 2011 Plan; (ii) shares of common stock withheld by, or otherwise remitted to, the Company to satisfy a participant’s tax withholding obligations; and (iii) shares of common stock covered by the portion of any stock appreciation right (“SAR”) that is exercised (whether or not such shares of common stock are actually issued to a participant upon exercise of the SAR).

Notwithstanding the foregoing, any shares of common stock issued in connection with awards other than stock options and SARs will be counted against the total share limit reserved under the 2011 Plan by applying the Multiplier (as defined below) to the shares of common stock covered by each such award; conversely, shares of common stock returned to or deemed not to have been issued from the 2011 Plan under awards other than stock options and SARs will return to the share reserve at a rate determined by multiplying such number of shares by the Multiplier. The “Multiplier” for awards other than stock options and SARs will be 2.22 shares of common stock for every 1.0 share of common stock issued in connection with such award. For example, a grant of a restricted stock award for 1,000 shares would count as 2,220 shares against the reserve, and if returned to the 2011 Plan, would count as 2,220 shares returned to the 2011 Plan. As of December 31, 2013, there are approximately 10,073,593 shares of our common stock available for issuance under the 2011 Plan.

On August 3, 2011, our stockholders also approved an amendment to the ESPP, to increase the number of shares available for future grant under the ESPP to 2,500,000. Under the ESPP, employees may defer up to 10% of their base salary to purchase shares of our common stock, up to a maximum of 1,000 shares per offering period. The purchase price of the common stock is equal to 85% of the lower of the fair market value per share of our common stock on the commencement date of the applicable offering period or the applicable purchase date. To date, we have issued 1,283,719 shares under the ESPP and 1,216,281 shares remain available for future issuance under the ESPP as of December 31, 2013.

Share-Based Award Activity

Our stock options generally vest over four years and have a contractual term of seven to ten years. A summary of stock option activity under our share-based compensation plans is as follows:

	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life
	(In thousands, except per share amounts)
Outstanding at December 31, 2012	5,908		$	7.23
Granted	2,158		9.07
Exercised	(766	)	6.67
Expired/Forfeited	(637	)	8.20
Outstanding at December 31, 2013	6,663		7.80		12,492		7.49
Vested and expected to vest at December 31, 2013	6,100		7.71		12,027		7.33
Exercisable at December 31, 2013	3,086		$	6.91	$	8,960	5.70

The aggregate intrinsic value of stock options outstanding and exercisable at December 31, 2013 was based on the closing price of our common stock on December 31, 2013 of $9.54 per share.

The total intrinsic value of stock options exercised (i.e., the difference between the market price on the date of exercise and the price paid by the employee to exercise the options) during the years ended December 31, 2013 , 2012 and 2011 was $2.0 million, $2.0 million and $1.0 million respectively.

RSUs granted under our Amended and Restated 2004 Stock Incentive Plan, as amended (the “2004 Plan”), the Symyx 2007 Stock Incentive Plan (the “2007 Plan”), as amended, and the 2011 Plan generally vest annually over three years and, once vested, do not expire. A limited number of RSUs granted under the 2011 Plan vest over one year and, once vested, do not expire.

Upon vesting of an RSU, employees are generally issued an equivalent number of shares of our common stock. A summary of RSU activity under our share-based compensation plans is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value Per Share
	(In thousands, except per share amounts)
Unvested at December 31, 2012	1,653		$	7.53
Granted	750		9.07
Vested	(728	)	7.42
Forfeited	(307	)	7.44
Unvested at December 31, 2013	1,368		$	8.46

Included in the vested shares for the period are approximately219,651shares tendered to us by employees for payment of minimum income tax obligations upon vesting of RSUs.

The total fair value of RSUs vested was $6.8 million, $3.8 million and $3.0 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Valuation Assumptions of Share-Based Awards

The fair value of stock options and ESPP purchase rights granted during the years ended December 31, 2013, 2012 and 2011 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	For the Years Ended
	December 31, 2013						December 31, 2012						December 31, 2011
	Stock Options			ESPP Purchase Rights			Stock Options			ESPP Purchase Rights			Stock Options			ESPP Purchase Rights
Expected volatility	44		%	28		%	50		%	34		%	50		%	35		%
Risk-free interest rate	1.6		%	0.1		%	0.7		%	0.1		%	0.8		%	0.1		%
Expected option life in years	5			0.5			5			0.5			5			0.5
Expected dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Weighted average per share grant date fair value	$	3.66		$	1.89		$	3.57		$	1.77		$	3.04		$	1.72

The fair value of RSUs granted during the years ended December 31, 2013, 2012 and 2011 was based on the market price of our common stock on the date of grant.

Share-Based Compensation Expense

The estimated fair value of our share-based awards is recognized as a charge against income on a straight-line basis over the requisite service period, which is typically the vesting period of the award. Total share-based compensation expense recognized in our consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 was as follows:

	For the Years Ended
	December 31, 2013		December 31, 2012			December 31, 2011
	(in thousands)
Cost of revenue	$	838	$	755		$	333
Product development	1,813		1,763			1,136
Sales and marketing	3,086		2,545			1,672
General and administrative	3,220		3,093			2,428
Business consolidation, transaction and restructuring costs	62		(41		)	3
Total stock-based compensation expense	$	9,019	$	8,115		$	5,572

No share-based compensation expense was capitalized in the periods presented. At December 31, 2013, the gross amount of unrecognized share-based compensation expense relating to unvested share-based stock options, restricted stock units and ESPP shares was approximately $21.4 million, which we anticipate recognizing as a charge against operations over a weighted average period of 2.5 years.

Stock Repurchases

Our Board of Directors from time to time approves common stock repurchase programs authorizing management to repurchase shares of our common stock in open market transactions in accordance with Rule 10b-18 of the Exchange Act. We repurchase shares primarily to offset dilution caused by ongoing stock issuances from existing equity compensation plans and to improve stockholders’ returns. Repurchased shares are recorded as treasury stock upon repurchase and are subsequently retired.

On December 13, 2012, we entered into a stock repurchase plan (the “2013 Repurchase Plan”) in accordance with Rule 10b5-1 of the Exchange Act. Pursuant to the Repurchase Plan, and subject to the conditions set forth therein and the provisions of Rule 10b-18 of the Exchange Act, we instructed our broker to purchase for our account up to $15.0 million worth of our common stock by December 31, 2013.

We have made cumulative repurchases of 4,255,153 shares, at a cost of approximately $36.3 million (including commissions), since we began our stock repurchase program in November 2010. All repurchased shares of common stock have been retired.

The following table provides a summary of the repurchase activity for the periods indicated under our stock repurchase program:

	For the Years Ended
	December 31, 2013		December 31, 2012		December 31, 2011
	(in thousands, except per share price)
Shares repurchased	1,651		1,373		877
Average purchase price	$	9.12	$	8.22	$	7.98
Aggregate purchase price	$	15,047	$	11,290	$	7,000

Retirement of Treasury Stock

During the year ended December 31, 2013, we retired 1,650,525 shares of our treasury stock. These shares remain as authorized shares; however, they are now considered unissued. In accordance with FASB ASC Topic 505, Equity, the retirement of our treasury stock resulted in a reduction in our treasury stock and a corresponding increase in our accumulated deficit of $15.0 million. There was no effect on the total stockholders' equity position as a result of the retirement.

Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income for the year ended December 31, 2013 consisted of the following:

	Unrealized Gain (Loss) on Marketable Securities			Foreign Currency Translation Adjustment		Total
	(in thousands)
Balance at December 31, 2012	$	76		$	1,188	$	1,264
Other comprehensive income (loss) before reclassifications	(53		)	1,477		1,424
Amounts reclassified from accumulated other comprehensive income (loss)	—			—		—
Net current period other comprehensive income (loss)	(53		)	1,477		1,424
Balance at December 31, 2013	$	23		$	2,665	$	2,688