STOCK-BASED COMPENSATION - Note 6

6 Months Ended

Sep. 30, 2017

Equity [Abstract]

STOCK-BASED COMPENSATION - Note 6

6. STOCK-BASED COMPENSATION

The following table summarizes information pertaining to the stock-based compensation expense from stock options and stock awards (in thousands, except grant-date fair value and recognition period):

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2017		2016		2017		2016
Cost of service revenue	$	473	$	440	$	864	$	800
Cost of product revenue		-		-		-		-
Research and development		1,314		863		2,651		1,750
Sales and marketing		2,568		1,751		5,215		3,666
General and administrative		2,302		1,454		4,278		3,343
Total	$	6,657	$	4,508	$	13,008	$	9,559

		Six Months Ended
		September 30,
		2017		2016
Options outstanding at the beginning of the period:		4,462		4,793
Options granted		229		310
Options exercised		(329)		(318)
Options canceled and forfeited		(134)		(1)
Options outstanding at the end of the period:		4,228		4,784
Weighted-average fair value of grants during the period	$	5.28	$	5.46
Total intrinsic value of options exercised during the period	$	3,537	$	3,551
Weighted-average remaining recognition period at period-end (in years)		1.95		2.26
Stock awards outstanding at the beginning of the period:		4,950		4,628
Stock awards granted		2,446		1,899
Stock awards vested		(1,225)		(934)
Stock awards canceled and forfeited		(272)		(142)
Stock awards outstanding at the end of the period:		5,899		5,451
Weighted-average fair value of grants during the period	$	14.09	$	15.08
Weighted-average remaining recognition period at period-end (in years)		2.75		2.68
Total unrecognized compensation expense at period-end	$	63,323	$	52,623

Performance Stock Units

During the three and six months ended September 30, 2017, the Company issued restricted performance stock units (PSUs) to a group of executives with vesting that is contingent on both market performance and continued service. These PSUs vest (1) 50% on September 19, 2019 and (2) 50% on September 19, 2020, in each case subject to the performance of the Company's common stock relative to the Russell 2000 Index (the benchmark) during the period from grant date through such vesting date. A 2x multiplier will be applied to the total shareholder returns (TSR) for each 1% of positive or negative relative TSR, and the number of shares earned will increase or decrease at the end of each respective performance measurement period by 2% of the target numbers. In the event 8x8's common stock performance is below negative 30% relative to the benchmark, no shares will be issued. These PSU grants are included in the restricted stock unit activity disclosure for the six months ended September 30, 2017.

To value these market-based PSUs under the Equity Compensation Plans, the Company used a Monte Carlo simulation model on the date of grant. Fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between the Company and the NASDAQ Composite Index, risk free interest rates, and future dividend payments.

Stock Repurchases

In May 2017, the Company's board of directors authorized the Company to purchase $25.0 million of its common stock from time to time under the 2017 Repurchase Plan (the "2017 Plan"). The 2017 Plan expires when the maximum purchase amount is reached, or upon the earlier revocation or termination by the board of directors. The remaining amount available under the 2017 Plan at September 30, 2017 was approximately $10.9 million.

The stock repurchase activity as of September 30, 2017 is summarized as follows (in thousands):

			Weighted Average
	Shares		Price		Amount
	Repurchased		Per Share		Repurchased (1)
Repurchase of common stock under 2017 Repurchase Plan	1,064	$	13.23	$	14,081
Total	1,064			$	14,081
(1) Amount excludes commission fees.

The total purchase price of the common stock repurchased and retired was reflected as a reduction to consolidated stockholders' equity during the period of repurchase.