Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Option Activity

In May 2013, the Company’s stockholders approved a new stock incentive plan authorizing an additional 1.6 million shares, plus remaining available shares under a prior plan for issuance under the new plan. Combined with the legacy stock incentive plans, there are approximately 1.4 million shares available for grant as of March 31, 2015.

Performance-based stock awards

The Company has issued performance-based stock options and performance-based RSUs, the vesting of which is contingent upon the achievement of certain performance criteria related to the operating performance of the Company as well as successful and timely development and market acceptance of future product introductions. In addition, certain of the performance RSUs have additional service requirements subsequent to the achievement of the performance criteria. Compensation expense is recognized over the implicit service period (the longer of the period the performance condition is expected to be achieved or the required service period) based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date.

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2015 (number of units and aggregate intrinsic value in thousands):

	Number of Units		Weighted Average Grant-Date Fair Value		Aggregated Intrinsic Value
Units outstanding, beginning of year	1,226		$	13.23
Granted	295		26.75
Released	(249	)	10.83
Forfeited	(23	)	12.84
Units outstanding, end of period	1,249		16.91		$	30,104

Aggregate intrinsic value represents the Company’s closing stock price on the last trading day of the period, which was $24.11 per share, multiplied by the number of restricted stock units outstanding. As of March 31, 2015, there was $17.5 million in unrecognized compensation costs related to RSUs under the Company's stock plans. The Company expects to recognize the cost related to the RSUs over a weighted average period of 2.98 years. RSUs are released when vesting requirements are met.

In the three months ended March 31, 2015, the Company granted approximately 36,101 performance-based RSUs, which are included in the table above. As of March 31, 2015, the performance criteria has not been met for any of the 0.1 million performance-based RSUs outstanding. Certain of the performance-based RSUs granted in 2015 and 2014 contain provisions whereby the amount of RSUs that ultimately vest is dependent upon the level of achievement of performance metrics. The amount of RSUs included in the table above related to such grants is the target level, which is the Company's best estimate of the amount of RSUs that will vest. The maximum additional number of RSUs that could be earned is approximately 0.1 million, which are not included in the table above.

Certain RSUs that vested in the three months ended March 31, 2015 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld were approximately 7,552 and had a value of approximately $0.2 million on their respective vesting dates as determined by the Company’s closing stock price. Payments for the employees’ tax obligations are reflected as a financing activity within the statement of cash flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the amount of shares that would have otherwise been issued as a result of the vesting.

Stock Option Activity

The following table summarizes stock option activity for the three months ended March 31, 2015 (number of units and aggregate intrinsic value in thousands):

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregated Intrinsic Value
Options outstanding, beginning of year	1,641		$	5.26
Granted	—		—
Exercised	(107	)	5.65
Expired / terminated (a)	—		5.52
Options outstanding, end of period	1,534		5.23		4.25	$	28,962
Options exercisable, end of period	1,500		5.24		4.26	28,311
Options expected to vest, end of period	28		4.74		3.73	539

^(a) Actual units terminated during the period was 251, which displayed as zero due to rounding.

Aggregate intrinsic value represents the difference between the exercise price of the underlying stock option awards and the closing market price of the Company's common stock of $24.11 on March 31, 2015. The intrinsic value of options exercised for the three months ended March 31, 2015 and 2014 was $2.1 million and $12.6 million, respectively. As of March 31, 2015, total unrecognized stock-based compensation expense related to unvested stock options was approximately $12,065, which is expected to be recognized over a remaining weighted average period of approximately nine months. Options expected to vest are presented net of forfeitures. As of March 31, 2015, total options outstanding includes approximately 0.3 million performance-based stock options, of which approximately 30,600 were unvested and 25,000 are expected to vest, and the Company expects to recognize $7,000 of expense related to these performance-based stock options over a remaining period of nine months.

Stock-based Compensation Expense

When granted, the Company calculates the fair value of stock options using the Black-Scholes-Merton option pricing valuation model, which incorporates various assumptions including volatility, expected life and risk-free interest rates. No options were awarded during the three months ended March 31, 2015 or 2014. The estimated fair value of stock-based compensation awards is amortized to expense on a straight-line basis over the service periods. As stock-based compensation expense recognized is based on awards ultimately expected to vest, it is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company’s forfeiture rate was calculated based on its historical experience of awards which ultimately vested.

	Three Months Ended March 31,
	2015		2014
Cost of products sold and services delivered	$	70	$	22
Sales, general and administrative expenses	934		711
Research and development expenses	540		444
Total stock-based compensation	$	1,544	$	1,177

Total stock-based compensation expense recognized in the statements of operations for the three months ended March 31, 2015 and 2014 includes $48,000 and $8,000, respectively, related to ISOs for which no tax benefit is recognized.

Stock Repurchase Plan

In May 2014, the Company announced that TASER’s Board of Directors authorized a stock repurchase program to acquire up to $30.0 million of the Company’s outstanding common stock subject to stock market conditions and corporate considerations. There were no stock repurchase transactions during the quarter ended March 31, 2015. As of March 31, 2015, $7.6 million remains available under the plan for future purchases.