Stockholders' Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

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 1.0 million shares available for grant as of March 31, 2016.

Performance-based stock awards

The Company has issued performance-based stock options and performance-based restricted stock units ("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-based vesting 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, 2016 (number of units and aggregate intrinsic value in thousands):

	Number of Units		Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value
Units outstanding, beginning of year	1,139		$	19.30
Granted	362		15.55
Released	(176	)	15.57
Forfeited	(54	)	21.08
Units outstanding, end of period	1,271		18.67		$	24,959

Aggregate intrinsic value represents the Company’s closing stock price on the last trading day of the period, which was $19.63 per share, multiplied by the number of RSUs outstanding. As of March 31, 2016, there was $20.5 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 2.70 years. RSUs are released when vesting requirements are met.

During the three months ended March 31, 2016, the Company granted approximately 0.1 million performance-based RSUs, which are included in the table above. As of March 31, 2016, the performance criteria had not been met for any of the 0.2 million performance-based RSUs outstanding. Certain of the performance-based RSUs granted in 2016 and 2015 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 performance-based RSUs that could be earned is 0.2 million, which are not included in the table above.

Certain RSUs that vested in the three months ended March 31, 2016 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 42,500 and had a value of approximately $0.7 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, 2016 (number of units and aggregate intrinsic value in thousands):

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Options outstanding, beginning of year	1,103		$	5.37
Granted	—		—
Exercised	(6	)	5.17
Expired / terminated	—		—
Options outstanding, end of period	1,097		5.37		3.08	$	15,640
Options exercisable, end of period	1,066		5.39		3.09	15,182
Options expected to vest, end of period	25		4.75		2.73	372

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 $19.63 on March 31, 2016. The intrinsic value of options exercised for the three months ended March 31, 2016 and 2015 was $0.1 million and $2.1 million, respectively. Options expected to vest are presented net of forfeitures. As of March 31, 2016, total options outstanding includes approximately 0.2 million performance-based stock options, of which approximately 30,600 were unvested and 25,000 expected to vest.

Stock-based Compensation Expense

The estimated fair value of stock-based 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. The following table summarizes the composition of stock stock-based compensation for the three and three months ended March 31, 2016 and 2015 (in thousands):

	Three Months Ended March 31,
	2016		2015
Cost of products sold and services delivered	$	100	$	70
Sales, general and administrative expenses	1,390		934
Research and development expenses	730		540
Total stock-based compensation	$	2,220	$	1,544

Stock Repurchase Plan

In February 2016, the Company announced that TASER’s Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of the Company’s outstanding common stock subject to stock market conditions and corporate considerations. During the three months ended March 31, 2016, the Company purchased, under a 10b5-1 plan, approximately 0.5 million common shares under the program for a total cost of approximately $9.0 million, or a weighted average cost of $18.86 per share. The weighted average cost includes the average price paid per share of $18.83, plus applicable administrative costs for the transaction. As of March 31, 2016, $41.0 million remain available under the plan for future purchases.