6. ACCOUNTING FOR EMPLOYEE STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]

6. ACCOUNTING FOR EMPLOYEE STOCK-BASED COMPENSATION

Shares outstanding and per share data below have been adjusted to give effect to the one-for-seven reverse stock split implemented on August 16, 2012 as described in note 5 above.

Total employee stock-based compensation is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Stock options for employees	$	78	$	137	$	158	$	261
Restricted stock for employees		–		–		1		(2	)
Total employee stock-based compensation	$	78	$	137	$	159	$	259

Total employee stock-based compensation increased additional paid-in capital by $159,000 and $259,000 for the six months ended June 30, 2013 and 2012, respectively.

The fair value of each stock option grant is estimated using the Black-Scholes option pricing model with the following assumptions used for grants during the periods presented:

	Six Months Ended June 30,
	2013			2012
Risk-free interest rate		0.38	%		0.97	%
Expected life (in years)		3.4			6.0
Dividend yield		0	%		0	%
Expected volatility		124	%		99	%

The expected stock price volatility is based on the historical volatility of Mediabistro’s common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company calculated the expected term using the simplified method for options issued through the third quarter of 2012. Since then, the Company has calculated the expected term for stock options issued using historical data. In 2010, the Company began issuing stock options with a 10-year life. As a result, the Company did not have enough historical data to calculate the expected term and therefore relied on the simplified method for the calculation of the expected life until the fourth quarter of 2012.

The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2013 and 2012 was $1.24 and $4.41, respectively.

The following table summarizes stock option activity during the six months ended June 30, 2013:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		850,701		$	5.88
Granted		11,000		$	1.65
Exercised		(3,581	)	$	1.82
Forfeited, expired or cancelled		(70,711	)	$	6.96
Outstanding at June 30, 2013		787,409		$	5.74		5.70	$	2,152
Vested and expected to vest at June 30, 2013		744,966		$	5.83		5.57	$	564
Exercisable at June 30, 2013		571,045		$	6.30		4.62	$	–

The aggregate intrinsic value in the table above is before income taxes, based on Mediabistro’s closing stock price of $1.65 on June 28, 2013, the last trading day of the quarter. During the three months ended June 30, 2013 and 2012, the total intrinsic value of stock options exercised was $0 and $133,000, respectively. During the six months ended June 30, 2013 and 2012, the total intrinsic value of stock options exercised was $2,000 and $238,000, respectively.

As of June 30, 2013, there was $315,000 of unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Company’s stock incentive plan. The Company expects to amortize that cost over a weighted-average period of 1.8 years.

The following table summarizes restricted stock activity during the six months ended June 30, 2013:

	Shares			Weighted Average Grant Date Fair Value
Outstanding nonvested shares at December 31, 2012		779		$	11.69
Vested		(87	)	$	11.69
Forfeited		(692	)	$	11.69
Outstanding nonvested shares at June 30, 2013		–		$	–