Common Stock and Stock Compensation

Stock Repurchase Program

In February 2011, the Company announced an "odd lot" share repurchase program under which the Board of Directors approved the repurchase of up to $1.0 million of the Company's common stock through March 18, 2011. Under this program, the Company repurchased approximately 5,000 shares of common stock at a weighted average price of 26.01 per share for aggregate purchase price of approximately $127,000.

Stock Option Plans

In December 2007, the Company's stockholders approved the 2007 Equity Incentive Plan (“2007 Plan”). The 2007 Plan replaced the Company's 1998 Stock Plan (the “1998 Plan”) and the 1999 Director Option Plan (the “Directors' Plan”), collectively referred to as the “Equity Plans”. The Equity Plans will continue to govern awards previously granted under each respective plan. There were initially 525,000 shares of common stock reserved for issuance under the 2007 Plan, subject to increase for stock options or awards previously issued under the Equity Plans which expire or are canceled. In May 2011, the Company's stockholders added 200,000 shares of common stock to the Plan. At December 31, 2011, after consideration of options outstanding in the table below, a total of 270,479 shares of common stock were available for issuance under the 2007 Plan. The 2007 Plan provides that each share award granted with an exercise price less than the fair market value on the date of grant will be counted as two shares towards the shares reserved and each such share award forfeited or repurchased by the Company will increase the shares reserved by two shares.

Under the 2007 Plan, the Board of Directors may grant to employees, consultants and directors an option to purchase shares of the Company’s Common Stock and/or awards of the Company’s common stock at terms and prices determined by the Board of Directors.

The 2007 Plan will terminate in 2017. Options granted under the 2007 Plan must be issued at a price equal to at least the fair market value of the Company’s common stock at the date of grant. All vested options or awards granted under the 2007 Plan may be exercised at any time within 10 years of the date of grant or within 90 days of termination of employment, or such other time as may be provided in the stock option agreement, and vest over a vesting schedule determined by the Board of Directors. The Company’s policy is to issue new shares upon exercise of options, granting of Restricted Stock Awards ("RSA") or vesting of Restricted Stock Units ("RSU") under the 2007 Plan.

As of December 31, 2011, the Company had reserved shares of its common stock for future issuance as follows:



1998 Stock Option Plan and Assumed Plans	35,726
1999 Director Option Plan	10,000
2007 Equity Plan	366,000
	411,726

The following table summarizes option activities from December 31, 2008 through December 31, 2011:



	Number of Shares		Weighted-Average Exercise Price per Share
Outstanding as of December 31, 2008	865,082		$29.10
Granted	187,905		$12.10
Exercised	(20,519	)	$12.60
Canceled	(306,747	)	$39.20
Outstanding as of December 31, 2009	725,721		$20.88
Granted	305,469		$15.32
Exercised	(230,723	)	$8.51
Canceled	(325,809	)	$24.05
Outstanding as of December 31, 2010	474,658		$20.72
Granted	174,017		$24.34
Exercised	(73,907	)	$16.34
Canceled	(163,042	)	$27.19
Outstanding as of December 31, 2011	411,726		$20.47

The options outstanding and currently exercisable by exercise price at December 31, 2011 were as follows (in thousands, except years and per-share amounts):



			OPTIONS OUTSTANDING				OPTIONS EXERCISABLE
Range of Exercise Prices			Number Outstanding	Weighted Average Remaining Life (in years)	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
$8.30	—	$11.90	42,722	6.70	$	11.65	28,081	$	11.64
12.50	—	14.00	55,134	7.46	13.53		32,049	13.54
14.20	—	14.50	15,897	6.52	14.39		10,789	14.35
14.70	—	14.70	46,000	8.26	14.70		19,166	14.70
14.90	—	19.47	45,622	7.71	17.00		18,692	16.44
20.22	—	21.09	56,267	9.70	20.71		921	20.88
21.80	—	26.40	37,179	7.21	24.73		14,104	24.80
26.60	—	26.60	42,550	9.25	26.60		—	—
26.72	—	28.50	42,700	9.19	26.80		6,812	27.24
29.66	—	52.00	27,655	4.06	$	41.33	24,255	42.96
$8.30	—	$52.00	411,726	7.88	$	20.47	154,869	$	20.02

The total intrinsic value of stock options outstanding and stock options exercisable as of December 31, 2011 and December 31, 2010 was $0.6 million and $3.6 million respectively. The aggregate intrinsic value in the above table is calculated as the excess of the December 31, 2011 official closing price of the Company's stock of $17.05 per share as reported by the NASDAQ Global Market over the exercise price of the shares. The weighted-average remaining contractual life of options exercisable as of December 31, 2011 was 5.90 years. The total number of in-the-money options exercisable as of December 31, 2011 was 0.1 million.

The following table summarizes restricted stock activities from December 31, 2008 through December 31, 2011:



	Number of Shares		Weighted-Average Exercise Price per Share
Outstanding as of December 31, 2008	86,667		$	29.10
Granted	4,900		$	12.14
Restricted Stock Release	(42,651	)	$	12.26
Restricted Stock Repurchase	(7,667	)	$	12.34
Outstanding as of December 31, 2009	41,249		$	12.14
Granted	163,650		$	25.89
Restricted Stock Release	(33,428	)	$	14.41
Restricted Stock Repurchase	(7,042	)	$	20.15
Outstanding as of December 31, 2010	164,429		$	25.89
Granted	107,100		$	25.63
Granted outside of Plan	312,500		$	23.18
Restricted Stock Release	(55,503	)	$	25.17
Canceled	(140,208	)	$	25.94
Outstanding as of December 31, 2011	388,318		$	23.65

Restricted stock includes both RSAs and RSUs. At December 31, 2011, the Company had 388,318 outstanding RSUs, which vest over a three year period. At December 31, 2010, the Company had 156,250 outstanding RSUs, which vest over a three year period. There were no RSUs outstanding at December 31, 2009. There were no outstanding RSAs at December 31, 2011. At December 31, 2010 and December 31, 2009 the Company had outstanding RSAs of 8,179 and 41,249, respectively, which are included in Common Stock. The total intrinsic value of options exercised was negligible during the years ended December 31, 2011, December 31, 2010 and December 31, 2009. The Company issues new shares upon the exercise of options. For the years ended December 31, 2011, December 31, 2010, and December 31, 2009, no tax benefit was realized from exercised options.

The total fair value of options vested during the years ended December 31, 2011, December 31, 2010 and December 31, 2009 were insignificant. As of December 31, 2011, total compensation cost not yet recognized and the weighted-average remaining term is as follows (amounts in thousands)

Valuation and Expense Information

The following table summarizes stock-based compensation expense recorded (in thousands):



	For Year Ended December 31,
	2011		2010		2009
E-commerce cost of revenue	$	193	$	97	$	79
Media cost of revenue	44		109		240
Included in cost of revenue	$	237	$	206	$	319
Sales and marketing	$	257	$	458	$	513
Research and development	157		298		343
General and administrative	3,004		1,291		1,476
Included in operating expenses	$	3,418	$	2,047	$	2,332
Total share-based compensation expense	$	3,656	$	2,253	$	2,651

In conjunction with the resignation of certain key executives in March 2011 and September 2011, the Company accelerated vesting of options to purchase 23,000 shares. In conjunction with the resignation of certain executives in August 2010 and September 2010, the Company accelerated vesting of options to purchase 88,000 shares and extended the exercise period of 29,000 options. As a result of these modifications the Company recorded minimal additional stock-based compensation for the year ended December 31, 2011 and $0.4 million for December 31, 2010 and $1.0 million for the year ended December 31, 2009.

The fair value of RSAs and RSUs has been calculated based on the grant date fair value of the Company's common stock. The fair value of the option grants has been calculated on the date of grant using the Black-Scholes option pricing model. The expected life was based on historical settlement patterns. Expected volatility was based on historical implied volatility in the Company’s stock. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The following table summarizes the weighted-average assumptions for stock options granted:



	Year Ended December 31,
	2011	2010	2009
Expected life (years)	4.36	5.6	5.82
Risk-free interest rate	1.15%	2.3%	2.8%
Volatility	74%	63%	66%
Dividend yield	None	None	None
Weighted average fair value at grant date	$13.72	$8.70	$7.40

As stock-based compensation expense is recognized in the Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been 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. Forfeitures are estimated based on historical experience. Stock based compensation is recognized on a straight line basis over the vesting period.

Expense not yet
recognized

Remaining Term(years)

Stock Options

Restricted Stock Units