Common Stock and Stock Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Common Stock and Stock Compensation

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 4,868 shares of common stock at a weighted average price of 26.01 per share for aggregate purchase price of approximately $127,000. There was no "odd lot" share repurchase program during 2012.

Equity Incentive 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, cancel or are forfeited.  In May 2011, the Company's stockholders approved the addition of 200,000 shares of common stock available for issuance under the 2007 Plan. At December 31, 2012, a total of 289,606 shares of common stock were available for issuance under the 2007 Plan.  

In May 2012 at the Annual Meeting of Stockholders, the stockholders approved an amendment to the 2007 Plan. The 2007 Plan was amended to change the way restricted stock unit grants reduce the number of shares available for issuance under the 2007 Plan. Prior to the amendment, for each grant or forfeiture of a restricted stock unit, the number of shares available for issuance under the 2007 Plan decreased or increased by two. The amendment changed this 2:1 ratio to a 1:1 ratio.

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 on the date of grant.  All vested stock options 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 as 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.

Stock Options

The following table summarizes option activities from December 31, 2011 through December 31, 2012:

	Number of Shares		Weighted-Average Exercise Price per Share	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2011	411,726		$20.47
Granted	5,989		$18.07
Exercised	(27,782	)	$12.77
Forfeited	(181,071	)	$21.25
Outstanding as of December 31, 2012	208,862		$20.75	4.3	$252
Vested or expected to vest at December 31, 2012	202,526		$20.69	4.2	$250
Exercisable at December 31, 2012	166,155		$20.77	3.6	$216

The total intrinsic value of options exercised was $0.1 million, $0.6 million and $3.6 million for the years ended December 31, 2012 , December 31, 2011 and December 31, 2010, respectively. The Company issues new shares upon the exercise of options. The weighted average grant date fair value was $7.42, $13.72 and $8.70 for the years ended December 31, 2012 , December 31, 2011 and December 31, 2010 , respectively. For the years ended December 31, 2012, December 31, 2011 and December 31, 2010, no tax benefit was realized from exercised options.

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,
	2012		2011		2010
Expected life (years)	3.02		4.36		5.6
Risk-free interest rate	0.4	%	1.2	%	2.3	%
Volatility	62	%	74	%	63	%
Dividend yield	—		—		—

Restricted Stock

Outstanding restricted stock units granted to employees vest over a three year period. Outstanding restricted stock units granted to non-employee directors typically vest in less than a year and represent compensation for serving on the Company's Board of Directors.  The following table summarizes restricted stock activities from December 31, 2011 through December 31, 2012:

	Number of Shares		Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2011	388,318		$23.65
Granted	167,120		$16.31
Restricted Stock Release	(235,029	)	$22.44
Canceled	(94,007	)	$18.31
Outstanding as of December 31, 2012	226,402		$21.70

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense as recorded in the Consolidated Statements of Operations (in thousands):

	Year Ended December 31,
	2012		2011		2010
Cost of revenue	$	376	$	193	$	97
Sales and marketing	$	148	$	55	$	10
Technology and design	133		57		19
General and administrative	2,902		2,712		1,295
Included in operating expenses	3,183		2,824		1,324
Total stock-based compensation expense	$	3,559	$	3,017	$	1,421

Stock-based compensation expense is recognized, net of estimated forfeitures, on a straight line basis over the vesting period. Forfeitures are estimated at the time of the grant, based on historical trends, and revised in subsequent periods, if necessary.

As of December 31, 2012, total compensation cost not yet recognized and the weighted-average remaining term is as follows ($ in thousands):

	Expense not yet recognized		Weighted Average Remaining Term (in years)
Stock Options	$	439	1.8
Restricted Stock Units	$	2,528	1.2