Note 11 - Stock-based Compensation

12 Months Ended

Dec. 31, 2014

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

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

11. Stock-Based Compensation

In June 2010, the Board of Directors approved the Company’s 2010 Stock Incentive Plan (the “2010 Plan”), which became effective in November 2010. The 2010 Plan provides for the grants of restricted stock, stock appreciation rights and stock unit awards to employees, non-employee directors, advisors and consultants. The Board of Directors administers the 2010 Plan, including the determination of the recipient of an award, the number of shares subject to each award, whether an option is to be classified as an incentive stock option or nonstatutory option, and the terms and conditions of each award, including the exercise and purchase prices and the vesting or duration of the award. Options granted under the 2010 Plan are exercisable only upon vesting. At December 31, 2014, 1,570,319 shares of common stock have been reserved for future grants under the 2010 Plan.

Stock Option Awards

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Year Ended December 31,
	2014		2013			2012
Risk-free interest rate		—		1.41	%		1.32	%
Expected life (in years)		—		6.25			6.22
Dividend yield		—		—			—
Expected volatility		—		50	%		50	%

The following table summarizes information regarding options outstanding:

	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2013		3,883,097		$	9.26		6.33	$	16,229
Granted		—			—
Exercised		(788,196	)		5.45
Canceled		(89,307	)		12.52
Outstanding at December 31, 2014		3,005,594		$	10.16		6.12	$	25,302
Exercisable at December 31, 2014		2,349,476		$	9.69		5.82	$	20,880
Vested and expected to vest in the future as of December 31, 2014		3,001,391		$	10.16		6.12	$	25,273

The intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the respective balance sheet dates.

The weighted average grant date fair value per share of stock options granted to employees during the years ended December 31, 2014, 2013 and 2012 was $0, $4.82 and $6.18, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $7,800, $7,313, and $6,861, respectively. The intrinsic value of exercised options is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. Cash received from the exercise of stock options was $4,298, $2,905 and $1,828, respectively, for the years ended December 31, 2014, 2013 and 2012.

Stock Option Exchange Offer

On September 20, 2012, the Company commenced an offering to eligible employees to voluntarily exchange certain vested and unvested stock option grants. Under the program, eligible employees holding options to purchase the Company’s common stock were given the opportunity to exchange certain of their existing options, with exercise prices at or above $16.63 per share for a predetermined smaller number of stock options to be granted following the expiration of the tender offer with exercise prices equal to the fair market value of one share of the Company’s common stock on the day the new awards were issued. Stock options to purchase an aggregate of 508,399 shares with exercise prices ranging from $16.63 to $22.07 were eligible for tender at the commencement of the program. The Company’s directors and executive officers were not eligible to participate in the program. The program is structured as a value-neutral exchange. The replacement awards would be targeted at providing value that is, in the aggregate, not greater than the fair value of the exchanged stock options. This means that the employees who participate in the program are expected to receive a number of replacement awards with an aggregate value that does not exceed the aggregate value of the stock options surrendered in the exchange. The terms and conditions of the new options, including the vesting schedules, will be substantially the same as the terms and conditions of the options cancelled.

On October 19, 2012, the offer period ended and the Company accepted for exchange and cancellation 464,899 vested and unvested eligible options to purchase common stock, with a weighted average exercise price of $21.06. In exchange, the Company issued 353,779 vested and unvested options to purchase shares of the Company’s common stock with an exercise price of $8.93, the closing price of the Company’s common stock on October 22, 2012. Using the Black-Scholes option pricing model, the Company determined that the fair value of the surrendered stock options on a grant-by-grant basis was approximately equal, as of the date of the exchange, to the fair value of the eligible stock options exchanged, resulting in insignificant incremental share-based compensation.

Restricted Stock Units and Awards

The Company granted restricted stock units (RSUs) to members of the Board of Directors and employees. Most of the Company’s outstanding restricted stock units vest over four years with vesting contingent upon continuous service. The Company estimates the fair value of restricted stock units using the market price of the common stock on the date of the grant. The fair value of these awards is amortized on a straight-line basis over the vesting period.

The following table summarizes information regarding outstanding restricted stock units:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2013		3,209,567		$	11.69
Granted		2,878,836			13.99
Vested		(1,098,924	)		12.61
Canceled		(199,857	)		11.92
Outstanding at December 31, 2014		4,789,622		$	12.85
Expected to vest in the future as of December 31, 2014		4,712,501

On October 16, 2014, the Compensation Committee of the Board of Directors granted one-time employment RSU awards of 1,000,000 shares to certain Cortina employees who entered employment with the Company commencing upon the closing of the acquisition. The awards vest over four years with vesting contingent upon continuous service.

The Company granted restricted stock awards (RSAs) to certain members of the Board of Directors. The Company estimates the fair value of the RSAs using the market price of the common stock on the date of the grant. As of December 31, 2011, the Company had 21,425 of which 8,576 RSAs vested during the year ended December 31, 2012, resulting to 12,849 unvested RSAs outstanding as of December 31, 2012. During 2013, 9,998 RSAs vested, resulting to 2,851 unvested RSAs outstanding as of December 31, 2013. All remaining unvested RSAs of $2,851 vested during the year ended December 31, 2014.

Employee Stock Purchase Plan

In December 2011, the Company adopted the Employee Stock Purchase Plan (“ESPP”). Participants purchase the Company's stock using payroll deductions, which may not exceed 15% of their total cash compensation. Pursuant to the terms of the ESPP, the "look-back" period for the stock purchase price is six months. Offering and purchase periods will begin on February 10 and August 10 of each year. Participants will be granted the right to purchase common stock at a price per share that is 85% of the lesser of the fair market value of the Company's common shares at the beginning or the end of each six-month period.

The ESPP imposes certain limitations upon an employee’s right to acquire common stock, including the following: (i) no employee shall be granted a right to participate if such employee immediately after the election to purchase common stock, would own stock possessing 5% or more to the total combined voting power or value of all classes of stock of the Company, and (ii) no employee may be granted rights to purchase more than $25 fair value of common stock for each calendar year. The maximum aggregate number of shares of common stock available for purchase under the ESPP is one million shares. Total common stock issued under the ESPP during the years ended December 31, 2014, 2013 and 2012 was 264,886, 279,074 and 101,088, respectively.

The fair value of employee stock purchase plan is estimated at the start of offering period using the Black-Scholes option pricing model with the following average assumptions for the years ended December 31, 2014, 2013 and 2012:

	Year Ended December 31,
	2014			2013			2012
Risk-free interest rate		0.07	%		0.10	%		0.13	%
Expected life (in years)		0.50			0.49			0.50
Dividend yield		—			—			—
Expected volatility		40	%		45	%		81	%
Estimated fair value	$	3.55		$	2.86		$	4.69

Stock-Based Compensation Expense

Stock-based compensation expense is included in the Company’s results of operations as follows:

	Year Ended December 31,
	2014		2013		2012
Cost of revenue	$	1,260	$	1,086	$	726
Research and development		12,420		8,586		5,833
Sales and marketing		4,079		3,204		2,660
General and administrative		4,701		4,102		3,240
	$	22,460	$	16,978	$	12,459

As of December 31, 2014, total unrecognized compensation cost related to unvested stock options and awards prior to the consideration of expected forfeitures, was approximately $52,068, which is expected to be recognized over a weighted-average period of 2.88 years.