Stock-based Compensation

Equity Incentive Plans

In March 2010, our board of directors (the "Board") and stockholders approved the 2010 Equity Incentive Award Plan (the "2010 Plan"), which became effective upon the completion of our initial public offering (“IPO”) in April 2010. The number of shares of our common stock available for issuance under the 2010 Plan is equal to 1,100,000 shares plus any shares of common stock reserved for future grant or issuance under the Company’s 2002 Stock Plan (the “2002 Plan”) that remained unissued at the time of completion of the IPO. The 2010 Plan also provides for automatic annual increases in the number of shares reserved for future issuance. All grants will reduce the 2010 Plan reserve by one share for every share granted. As of December 31, 2016, total shares remaining available for issuance under the 2010 Plan were approximately 7.8 million shares.

The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock award (“RSA”), restricted stock unit (“RSU”), performance-based awards, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

Incentive stock options may be granted with an exercise price of not less than the fair value of our common stock on the date of grant, and the nonstatutory stock options may be granted with an exercise price of not less than 85% of the fair value of our common stock on the date of grant, as determined by the Board. Stock options granted to a stockholder owning more than 10% of our voting stock must have an exercise price of not less than 110% of the fair value of the common stock on the date of grant. Stock options are granted with terms of up to 10 years and generally vest over a period of 4 years.

RSAs, RSUs and Performance-Contingent RSUs (“PSUs”) may be granted for no consideration (other than par value of a share of common stock). The fair values of RSAs, RSUs and PSUs are based upon the closing price of our common stock on the date of grant. RSAs generally vest over one to three years. RSUs generally vest over three to four years. PSUs generally vest over two years and are conditional upon the attainment of one or more performance objectives over a specified period.

Stock-Based Compensation Expense:

Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands):



	Years Ended December 31,
	2016		2015		2014
Research and development	$	1,033	$	935	$	953
Selling, general and administrative	4,640		4,191		3,667
	$	5,673	$	5,126	$	4,620

Grant Award Activities:

Stock Option Awards

We estimated the fair value of stock options using the Black-Scholes-Merton option-pricing model based on the date of grant. The following summarize the ranges of weighted-average assumptions used to estimate the fair value of employee stock options granted:



	Years Ended December 31,
	2016		2015		2014
Expected life (years)	5.3		6.1		6.0
Volatility	64.2	%	66.1	%	65.0	%
Risk-free interest rate	1.3	%	1.7	%	1.9	%
Expected dividend yield⁽¹⁾	0.0	%	0.0	%	0.0	%


(1)	We do not currently pay dividends, and thus the dividend rate variable in the Black-Scholes-Merton option-pricing model is zero.

The following table summarizes stock option activity in 2016:



	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)				(in years)	(in thousands)
Balance at January 1, 2016	3,918		$	4.49
Granted	971		$	4.16
Exercised	(398	)	$	2.60
Forfeited/Expired	(601	)	$	5.76
Outstanding at December 31, 2016	3,890		$	4.40	6.54	$	4,494

Exercisable at December 31, 2016	2,477		$	4.84	5.31	$	3,138
Vested and expected to vest at December 31, 2016	3,693		$	4.42	6.40	$	4,381

The weighted average grant date fair value per share of stock options granted in 2016, 2015 and 2014 was $2.32, $2.09 and $1.20, respectively. The total intrinsic value of options exercised in 2016, 2015 and 2014 was $0.6 million, $0.4 million and $57 thousand, respectively.

As of December 31, 2016, there was $2.1 million unrecognized stock-based compensation cost related to non-vested options, which we expect to recognize over a weighted average period of 2.7 years.

Restricted Stock Awards

The following table summarizes the RSAs activity in 2016:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Non-vested balance at January 1, 2016	480		$	3.29
Granted	185		$	4.21
Vested	(435	)	$	3.40
Forfeited/Expired	—		$	—
Non-vested balance at December 31, 2016	230		$	3.82

The weighted average grant date fair value per share of RSAs granted in 2016, 2015 and 2014 was $4.21, $4.10 and $1.64, respectively. The total fair value of RSAs vested in fiscal 2016, 2015 and 2014 was $1.8 million, $2.3 million and $0.7 million respectively.

As of December 31, 2016, there was $0.4 million unrecognized stock-based compensation cost related to non-vested RSAs, which we expect to recognize over a weighted average period of 0.6 years.

Restricted Stock Units

The following table summarizes the RSUs activity in 2016:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Non-vested balance at January 1, 2016	545		$	3.15
Granted	330		$	4.10
Vested	(243	)	$	3.11
Forfeited/Expired	(15	)	$	2.74
Non-vested balance at December 31, 2016	617		$	3.69

The weighted average grant date fair value per share of RSUs granted in 2016, 2015 and 2014 was $4.10, $3.65 and $2.14, respectively. The total fair value of RSUs vested in fiscal 2016, 2015 and 2014 was $1.0 million, $2.9 million and $1.9 million respectively.

As of December 31, 2016, there was $1.1 million unrecognized stock-based compensation cost related to non-vested RSUs, which we expect to recognize over a weighted average period of 1.5 years.

Performance-Contingent RSUs

The following table summarizes the PSUs activity in 2016:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Non-vested balance at January 1, 2016	989		$	2.94
Granted	629		$	4.10
Vested	(482	)	$	2.89
Forfeited/Expired	(305	)	$	2.82
Non-vested balance at December 31, 2016	831		$	3.88

The weighted average grant date fair value per share of PSUs granted in 2016, 2015 and 2014 was $4.10, $3.45 and $2.00, respectively. The total fair value of PSUs vested in fiscal 2016 and 2015 were $1.8 million and $0.8 million, respectively. We had no PSUs vest in 2014.

As of December 31, 2016, there was $1.1 million unrecognized stock-based compensation cost related to non-vested PSUs, which we expect to recognize over a weighted average period of 0.5 years.