Equity Incentive Plans

9 Months Ended

Sep. 30, 2012

Equity Incentive Plans [Abstract]

Equity Incentive Plans

7. Equity Incentive Plans

In May 2002, the stockholders approved the Amended and Restated 1997 Stock Option/Stock Issuance Plan (the 1997 Plan), in September 2002, the stockholders approved the 2002 Equity Incentive Plan (the 2002 Plan, and collectively with the 1997 Plan, the Prior Plans), and in February 2012, the stockholders approved the 2012 Equity Incentive Award Plan (the 2012 Plan, and together with the Prior Plans, the Stock Plans). As of February 8, 2012, the effective date of the 2012 Plan, no further award grants will be made under the Prior Plans.

As of September 30, 2012, the total number of shares available for issuance under the 2012 Plan was 1,577,967, which consists of (a) 3,000,000 shares of the Company’s common stock initially reserved for issuance under the 2012 Plan, (b) 52,576 shares of common stock available for issuance under the Prior Plans as of the effective date of the 2012 Plan and (c) 33,461 shares of common stock subject to outstanding awards under the Stock Plans that were forfeited or lapsed unexercised between the effective date of the 2012 Plan and September 30, 2012, less 1,508,070 shares of common stock granted under the 2012 Plan between February 8, 2012 and September 30, 2012. The number of shares available for issuance under the 2012 Plan will be annually increased by an amount equal to the lesser of: 2,000,000 shares; or, 4% of the outstanding shares of the Company’s common stock as of the last day of the Company’s immediately preceding fiscal year; or, an amount determined by our Board of Directors. As of September 30, 2012, a total of 1,485,070 shares of common stock were subject to outstanding awards under the 2012 Plan.

Under the 2012 Plan, incentive stock options may be granted by the Board of Directors to employees, and nonstatutory options may be granted by the Board of Directors to employees, officers, directors and consultants, at exercise prices of not less than 100% of the fair value at the date of grant. Under the 2012 Plan, options may be granted with different vesting terms from time to time, but not to exceed 10 years from the date of grant. Outstanding options generally vest over four years, with 25% of the total grant vesting on the first anniversary of the option grant date and 1/36th of the remaining grant vesting each month thereafter.

In February 2012, the stockholders approved the 2012 Employee Stock Purchase Plan, (the ESPP), which plan became effective as of February 8, 2012. A total of 300,000 shares of the Company’s common stock have been reserved for issuance under the ESPP. In addition, the number of shares available for issuance under the ESPP will be annually increased on the first day of each fiscal year during the term of the ESPP, beginning with the 2013 fiscal year, by an amount equal to the lesser of: 300,000 shares; 1% of outstanding shares of the Company’s common stock; or, an amount determined by its Board of Directors. The ESPP provides for an aggregate limit of 3,300,000 shares of common stock that may be issued under the ESPP during the term of the ESPP. As of September 30, 2012, no shares of common stock have been issued to employees under the ESPP.

As of September 30, 2012, the Company had the following option activity under its Stock Plans:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding at December 31, 2011		4,016,393		$	4.89
Granted		1,508,070			13.47
Exercised		(89,977	)		3.51
Forfeited		(37,527	)		9.32
Options outstanding at September 30, 2012		5,396,959		$	7.28		6.87 years	$	26,685,432

Stock-based Compensation

As of September 30, 2012, $13.7 million of total unrecognized compensation expense related to employee stock options was expected to be recognized over a weighted-average period of 2.88 years. The fair values of the employee stock options granted under the Company’s Stock Plans were estimated at the date of grant using the Black-Scholes option-pricing model. Since implementing the ESPP in 2012, the Company has recorded approximately $101,000 in stock compensation expense relating to the ESPP.