14. Stock-Based Compensation Expense

The Company included stock-based compensation expense related to all of the Company’s stock-based payments awards in various operating expense categories for the years ended December 31, 2016, 2015 and 2014 as follows:

	Years Ended
	December 31,
	2016		2015		2014
Stock-based compensation expense:
Technology and development	$	931	$	854	$	907
Sales and marketing(1)	1,415		1,445		1,506
General and administrative	1,554		1,708		2,209

Total stock-based compensation expense	$	3,900	$	4,007	$	4,622

(1)

Includes $0, $5, and $15 in stock-based compensation expense related to a non-employee third-party stock grant issued in 2016, 2015, and 2014 respectively.

Stock-Based Incentive Plans

On June 26, 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”). The Company has stock option awards outstanding under five stock-based incentive plans as of December 31, 2016, including, in each case, two plans that were assumed as part of the acquisition of ScanScout. The Company has restricted stock unit awards outstanding, under its 2013 Plan, as of December 31, 2016.

The Company’s initial share reserve under the 2013 Plan upon adoption was 1,333,333 shares of common stock. The number of shares reserved for issuance under the 2013 Plan increases automatically on the first day of January of each year, for a period of ten years, continuing through and including January 1, 2023, by the lesser of 4% of the total number of shares of common stock on the immediately preceding December 31st, or a lesser number of shares determined by the Company’s board of directors. The maximum term for stock option awards granted under the 2013 Plan may not exceed ten years from the date of grant. The 2013 Plan will terminate ten years from the date of approval unless it is terminated earlier by the compensation committee of the board of directors.

Stock Option Awards Outstanding

The following table presents summary information of the Company’s stock option awards outstanding and exercisable under all plans as of December 31, 2016:

	Options Outstanding				Options Exercisable
		Weighted				Weighted
		Average	Weighted			Average	Weighted
		Remaining	Average			Remaining	Average
		Contractual	Exercise			Contractual	Exercise
	Options	Life	Price		Options	Life	Price
Range of Exercise Prices	Outstanding	(Years)	Per Share		Exercisable	(Years)	Per Share

$0.26 – $0.44	26,013	.54	$	.44	26,013	.54	$	.44
$0.53 – $0.84	48,998	1.36	.69		48,998	1.36	.69
$1.11 – $1.49	1,181,400	4.4	1.39		856,400	2.50	1.27
$1.90 – $3.72	1,231,580	8.44	2.09		442,828	8.07	2.17
$4.27 – $5.90	3,600,608	4.59	4.56		3,435,325	4.47	4.57
$8.15 – $9.64	337,233	6.45	8.28		297,466	6.44	8.27

	6,425,832	5.35	3.65		5,107,030	4.52	3.96

The following table presents summary information of the Company’s stock option awards outstanding and exercisable under all plans as of December 31, 2016:

	Number of		Weighted
	Stock Option		Average
	Awards		Exercise Price
	Outstanding		Per Share
Stock option awards outstanding as of December 31, 2015	7,006,472		$	3.79
Stock option awards granted(1)	325,000		1.69
Stock option awards forfeited	(738,273	)	4.68
Stock option awards exercised	(167,367	)	.96

Stock option awards outstanding as of December 31, 2016	6,425,832		3.65


Stock option awards vested and exercisable as of December 31, 2016	5,107,030		3.96

(1)

Includes an employment inducement award granted to the Company’s newly appointed Chief Marketing Officer (“CMO”) on September 26, 2016. This award was comprised of stock options to purchase 125,000 shares of the Company’s common stock at an exercise price of $1.59 per share. The exercise price represents the closing price of the Company’s common stock on the date of grant. The award was issued outside of the Company’s stockholder approved equity compensation plans, but is generally subject to the same terms and conditions as applied to awards granted under the Company’s 2013 Plan. Stock option awards are generally granted at the fair market value of the Company’s common stock on the date of grant, generally vest over periods up to four years, have a one year cliff with monthly vesting thereafter, and have terms not to exceed 10 years.

Other selected information is as follows:

	Years Ended
	December 31,
	2016		2015		2014

Aggregate fair value of stock option awards vested	$	1,418	$	1,869	$	3,116
Aggregate intrinsic value of outstanding stock option awards	1,969		1,100		2,252
Aggregate intrinsic value of stock option awards exercised	155		311		2,407
Weighted-average grant-date fair value per share of stock option awards granted	0.57		0.80		1.84
Cash proceeds received from stock option awards exercised	161		108		767

The fair value for stock option awards granted under all plans was estimated at the date of grant using a Black-Scholes option pricing model. Calculating the fair value of the stock option awards requires subjective assumptions, including, but not limited to, the expected term of the stock option awards and stock price volatility. The Company estimates the expected life of stock option awards granted based on the simplified method, which the Company believes, is representative of the actual characteristics of the awards. The Company estimates the volatility of its common stock on the date of grant based on the historic volatility of comparable companies in its industry. Risk-free interest rates are based on yields from United States Treasury zero-coupon issues with a term consistent with the expected term of the awards in effect at the time of grant. Forfeitures are estimated at the time the stock option awards are granted based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of stock option awards that are expected to vest. The Company has never declared or paid any cash dividends and has no current plan to do so. Consequently, it used an expected dividend yield of zero.

The following table presents the assumptions for stock option awards granted during the years ended December 31, 2016, 2015 and 2014:

	2016	2015	2014

Volatility	33% - 32%	34% - 43%	48% - 49%
Risk-free interest rate	1.24% - 1.57%	1.60% - 1.73%	1.77% - 2.01%
Expected life (in years)	5.80 - 6.03	6.00 - 6.06	5.74 - 6.00
Dividend yield	0.00%	0.00%	0.00%

There was $1,129 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of 2.56 years.

Non-vested Restricted Stock Unit (RSU) Awards Outstanding

The following table presents a summary of the Company’s non-vested restricted stock unit award activity under all plans and related information for the year ended December 31, 2016:

	Number of		Weighted
	Restricted		Average
	Stock		Grant Date
	Awards		Fair Value
	Outstanding		Per Share
Non-vested restricted stock unit awards outstanding as of December 31, 2015	2,370,803		$	2.66
Restricted stock unit awards granted	3,046,681		1.81
Restricted stock unit awards forfeited	(831,290	)	2.23
Restricted stock unit awards vested	(835,902	)	2.32

Non-vested restricted stock unit awards outstanding as of December 31, 2016	3,750,292		2.07

	Years Ended
	December 31,
	2016		2015		2014

Aggregate grant date fair value of restricted stock unit awards outstanding	$	7,763	$	6,306	$	4,438

Restricted stock unit awards are generally granted at the fair market value of the Company’s common stock on the date of grant and vest on an annual basis over periods up to four years. Forfeitures are estimated at the time the restricted stock unit awards are granted based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of restricted stock unit awards that are expected to vest.

As restricted stock unit awards vest, they are settled on a net-share basis. Upon settlement, certain shares underlying each restricted stock unit award are withheld to satisfy income tax withholding obligations, which is based on the value of the restricted stock unit award on the settlement date as determined by the closing fair market value of the Company’s common stock, relating to the employees’ minimum statutory obligation.

There were $5,995 of total unrecognized compensation cost related to non-vested restricted stock unit awards granted under the Company’s equity incentive plans as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of 3.0 years.

Employee Stock Purchase Plan

On April 22, 2014, the Company’s board of directors adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which was approved by the Company’s stockholders at the 2014 annual meeting of stockholders on June 16, 2014. The 2014 ESPP allows eligible participants to purchase shares of the Company’s common stock generally at six-month intervals, or offering periods, at a price equal to 85% of the lower of (i) the fair market value at the beginning of the offering period or (ii) the fair market value at the end of the offering period, or the purchase date.

Employees purchase shares of common stock through payroll deductions, which may not exceed 15% of their total base salary. The 2014 ESPP imposes certain limitations upon an employee’s right to purchase shares, including the following: (1) no employee may purchase more than 5,000 shares on any one purchase date and (2) no employee may purchase shares with a fair market value in excess of $25 in any calendar year.

No more than 2,000,000 shares of common stock are reserved for future issuance under the 2014 ESPP. As of December 31, 2016, the Company had 1,280,569 shares of common stock reserved for future issuance under the 2014 ESPP.

The fair value for each award under the 2014 ESPP was estimated at the date of grant, at the beginning of the offering period, using a Black-Scholes option pricing model. Calculating the fair value of the ESPP awards requires subjective assumptions, including, but not limited to, the expected term of the ESPP award and stock price volatility. The Company estimates the expected life of the awards granted under the 2014 ESPP based on the duration of the offering periods, which is six months. The Company estimates the volatility of its common stock on the date of grant based on the historic volatility of comparable companies in its industry. Risk-free interest rates are based on yields from United States Treasury zero-coupon issues with a term consistent with the expected term of the awards in effect at the time of grant. Forfeitures are estimated at the beginning of the offering period based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of shares that are expected to be purchased. The Company has never declared or paid any cash dividends and has no current plan to do so. Consequently, it used an expected dividend yield of zero.

For the years ended December 31, 2016 and 2015, the following assumptions were used for awards issued under the 2014 ESPP:

	2016	2015
Volatility	32% - 35%	28% - 35%
Risk-free interest rate	0.46% - 0.49%	0.07% - 0.22%
Expected life (in years)	0.50	0.50
Dividend yield	0.00%	0.00%

There was $29 of total unrecognized compensation cost related to awards under the 2014 ESPP as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of less than one year.