Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

(4) Stock-Based Compensation

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include option grants and restricted stock awards.

Stock-based compensation expense related to internal labor is capitalized to software and patents based on direct labor hours charged to capitalized software and patent costs.

Determining Fair Value

Stock Options

Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model. The Company amortizes the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and pre-vesting and post-vesting forfeitures. Stock options granted generally vest over three to four years for employee grants and one to two years for director grants, and have contractual terms of ten years.

Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the expected life of the award.

Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the expected life of the award.

Expected Dividend Yield. The expected dividend yield is derived by the Company’s expected annual dividend rate over the expected term divided by the fair value of the Company’s common stock at the grant date.

There were no stock options granted during the years ended December 31, 2016, 2015 and 2014.

The Company records stock-based compensation expense for stock option awards only for those awards that are expected to vest.

Restricted Stock

The fair value of restricted stock awarded is based on the fair market value of the Company’s common stock on the date of the grant (measurement date), and is recognized over the vesting period of the award using the straight-line method.

The Company records stock-based compensation expense for restricted stock awards only for those awards that are expected to vest.

Stock-based Compensation

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2016		2015		2014
Stock-based compensation:
Cost of revenue	$	709	$	740	$	545
Sales and marketing		975		775		674
Research, development and engineering		1,381		1,308		1,406
General and administrative		2,182		1,978		2,454
Intellectual property		306		276		324
Stock-based compensation expense		5,553		5,077		5,403
Capitalized to software and patent costs		164		174		177
Total stock-based compensation	$	5,717	$	5,251	$	5,580

The following table sets forth total unrecognized compensation cost related to non-vested stock-based awards granted under all equity compensation plans:

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2016		2015		2014
Total unrecognized compensation costs	$	9,728	$	9,549	$	11,206

Total unrecognized compensation costs will be adjusted for any future forfeitures.

The Company expects to recognize the total unrecognized compensation costs as of December 31, 2016 for stock options and restricted stock over weighted average periods through December 2020 as follows:

	Stock	Restricted
	Options	Stock
Weighted average period	0.0 years	1.3 years