Equity Incentive Plan

9 Months Ended

Sep. 30, 2013

Equity Incentive Plan

Equity Incentive Plan

8. Equity Incentive Plan

In connection with our IPO, the Company’s Board of Directors adopted the 2010 Equity Incentive Plan (as amended, the “2010 Plan”). The 2010 Plan is administered by the Board of Directors, or the plan administrator. Awards issuable under the 2010 Plan include common stock, stock options, restricted stock, stock appreciation rights, dividend equivalents and other incentive awards. Following approval by the Board of Directors on March 30, 2013, our stockholders, on May 22, 2013, approved the amendment and restatement of the 2010 Plan which, among other things, increased the number of shares of common stock authorized for issuance by 3,000,000 shares. We have reserved a total of 6,000,000 shares of our common stock for issuance pursuant to the 2010 Plan, which may be adjusted for changes in our capitalization and certain corporate transactions. To the extent that an award expires, terminates or lapses, or an award is settled in cash without the delivery of shares of common stock to the participant, then any unexercised shares subject to the award will be available for future grant or sale under the 2010 Plan. Shares of restricted stock which are forfeited or repurchased by us pursuant to the 2010 Plan may again be optioned, granted or awarded under the 2010 Plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the 2010 Plan.

As of September 30, 2013, 3,632,820 shares of our common stock were available for issuance pursuant to the 2010 Plan.

Stock Options

Stock option awards are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant. The fair value of each option granted under the 2010 Plan is estimated on the date of grant using the Black-Scholes option-pricing model. For the nine months ended September 30, 2013, options to purchase 209,268 shares of common stock were granted. The fair values are being amortized on a straight-line basis over the vesting periods.

The following table sets forth the stock option activity under the 2010 Plan for the nine months ended September 30, 2013:

	Number of Shares Subject to Option		Weighted Average Exercise Price
Options outstanding, December 31, 2012	1,017,195		$	17.25
Granted	209,268		32.50
Forfeited	(23,865	)	21.22
Exercised	(40,277	)	15.65
Options outstanding, September 30, 2013	1,162,321		$	19.97

The following table sets forth the number of shares subject to options that are unvested as of September 30, 2013, and the fair value of these options at the grant date:

	Number of Shares Subject to Option		Weighted Average Fair Value at Grant
Unvested balance, December 31, 2012	730,159		$	5.70
Granted	209,268		10.01
Forfeited	(23,865	)	6.69
Vested	(261,862	)	5.55
Unvested balance, September 30, 2013	653,700		$	7.11

As of September 30, 2013, total unearned compensation on options was approximately $3.9 million, and the weighted-average vesting period was 2.2 years.

Restricted Awards

During the nine months ended September 30, 2013, the Company granted 187,186 shares of restricted stock under the 2010 Plan. Additionally, the Company granted 5,328 restricted stock units, or RSUs under the 2010 Plan. The principal difference between these instruments is that RSUs are not outstanding shares of the Company’s common stock and do not have any of the rights or privileges thereof, including voting rights. On the applicable vesting date, the holder of an RSU becomes entitled to one share of common stock for each RSU. Restricted awards are amortized on a straight-line basis over the vesting period. The following table sets forth the number of unvested restricted awards and the weighted average fair value of these awards at the date of grant:

	Restricted Awards		Weighted Average Fair Value at Grant
Unvested balance, December 31, 2012	598,695		$	21.37
Granted	192,514		32.47
Forfeited	(16,902	)	25.08
Vested	(229,613	)	20.80
Unvested balance, September 30, 2013	544,694		$	25.42

As of September 30, 2013, total unearned compensation on restricted awards was approximately $11.3 million, and the weighted-average vesting period was 2.4 years.