Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

(9) Stock-Based Compensation

The Company recognizes all share-based payments to employees and directors in the financial statements based on their fair values. The Company records compensation expense over an award’s requisite service period, or vesting period, based on the award’s fair value at the date of grant. The Company’s policy is to charge the fair value of stock options as an expense on a straight-line basis over the vesting period, which is generally four years for employees and three years for directors. Generally, the vesting of all of the Company’s stock options was based on the passage of time and the employees’ continued service. In December 2011 and January 2012, the Company granted performance-based stock options to purchase a total of 697,500 shares of common stock to employees. Of this amount, options to purchase 174,375 shares will vest immediately upon the achievement of various performance conditions and options to purchase 523,125 shares will begin to vest over a three year service period upon the achievement of the same performance conditions. During the nine months ended September 30, 2012 one of the specified performance conditions was achieved and options to purchase 87,189 shares began vesting over a three-year period in accordance with the terms of the performance-based options. The Company recognizes expense over the implicit and explicit service periods for awards with performance conditions when the Company determines the achievement of the performance conditions to be probable.

The Company recorded charges of $505,000 and $655,000 in its statements of comprehensive loss for the three months ended September 30, 2012 and 2011, respectively, and $1,628,000 and $2,094,000 in its statements of comprehensive loss for the nine months ended September 30, 2012 and 2011, respectively, for stock-based compensation expense attributable to share-based payments made to employees and directors. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions apply to the options to purchase 157,500 and 160,750 shares of common stock granted to employees and directors during the nine months ended September 30, 2012 and 2011, respectively:

	Nine Months Ended September 30,
	2012			2011
Average risk free interest rate		0.9	%		3.0	%
Expected dividend yield		—			—
Expected lives (years)		5.6			9.7
Expected volatility		63	%		62	%
Weighted average grant date fair value of options granted during the period (per share)	$	0.54		$	1.55
Weighted average exercise price of options granted during the period (per share)	$	0.97		$	2.18

The expected lives and the expected volatility of the options are based on historical experience. All options granted during the nine months ended September 30, 2012 and 2011 were granted at exercise prices equal to the fair market value of the common stock on the dates of grant.