Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation and Stock Incentive Plans

v2.4.0.6
Stock-Based Compensation and Stock Incentive Plans
3 Months Ended
Apr. 30, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

10. Stock-Based Compensation and Stock Incentive Plans

 

2011 Compensation and Incentive Plan.

 

On July 20, 2011, our stockholders approved the adoption of our 2011 Compensation and Incentive Plan (the “2011 Plan”). Under the 2011 Plan the number of authorized shares of common stock is equal to 2,800,000 shares plus the number of shares that expired, terminated, surrendered or forfeited awards subsequent to July 20, 2011 under the Amended and Restated 2005 Equity Compensation and Incentive Plan (the2005 Plan”). Following approval of the 2011 Plan, we terminated the 2005 Plan. The 2011 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units (“RSUs”), and other equity based non-stock option awards as determined by the plan administrator by officers, employees, consultants, and directors of the Company. The Board of Directors amended the 2011 Plan in the first quarter of fiscal 2014 to increase the per participant award limit per fiscal year from 500,000 shares to 1,250,000 shares while providing a per participant vesting limit per fiscal year of 500,000 shares. This amendment is effective as of February 1, 2012. We may satisfy awards upon the exercise of stock options or vesting of RSUs with newly issued shares or treasury shares. The Board of Directors is responsible for the administration of the 2011 Plan and determining the terms of each award, award exercise price, the number of shares for which each award is granted and the rate at which each award vests. In certain instances the Board of Directors may elect to modify the terms of an award. In the second quarter of fiscal 2013, the Board of Directors elected to modify awards for a departing Board member and certain departing employees. The modification allowed awards to vest without completion of the required service period.

 

Option awards may be granted to employees at an exercise price per share of not less than 100% of the fair market value per common share on the date of the grant. RSUs and other equity-based non-stock option awards may be granted to any officer, employee, director, or consultant at a purchase price per share as determined by the Board of Directors. Awards granted under the 2011 Plan generally vest over three years and expire seven years from the date of the grant.

 

On May 1, 2012, we granted to the Chief Executive Officer as part of his total compensation package, 875,000 Market Condition Options to purchase the Company’s common stock at an exercise price equal to the last reported sale price of the common stock as of the date of the grant. The award was in excess of the then-existing per participant award limit under the 2011 Plan, which, as described above, was subsequently amended effective as of February 1, 2012. The stock options vest in increments based upon the closing price of SeaChange’s common stock. If on May 1, 2015 less than 437,500 options have vested pursuant to stock price vesting terms, then an additional number of options shall vest on such date that the total number of vested options under the award shall equal 437,500 and all remaining unvested options shall thereupon expire.

 

We recorded the fair value of these stock options using the Monte Carlo simulation model, since the stock option vesting is variable depending on the closing price of our traded common stock. The model simulated the daily trading price of the market stock options expected term to determine if the vesting conditions would be triggered during that term. As a result, the fair value of these stock options was estimated at $3.3 million at the date of grant using the following assumptions:

 

· The stock option value per share was $3.78;

 

· The derived service period is 2.1 years; and

 

· The risk-free interest rate is 1.22%.

  

We incurred stock compensation expenses of $0.4 million for the three months ended April 30, 2013 relating to these stock options. The stock-based compensation cost is measured at the grant date at the fair value of the award and is recognized over the employee’s derived service period.

 

The following table presents total stock-based compensation expense included in the consolidated statements of operations and comprehensive loss:

 

    Three Months Ended  
    April 30,  
    2013     2012  
    (Amounts in thousands)  
Cost of revenues   $ 54     $ 117  
Research and development     85       116  
Selling and marketing     46       132  
General and administrative     928       663  
Total stock-based compensation   $ 1,113     $ 1,028