F-29
Stock-basedValuationandCompensationExpense Information
The following table summarizes stock-based compensation expense for the years endedDecember 31, 2013, 2012 and2011
(in thousands), whichwas allocated as follows:
YearEndedDecember 31,
2013
2012
2011
Research, development andpatents ............... $
9,673 $
7,246 $
8,527
General and administrative ............................
1,745
1,325
1,318
Total .............................................................. $
11,418 $
8,571 $
9,845
DeterminingFairValue
Valuation.
Wemeasure stock-based compensation expense for equity-classified awards, principally related to stockoptions,
RSUs, and stockpurchase rights under theESPP at the grant date, basedon the estimated fair value of the award andwe recognize the
expense over the employee’s requisite service period.We valueRSUs basedon themarket price of our common stockon the date of
grant.
We use theBlack-Scholesmodel to estimate the fair value of stockoptions granted and stockpurchase rights under the
ESPP. The expected termof stockoptions granted represents the period of time that we expect them to be outstanding. We estimate
the expected termof options grantedbased onhistorical exercise patterns. We recognize compensation expense for stockoptions
granted, RSUs, and stock purchase rights under theESPPusing the acceleratedmultiple-option approach. Under the accelerated
multiple-option approach (alsoknown as the graded-vestingmethod), an entity recognizes compensation expense over the requisite
service period for each separatelyvesting tranche of the award as though the awardwere in substancemultiple awards, which results
in the expense being front-loadedover the vestingperiod.
For the years endedDecember 31, 2013, 2012 and 2011, we used the followingweighted-average assumptions inourBlack-
Scholes calculations:
Employee StockOptions:
December 31,
2013
2012
2011
Risk-free interest rate ....................
1.1%
1.1%
2.3%
Dividend yield...............................
0.0%
0.0%
0.0%
Volatility .......................................
51.1%
50.7%
52.4%
Expected life..................................
5.1 years
5.1 years
5.3 years
BoardofDirector StockOptions:
December 31,
2013
2012
2011
Risk-free interest rate ....................
2.2%
1.3%
2.9%
Dividend yield ...............................
0.0%
0.0%
0.0%
Volatility .......................................
52.7%
51.3%
52.8%
Expected life ..................................
7.2 years
7.6 years
7.8 years
ESPP:
December 31,
2013
2012
2011
Risk-free interest rate ....................
0.1%
0.1%
0.1%
Dividend yield ...............................
0.0%
0.0%
0.0%
Volatility .......................................
62.9%
44.5%
34.9%
Expected life ..................................
6months
6months
6months
Risk-Free Interest Rate.
We base the risk-free interest rate assumptiononobserved interest rates appropriate for the termof
our stockoptionplans or ESPP.
