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Equity Incentive Plans and Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2011
Equity Incentive Plans and Stock-Based Compensation |
Equity Incentive Plans and Stock-Based Compensation |
5. Equity Incentive Plans and Stock-Based Compensation Stock Option Plans As of June 30, 2011, 3,522,722 shares of the 14,900,000 shares approved under the 2006 Plan remain available for grant. The 2006 Plan is now the Company’s only plan for providing stock-based incentive compensation to eligible employees, executive officers, non-employee directors and consultants. A summary of shares available for grant under the Company’s plans is as follows:
|  | Shares Available for Grant |
Shares available as of December 31, 2010 |  | 5,348,162 |
Stock options granted |  | (1,712,211 | )
Stock options forfeited |  | 447,417 |
Stock options expired under former plans |  | (262,716 | )
Nonvested equity stock and stock units granted (1) |  | (320,331 | )
Nonvested equity stock and stock units forfeited (1) |  | 22,401 |
Total available for grant as of June 30, 2011 |  | 3,522,722 |
(1) For purposes of determining the number of shares available for grant under the 2006 Plan against the maximum number of shares authorized, each restricted stock granted reduces the number of shares available for grant by 1.5 shares and each restricted stock forfeited increases shares available for grant by 1.5 shares. General Stock Option Information The following table summarizes stock option activity under the 1997, 1999 and 2006 Plans for the six months ended June 30, 2011 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of June 30, 2011.
|  | Options Outstanding |  | Weighted |  |  |
|  |  |  | Weighted |  | Average |  |  |
|  |  |  | Average |  | Remaining |  | Aggregate |
|  | Number of |  | Exercise Price |  | Contractual |  | Intrinsic |
|  | Shares |  | Per Share |  | Term(in years) |  | Value |
|  | (Dollars in thousands, except per share amounts) |
Outstanding as of December 31, 2010 |  | 13,969,383 |  | $ | 18.85 |  |  |  |  |
Options granted |  | 1,712,211 |  | 20.71 |  |  |  |  |
Options exercised |  | (478,974 | ) | 10.29 |  |  |  |  |
Options forfeited |  | (447,417 | ) | 11.48 |  |  |  |  |
Outstanding as of June 30, 2011 |  | 14,755,203 |  | 19.57 |  | 5.61 |  | $ | 14,793 |
Vested or expected to vest at June 30, 2011 |  | 14,209,999 |  | 19.56 |  | 5.49 |  | 14,406 |
Options exercisable at June 30, 2011 |  | 10,199,075 |  | 19.76 |  | 4.36 |  | 10,787 |
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options at June 30, 2011, based on the $14.68 closing stock price of Rambus’ Common Stock on June 30, 2011 on the NASDAQ Global Select Market, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options outstanding and exercisable as of June 30, 2011 was 2,529,882 and 1,819,311, respectively. Employee Stock Purchase Plans Under the 2006 Employee Stock Purchase Plan (“ESPP”), the Company issued 146,034 shares at a price of $16.50 per share during the six months ended June 30, 2011. The Company issued 161,293 shares at a price of $13.56 per share during the six months ended June 30, 2010. As of June 30, 2011, 439,734 shares under the 2006 ESPP remained available for issuance. Stock-Based Compensation For the six months ended June 30, 2011 and 2010, the Company maintained stock plans covering a broad range of potential equity grants including stock options, nonvested equity stock and equity stock units and performance based instruments. In addition, the Company sponsors an ESPP, whereby eligible employees are entitled to purchase Common Stock semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market value of the Common Stock as of certain specified dates. Stock Options During the three and six months ended June 30, 2011, Rambus granted 78,510 and 1,712,211 stock options, respectively, with an estimated total grant-date fair value of $0.6 million and $18.3 million, respectively. During the three and six months ended June 30, 2011, Rambus recorded stock-based compensation expense related to stock options of $5.0 million and $10.2 million, respectively. During the three and six months ended June 30, 2010, Rambus granted 138,350 and 1,725,323 stock options, respectively, with an estimated total grant-date fair value of $2.0 million and $22.9 million, respectively. During the three and six months ended June 30, 2010, Rambus recorded stock-based compensation expense related to stock options of $6.0 million and $11.7 million, respectively. As of June 30, 2011, there was $40.4 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements granted under the stock option plans. That cost is expected to be recognized over a weighted-average period of 3.4 years. The total fair value of shares vested as of June 30, 2011 was $141.7 million. The total intrinsic value of options exercised was $1.9 million and $4.0 million for the three and six months ended June 30, 2011, respectively. The total intrinsic value of options exercised was $3.3 million and $5.2 million for the three and six months ended June 30, 2010, respectively. Intrinsic value is the total value of exercised shares based on the price of the Company’s common stock at the time of exercise less the cash received from the employees to exercise the options. During the six months ended June 30, 2011, net proceeds from employee stock option exercises totaled approximately $4.9 million. Employee Stock Purchase Plans For the three and six months ended June 30, 2011, the Company recorded compensation expense related to the ESPP of $0.4 million and $0.8 million, respectively. For the three and six months ended June 30, 2010, the Company recorded compensation expense related to the ESPP of $0.4 million and $0.9 million, respectively. As of June 30, 2011, there was $0.6 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under the ESPP. That cost is expected to be recognized over four months. There were no tax benefits realized as a result of employee stock option exercises, stock purchase plan purchases, and vesting of equity stock and stock units for the three and six months ended June 30, 2011 and 2010 calculated in accordance with accounting for share-based payments. Valuation Assumptions The fair value of stock awards is estimated as of the grant date using the Black-Scholes-Merton (“BSM”) option-pricing model assuming a dividend yield of 0% and the additional weighted-average assumptions as listed in the following tables:
|  | Stock Option Plans |
|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Stock Option Plans |  |  |  |  |  |  |  |  |
Expected stock price volatility |  | 50 | % | 69 | % | 50-52% |  | 61-69% |
Risk free interest rate |  | 2.6 | % | 3.2 | % | 2.6-2.8% |  | 2.4-3.2% |
Expected term (in years) |  | 6.1 |  | 6.1 |  | 6.0 - 6.1 |  | 5.9 – 6.1 |
Weighted-average fair value of stock options granted |  | $ | 8.58 |  | $ | 14.38 |  | $ | 10.71 |  | $ | 13.27 |
|  | Employee Stock Purchase Plan |
|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Employee Stock Purchase Plan |  |  |  |  |  |  |  |  |
Expected stock price volatility |  | 56 | % | 54 | % | 56 | % | 54 | %
Risk free interest rate |  | 0.1 | % | 0.3 | % | 0.1 | % | 0.3 | %
Expected term (in years) |  | 0.5 |  | 0.5 |  | 0.5 |  | 0.5 |
Weighted-average fair value of purchase rights granted under the purchase plan |  | $ | 5.96 |  | $ | 7.46 |  | $ | 5.96 |  | $ | 7.46 |
Nonvested Equity Stock and Stock Units The Company grants nonvested equity stock units to certain officers, employees and directors. For the three months ended June 30, 2011, the Company made no equity stock unit grants. During the six months ended June 30, 2011, the Company granted nonvested equity stock units totaling 213,554 shares under the 2006 Plan. These awards have a service condition, generally a service period of four years, except in the case of grants to directors, for which the service period is one year. The nonvested equity stock units were valued at the date of grant giving them a fair value of approximately $4.5 million. The Company occasionally grants nonvested equity stock units to its employees with vesting subject to the achievement of certain performance conditions. During the three and six months ended June 30, 2011, the achievement of certain performance conditions for certain performance equity stock units was considered probable, and as a result, the Company recognized an insignificant amount of stock-based compensation expense related to these performance stock units for both periods. For the three and six months ended June 30, 2011, the Company recorded stock-based compensation expense of approximately $1.6 million and $3.3 million, respectively, related to all outstanding unvested equity stock grants. For the three and six months ended June 30, 2010, the Company recorded stock-based compensation expense of approximately $1.5 million and $3.1 million, respectively, related to all outstanding unvested equity stock grants. Unrecognized stock-based compensation related to all nonvested equity stock grants, net of estimated forfeitures, was approximately $9.7 million at June 30, 2011. This is expected to be recognized over a weighted average period of 1.9 years. The following table reflects the activity related to nonvested equity stock and stock units for the six months ended June 30, 2011:
Nonvested Equity Stock and Stock Units |  | Shares |  | Weighted- Average Grant-Date Fair Value |
Nonvested at December 31, 2010 |  | 718,007 |  | $ | 18.23 |
Granted |  | 213,554 |  | 20.86 |
Vested |  | (147,197 | ) | 17.30 |
Forfeited |  | (14,934 | ) | 21.76 |
Nonvested at June 30, 2011 |  | 769,430 |  | 19.07

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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