The Company has three stock option plans under which grants are currently outstanding: the 1997 Stock Option Plan (the "1997 Plan"), the 1999 Non-statutory Stock Option Plan (the "1999 Plan") and the 2006 Equity Incentive Plan (the "2006 Plan"). Grants under all plans typically have a requisite service period of 60 months, have straight-line or graded vesting schedules (the 1997 and 1999 plans only) and expire not more than ten years from date of grant. Effective with stockholder approval of the 2006 Plan in May 2006, no further awards are being made under the 1997 Plan and the 1999 Plan but the plans will continue to govern awards previously granted under those plans.

The 2006 Plan was approved by the stockholders in May 2006. The 2006 Plan, as amended, provides for the issuance of the following types of incentive awards: (i) stock options; (ii) stock appreciation rights; (iii) restricted stock; (iv) restricted stock units; (v) performance shares and performance units; and (vi) other stock or cash awards. This plan provides for the granting of awards at less than fair market value of the common stock on the date of grant, but such grants would be counted against the numerical limits of available shares at a ratio of 1.5 to 1. The Board of Directors reserved 8,400,000 shares in March 2006 for issuance under this plan, subject to stockholder approval. Upon stockholder approval of this Plan on May 10, 2006, the 1997 Plan was replaced and the 1999 Plan was terminated. On April 30, 2009, stockholders approved additional 6,500,000 shares for issuance under the 2006 Plan. Those who will be eligible for awards under the 2006 Plan include employees, directors and consultants who provide services to the Company and its affiliates. These options typically have a requisite service period of 60 months, have straight-line vesting schedules, and expire ten years from date of grant. The Board will periodically review actual share consumption under the 2006 Plan and may make a request for additional shares as needed.

As of December 31, 2011, 2,812,876 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 and non-employee directors and consultants.

A summary of shares available for grant under the Company's plans is as follows:



Shares available as of December 31, 2008	2,556,984
Increase in shares approved for issuance	6,500,000
Stock options granted	(1,487,905	)
Stock options forfeited	2,123,045
Stock options expired under former plans	(1,849,516	)
Nonvested equity stock and stock units granted(1)	(419,214	)
Nonvested equity stock and stock units forfeited(1)	39,000

Total shares available for grant as of December 31, 2009	7,462,394
Stock options granted	(1,921,743	)
Stock options forfeited	1,411,524
Stock options expired under former plans	(1,231,899	)
Nonvested equity stock and stock units granted(1)	(453,468	)
Nonvested equity stock and stock units forfeited(1)	81,354

Total shares available for grant as of December 31, 2010	5,348,162
Stock options granted	(2,357,001	)
Stock options forfeited	865,097
Stock options expired under former plans	(503,526	)
Nonvested equity stock and stock units granted(1)	(562,257	)
Nonvested equity stock and stock units forfeited(1)	22,401

Total shares available for grant as of December 31, 2011	2,812,876

The following table summarizes stock option activity under the 1997, 1999 and 2006 Plans for the years ended December 31, 2011 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2011.

	Options Outstanding

	Options Outstanding					Weighted Average Remaining Contractual Term
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(Dollars in thousands, except per share amounts)
Outstanding as of December 31, 2008		16,573,739		$	21.19
Options granted		1,487,905			9.21
Options exercised		(1,482,489	)		11.29
Options forfeited		(2,123,045	)		21.34

Outstanding as of December 31, 2009		14,456,110		$	20.95
Options granted		1,921,743			22.47
Options exercised		(996,946	)		12.95
Options forfeited		(1,411,524	)		49.43

Outstanding as of December 31, 2010		13,969,383		$	18.85
Options granted		2,357,001			18.83
Options exercised		(873,691	)		8.46
Options forfeited		(865,097	)		14.53

Outstanding as of December 31, 2011		14,587,596		$	19.73		5.49	$	806

Vested or expected to vest at December 31, 2011		14,103,419		$	19.76		5.38	$	806
Options exercisable at December 31, 2011		10,428,578		$	20.26		4.36	$	806

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options at December 31, 2011, based on the $7.55 closing stock price of Rambus' Common Stock on December 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 December 31, 2011 was 262,467 and 262,467, respectively.

The following table summarizes the information about stock options outstanding and exercisable as of December 31, 2011:

	Options Outstanding						Options Exercisable

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$3.82 - $11.31		1,604,986		5.74	$	8.03		964,767	$	7.48
$11.39 - $14.89		1,577,402		5.46	$	14.23		1,043,121	$	14.11
$15.23 - $17.95		1,527,818		3.63	$	16.94		1,406,188	$	16.96
$18.04 - $18.69		1,697,627		4.76	$	18.61		1,621,495	$	18.61
$19.13 - $19.86		1,927,709		5.92	$	19.63		1,521,929	$	19.61
$20.16 - $20.86		196,622		8.42	$	20.37		58,078	$	20.40
$20.93 - $20.93		1,467,812		9.05	$	20.93		245,500	$	20.93
$21.14 - $22.72		1,550,770		7.13	$	22.45		758,296	$	22.24
$22.77 - $26.45		1,617,650		4.46	$	23.75		1,390,004	$	23.83
$27.32 - $46.80		1,419,200		2.82	$	34.62		1,419,200	$	34.62

$3.82 - $46.80		14,587,596		5.49	$	19.73		10,428,578	$	20.26

During the three year period ended December 31, 2011, the Company had one employee stock purchase plan, the 2006 Employee Stock Purchase Plan.

In March 2006, the Company adopted the 2006 Employee Stock Purchase Plan, as amended (the "2006 Purchase Plan") and reserved 1,600,000 shares, subject to stockholder approval which was received on May 10, 2006. Employees generally will be eligible to participate in this plan if they are employed by Rambus for more than 20 hours per week and more than five months in a fiscal year. The 2006 Purchase Plan provides for six month offering periods, with a new offering period commencing on the first trading day on or after May 1 and November 1 of each year. Under this plan, employees may purchase stock at the lower of 85% of the beginning of the offering period (the enrollment date), or the end of each offering period (the purchase date). Employees generally may not purchase more than the number of shares having a value greater than $25,000 in any calendar year, as measured at the purchase date.

During the year ended December 31, 2011, the Company issued 271,804 shares under the 2006 Purchase Plan at a weighted average price of $15.62 per share. During the year ended December 31, 2010, the Company issued 261,088 shares under the 2006 Purchase Plan at a weighted average price of $14.78 per share. During the year ended December 31, 2009, the Company issued 418,215 shares under the 2006 Purchase Plan at a weighted average price of $8.95 per share. As of December 31, 2011, 313,964 shares remain available for issuance under the 2006 Purchase Plan.

During the years ended December 31, 2011, 2010 and 2009, Rambus granted 2,357,001, 1,921,743 and 1,487,905 stock options, respectively, with an estimated total grant-date fair value of $24.2 million, $24.9 million and $10.2 million, respectively. During the years ended December 31, 2011, 2010 and 2009, Rambus recorded stock-based compensation related to stock options of $19.6 million, $22.6 million and $24.4 million, respectively.

As of December 31, 2011, there was $35.8 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans. This cost is expected to be recognized over a weighted-average period of 3.3 years. The total fair value of options vested for the years ended December 31, 2011, 2010 and 2009 was $144.8 million, $137.9 million and $195.2 million, respectively.

The total intrinsic value of options exercised was $6.2 million, $9.1 million and $8.3 million for the years ended December 31, 2011, 2010 and 2009, 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 proceeds received from the employees to exercise the options.

During the years ended December 31, 2011, 2010 and 2009, proceeds from employee stock option exercises totaled approximately $7.4 million, $12.9 million (of which $0.6 million was included in prepaid and other assets as of December 31, 2010 and was subsequently received in January 2011), and $16.7 million (of which $0.3 million was included in prepaid and other assets as of December 31, 2009 and was subsequently received in January 2010), respectively.

During the years ended December 31, 2011, 2010 and 2009, Rambus recorded stock-based compensation related to employee stock purchase plans of $1.7 million, $1.6 million and $1.8 million, respectively. As of December 31, 2011, there was $0.9 million of total unrecognized compensation cost related to share-based compensation arrangements granted under the 2006 Purchase Plan. 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 years ended December 31, 2011, 2010 and 2009 calculated in accordance with accounting for share-based payments.

Rambus estimates the fair value of stock options using the Black-Scholes-Merton model ("BSM"). The BSM model determines the fair value of stock-based compensation and is affected by Rambus' stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include expected volatility, expected life of the award, expected dividend rate, and expected risk-free rate of return. The assumptions for expected volatility and expected life are the two assumptions that significantly affect the grant date fair value. If actual results differ significantly from these estimates, stock-based compensation expense and Rambus' results of operations could be materially impacted.

The fair value of stock awards is estimated as of the grant date using the 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 for Years Ended December 31,

	2011	2010	2009
Stock Option Plans
Expected stock price volatility	50% - 75%	49% - 69%	89% - 96%
Risk free interest rate	1.4% - 2.8%	2.0% - 3.2%	1.8% - 2.8%
Expected term (in years)	6.0 - 6.1	5.9 - 6.2	5.3 - 6.1
Weighted-average fair value of stock options granted	$10.27	$12.98	$6.85

	Employee Stock Purchase Plan for Years Ended December 31,

	2011	2010	2009
Employee Stock Purchase Plan
Expected stock price volatility	56% - 78%	50% - 54%	86% - 92%
Risk free interest rate	0.1%	0.2% - 0.3%	0.2% - 0.3%
Expected term (in years)	0.5	0.5	0.5
Weighted-average fair value of purchase rights granted under the purchase plan	$6.16	$6.45	$5.52

Expected Stock Price Volatility: Given the volume of market activity in its market traded options, Rambus determined that it would use the implied volatility of its nearest-to-the-money traded options. The Company believes that the use of implied volatility is more reflective of market conditions and a better indicator of expected volatility than historical volatility. If there is not sufficient volume in its market traded options, the Company will use an equally weighted blend of historical and implied volatility.

Risk-free Interest Rate: Rambus bases the risk-free interest rate used in the BSM valuation method on implied yield currently available on the U.S. Treasury zero-coupon issues with an equivalent term. Where the expected terms of Rambus' stock-based awards do not correspond with the terms for which interest rates are quoted, Rambus uses an approximation based on rates on the closest term currently available.

Expected Term: The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The expected term of ESPP grants is based upon the length of each respective purchase period.

The Company grants nonvested equity stock units to certain officers, employees and directors. For the year ended December 31, 2011, the Company granted nonvested equity stock units totaling 374,838 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 $6.7 million. The Company occasionally grants nonvested equity stock units to its employees with vesting subject to the achievement of certain performance conditions. During the years ended December 31, 2011 and 2010, 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 years. During the year ended December 31, 2009, the Company did not recognize any compensation expense for any performance equity stock units since the performance conditions had not been met.

For the years ended December 31, 2011, 2010, and 2009, the Company recorded stock-based compensation expense of approximately $6.7 million, $6.3 million and $5.4 million, respectively, related to all outstanding equity stock grants. Unrecognized stock-based compensation related to all nonvested equity stock grants, net of an estimate of forfeitures, was approximately $8.4 million at December 31, 2011. This cost is expected to be recognized over a weighted average period of 1.8 years.

The following table reflects the activity related to nonvested equity stock and stock units for the three years ended December 31, 2011:

Nonvested Equity Stock and Stock Units			Weighted- Average Grant-Date Fair Value

Nonvested at December 31, 2008	821,064		$	18.46
Granted	279,476			11.12
Vested	(290,564	)		17.43
Forfeited	(26,000	)		18.05

Nonvested at December 31, 2009	783,976			16.24
Granted	302,312			21.87
Vested	(314,045	)		17.18
Forfeited	(54,236	)		15.76

Nonvested at December 31, 2010	718,007			18.23
Granted	374,838			17.86
Vested	(314,401	)		18.15
Forfeited	(14,934	)		21.76

Nonvested at December 31, 2011	763,510			18.02