XML 28 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity
 12 Months Ended
Dec. 31, 2015
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity
Stock Plans
In May 2009, the Company’s stockholders approved the amendment and restatement of the Company’s 2002 Stock Incentive Plan (the “Amended 2002 Plan”). The Company’s 2002 Stock Incentive Plan was amended to (i) increase the number of shares available for issuance under the Amended 2002 Plan by 1.3 million shares, (ii) revise the list of performance criteria that may be used by the compensation committee for purposes of granting awards under the Amended 2002 Plan that are intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code, as amended, and (iii) eliminate the automatic option grant program for non-employee directors, the director fee stock issuance program and the director fee option grant program, which programs have been superseded by the Company’s amended and restated Director Compensation Policy. Additionally, in May 2012, the Company’s stockholders approved an amendment and restatement of the Company’s 2002 Stock Incentive Plan to increase the number of shares available for issuance by 1.8 million shares. As of December 31, 2015, there were 0.7 million shares available for future option grants or direct issuance under the Amended 2002 Plan.
Following is a summary of the Company’s stock option plan activity and related information:
 
 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term in
Years
 
Aggregate
Intrinsic
Value
(In  thousands)
Balance at December 31, 2014
1,800,697

 
$
28.78

 
7.25
 
$
51,558

Granted
287,747

 
62.82

 
 
 
 
Exercised
(326,418
)
 
26.55

 
 
 
 
Forfeited
(78,685
)
 
45.75

 
 
 
 
Balance at December 31, 2015
1,683,341

 
34.23

 
6.66
 
124,880

Exercisable at December 31, 2015
1,193,288

 
25.41

 
5.98
 
99,061

Options vested and expected to vest as of December 31, 2015
1,683,341

 
$
34.23

 
6.66
 
$
124,880



The weighted-average grant-date fair value of all stock options granted during 2015, 2014 and 2013 was $35.39, $46.20 and $14.28 per share, respectively. The total intrinsic value of all options exercised during 2015, 2014 and 2013 was approximately $20.7 million, $15.3 million and $5.9 million, respectively. As of December 31, 2015, there was $13.1 million of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 2.4 years.
Cash received from options exercised, net of fees paid, in 2015, 2014 and 2013 was $8.7 million, $4.4 million and $3.0 million, respectively.
Following is a further breakdown of the options outstanding as of December 31, 2015:
 
Range of exercise prices
Options
outstanding
 
Weighted
average
remaining  life
in years
 
Weighted average
exercise price
 
Options
exercisable
 
Weighted average
exercise price
$8.58 – $12.53
353,949

 
5.17
 
$
10.26

 
353,824

 
$
10.26

$12.81-16.14
371,551

 
5.58
 
14.75

 
342,754

 
14.78

$17.10-32.30
361,019

 
6.55
 
23.34

 
270,634

 
23.81

$32.76-74.42
552,544

 
8.18
 
64.69

 
226,076

 
67.13

$89.75-104.59
44,278

 
9.47
 
98.13

 
—

 
—

$8.58 – $104.59
1,683,341

 
6.66
 
$
34.23

 
1,193,288

 
$
25.41


Restricted Stock Activity
The following is a summary of the Company’s restricted stock activity and related information:
 
 
Shares
 
Weighted-Average
Grant Date Fair
Value
Outstanding at December 31, 2014
82,673

 
$
45.76

Granted
112,954

 
63.50

Vested
(49,366
)
 
44.8

Forfeited
(15,512
)
 
54.91

Outstanding at December 31, 2015
130,749

 
$
60.36


Restricted stock awards generally vest over three years. As of December 31, 2015, unrecognized compensation cost related to non-vested stock awards amounted to $4.7 million. That cost is expected to be recognized over a weighted average period of 1.6 years.
Employee Stock Purchase Plan
The Company’s Amended ESPP allows participants to purchase up to 1,250 shares of Ligand common stock during each offering period, but in no event may a participant purchase more than 1,250 shares of common stock during any calendar year. The length of each offering period is six months, and employees are eligible to participate in the first offering period beginning after their hire date.
The Amended ESPP allows employees to purchase a limited amount of common stock at the end of each six month period at a price equal to 85% of the lesser of fair market value on either the start date of the period or the last trading day of the period (the “Lookback Provision”). The 15% discount and the Lookback Provision make the Amended ESPP compensatory. There were 3,374, 3,774 and 5,016 shares of common stock issued under the Amended ESPP in 2015, 2014 and 2013, respectively, resulting in an expense of $56,000, $54,000 and $45,000, respectively. For shares purchased under the Company’s Amended ESPP, a weighted-average expected volatility of 49%, 40% and 36% was used for 2015, 2014 and 2013, respectively. The expected term for shares issued under the ESPP is 6 months. As of December 31, 2015, 215,821 shares of common stock had been issued under the Amended ESPP to employees and 72,367 shares are available for future issuance.

Preferred Stock
The Company has authorized 5,000,000 shares of preferred stock, of which 1,600,000 are designated Series A Participating Preferred Stock (the “Preferred Stock”). The Board of Directors of Ligand has the authority to issue the Preferred Stock in one or more series and to fix the designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series, including the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), liquidation preferences and the number of shares constituting any such series, without any further vote or action by the stockholders. The rights and preferences of Preferred Stock may in all respects be superior and prior to the rights of the common stock. The issuance of the Preferred Stock could decrease the amount of earnings and assets available for distribution to holders of common stock or adversely affect the rights and powers, including voting rights, of the holders of the common stock and could have the effect of delaying, deferring or preventing a change in control of Ligand. As of December 31, 2015 and 2014, there are no preferred shares issued or outstanding.

Shareholder Rights Plan
In October 2006, the Company’s Board of Directors renewed the Company’s stockholder rights plan, which was originally adopted and has been in place since September 2002, and which expired on September 13, 2006, through the adoption of a new 2006 Stockholder Rights Plan (the “2006 Rights Plan”). The 2006 Rights Plan provides for a dividend distribution of one preferred share purchase right (a “Right”) on each outstanding share of the Company’s common stock. Each Right entitles stockholders to buy 1/1000th of a share of Ligand Series A Participating Preferred Stock at an exercise price of $100. The Rights will become exercisable if a person or group announces an acquisition of 20% or more of the Company’s common stock, or announces commencement of a tender offer for 20% or more of the common stock. In that event, the Rights permit stockholders, other than the acquiring person, to purchase the Company’s common stock having a market value of twice the exercise price of the Rights, in lieu of the Preferred stock. In addition, in the event of certain business combinations, the Rights permit the purchase of the common stock of an acquiring person at a 50% discount. Rights held by the acquiring person become null and void in each case. The 2006 Rights Plan expires in 2016.

Corporate Share Repurchase
In September 2015, the Company's Board of Directors authorized the Company to repurchase up to $200 million of its own stock in privately negotiated and open market transactions for a period of up to three years, subject to the Company's evaluation of market conditions, applicable legal requirements and other factors. During the year ended December 31, 2015, the Company repurchased 6,120 common shares at a weighted average price of $79.92 per share pursuant to the repurchase plan, or $0.5 million of common shares.

In August 2014, the Company's Board of Directors authorized the Company to repurchase up to $200 million of its own stock in privately negotiated and open market transactions for a period of up to one year, subject to the Company's evaluation of market conditions, applicable legal requirements and other factors. The plan expired in August 2015. During the year ended December 31, 2014, the Company repurchased 1,253,425 common shares at a weighted average price of $54.20 per share pursuant to the repurchase plan, or $68.0 million of common shares.