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Stock Based Compensation | 12 Months Ended
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Dec. 31, 2011
Stock-based Compensation and Employee Benefit Plans [Abstract] |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | 3. STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Vicor currently grants stock options under the following equity compensation plans that are shareholder-approved: Amended and Restated 2000 Stock Option and Incentive Plan (the “Vicor 2000 Plan”) — Under the Vicor 2000 Plan, the Board of Directors or the Compensation Committee of the Board of Directors may grant stock incentive awards based on the Company’s Common Stock, including stock options, stock appreciation rights, restricted stock, performance shares, unrestricted stock, deferred stock and dividend equivalent rights. Awards may be granted to employees and other key persons, including non-employee directors. Incentive stock options may be granted to employees at a price at least equal to the fair market value per share of the Common Stock on the date of grant, and non-qualified options may be granted to non-employee directors at a price at least equal to 85% of the fair market value of the Common Stock on the date of grant. A total of 4,000,000 shares of Common Stock have been reserved for issuance under the Vicor 2000 Plan. The period of time during which an option may be exercised and the vesting periods are determined by the Compensation Committee. The term of each option may not exceed ten years from the date of grant. 1998 Stock Option and Incentive Plan (the “Vicor 1998 Plan”) — The Vicor 1998 Plan permitted the grant of share options to its employees and other key persons, including non-employee directors for the purchase of up to 2,000,000 shares of common stock. As a result of the approval of the Vicor 2000 Plan, no further grants were made under the Vicor 1998 Plan. 1993 Stock Option Plan (the “Vicor 1993 Plan”) — The Vicor 1993 Plan permitted the grant of share options to its employees and non-employee directors for the purchase of up to 4,000,000 shares of common stock. As a result of the approval of the Vicor 2000 Plan, no further grants were made under the 1993 Plan. Picor Corporation (“Picor”), a privately held majority-owned subsidiary of Vicor, currently grants stock options under the following equity compensation plan that has been approved by its Board of Directors: 2001 Stock Option and Incentive Plan, as amended (the “2001 Picor Plan”) — Under the 2001 Picor Plan, the Board of Directors of Picor may grant stock incentive awards based on the Picor Common Stock, including stock options, restricted stock or unrestricted stock. Awards may be granted to employees and other key persons, including non-employee directors and full or part-time officers. Incentive stock options may be granted to employees at a price at least equal to the fair market value per share of the Picor Common Stock, based on judgments made by the Company, on the date of grant. A total of 80,000,000 shares of Picor Common Stock have been reserved for issuance under the 2001 Picor Plan. The period of time during which an option may be exercised and the vesting periods are determined by the Picor Board of Directors. The term of each option may not exceed ten years from the date of grant. V*I Chip Corporation (“V*I Chip”), a privately held wholly-owned subsidiary of Vicor, currently grants stock options under the following equity compensation plan that has been approved by its Board of Directors: 2007 Stock Option and Incentive Plan, as amended (the “2007 V*I Chip Plan”) — Under the 2007 V*I Chip Plan, the Board of Directors of V*I Chip may grant stock incentive awards based on the V*I Chip Common Stock, including stock options, restricted stock or unrestricted stock. Awards may be granted to employees and other key persons, including non-employee directors and full or part-time officers. Incentive stock options may be granted to employees at a price at least equal to the fair market value per share of the V*I Chip Common Stock, based on judgments made by the Company, on the date of grant. A total of 100,000,000 shares of V*I Chip Common Stock have been reserved for issuance under the 2007 V*I Chip Plan. The period of time during which an option may be exercised and the vesting periods are determined by the V*I Chip Board of Directors. The term of each option may not exceed ten years from the date of grant. All non performance-based option awards are granted at an exercise price equal to or greater than the market price for Vicor at the date of the grant, and are granted at a price equal to or greater than the estimated fair value for both Picor and V*I Chip at the date of grant. Options generally vest over various periods of up to five years and may be exercised for up to 10 years from the date of grant, which is the maximum contractual term. The Company uses the graded attribution method to recognize expense for all stock-based awards. During the third quarter of 2010, the Company granted 1,243,750 non-qualified stock options under the Vicor 2000 Plan, with performance-based vesting provisions tied to achievement of certain quarterly revenue targets by the Brick Business Unit. Under the accounting rules for performance-based awards, the Company is required to assess, on an ongoing basis, the probability of whether the performance criteria will be achieved. If and when achievement is deemed probable, the Company will begin to recognize the associated compensation expense for the stock options over the relevant performance period. As of December 31, 2011, the Company determined that it was not probable that the revenue targets could be achieved and, accordingly, has not recorded compensation expense relating to these options since the grant date. The unrecognized compensation expense of these performance-based options was approximately $7,790,000 as of December 31, 2011. The fair value for the options was estimated at the date of grant using the Black-Scholes option pricing model. On December 31, 2010, the Company granted 2,984,250 non-qualified stock options under the 2007 V*I Chip Plan with performance-based vesting provisions tied to achievement of certain margin targets by the V*I Chip Business Unit. As of December 31, 2010, the Company determined that it was probable that the margin targets could be achieved and, accordingly, will begin recording compensation expense relating to these options beginning January 1, 2011. The unrecognized compensation expense of these performance-based options was approximately $1,199,000 as of December 31, 2011. The fair value for the options was estimated at the date of grant using the Black-Scholes option pricing model. Stock compensation expense for the years ended December 31 was as follows (in thousands):
|  | 2011 |  |  | 2010 |  |  | 2009 |
Cost of revenues |  | $ | 68 |  |  | $ | 19 |  |  | $ | 20 |
Selling, general and administrative |  |  | 1,188 |  |  |  | 618 |  |  |  | 456 |
Research and development |  |  | 667 |  |  |  | 234 |  |  |  | 181 |
Total stock based compensation |  | $ | 1,923 |  |  | $ | 871 |  |  | $ | 657 |
The increase in stock compensation expense in 2011 compared to 2010 was primarily due to the recording of compensation expense for the V*I Chip performance-based options beginning on January 1, 2011, and to a grant of Picor stock options to all Picor employees in the fourth quarter of 2010. During the third quarter of 2011, the Picor Board of Directors (the “Picor Board”) authorized different alternatives of net settlement to holders of Picor stock options in the tenth and final year of their respective terms. In addition, the Picor Board approved an offer to repurchase up to 1,142,000 shares of Picor Common Stock from a limited number of holders who purchase these shares via exercise before October 31, 2011. As a result, the Company accrued $368,000 in the third quarter of 2011, representing the maximum repurchase obligation to these holders assuming all holders sold their shares. This resulted in additional stock-based compensation expense of $169,000 and $132,000 in Selling, general and administrative and Research and development expense, respectively, along with a charge of $67,000 against Additional paid-in-capital, in the third quarter of 2011. During the fourth quarter of 2011, the Company accounted for those options for which repurchase was ultimately not elected by the holder, reducing the accrual by $106,000, with the offset to Picor’s additional paid-in capital. The fair value for the options was estimated at the date of grant using a Black-Scholes option pricing model under all methods with the following weighted-average assumptions:
|  | Non Performance- based Stock Options (1) |  |  | Performance- based Stock Options (2) |
Vicor: |  | 2011 |  |  | 2010 |  |  | 2009 |  |  | 2010 |
Risk-free interest rate |  |  | 1.8 | % |  |  | 2.3 | % |  |  | 1.1 | % |  |  | 2.0-2.7 | %
Expected dividend yield |  |  | 1.6 | % |  |  | 1.6 | % |  |  | 1.0 | % |  |  | 2.5 | %
Expected volatility |  |  | 54 | % |  |  | 54 | % |  |  | 67 | % |  |  | 55 | %
Expected lives (years) |  |  | 5.0 |  |  |  | 3.9 |  |  |  | 2.7 |  |  |  | 6.5-9.5 |
V*I Chip: |  | 2011 |  |  | 2010 |  |  | 2009 |  |  | 2010 |
Risk-free interest rate |  |  | 1.5 | % |  |  | 2.7 | % |  |  | — |  |  |  | 2.7 | %
Expected dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Expected volatility |  |  | 49 | % |  |  | 49 | % |  |  | — |  |  |  | 49 | %
Expected lives (years) |  |  | 6.5 |  |  |  | 6.5 |  |  |  | — |  |  |  | 6.5 |
Picor: |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Risk-free interest rate |  |  | 1.6 | % |  |  | 2.0 | % |  |  | — |  |  |  |  |
Expected dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |
Expected volatility |  |  | 52 | % |  |  | 52 | % |  |  | — |  |  |  |  |
Expected lives (years) |  |  | 6.5 |  |  |  | 6.5 |  |  |  | — |  |  |  |  |
(1) | There were no Picor or V*I Chip options granted during 2009.
(2) | There were no Vicor or V*I Chip performance-based options granted in 2011 or prior to 2010.
Risk-free interest rate: Vicor — The Company uses the yield on zero-coupon U.S. Treasury “Strip” securities for a period that is commensurate with the expected term assumption for each vesting period. Picor and V*I Chip — Picor and V*I Chip use the yield to maturity of a seven-year U.S. Treasury bond, as it most closely aligns to the expected exercise period. Expected dividend yield: Vicor — The Company determines the expected dividend yield by annualizing the most recent prior cash dividends declared by the Company’s Board of Directors and dividing that result by the closing stock price on the date of that dividend declaration. Dividends are not paid on options. Picor and V*I Chip — Picor and V*I Chip have not and do not expect to declare and pay dividends in the foreseeable future. Therefore, the expected dividend yield is not applicable. Expected volatility: Vicor — Vicor uses historical volatility to estimate the grant-date fair value of the options, using the expected term for the period over which to calculate the volatility (see below). The Company does not expect its future volatility to differ from its historical volatility. The computation of the Company’s volatility is based on a simple average calculation of monthly volatilities over the expected term. Picor — As Picor is a nonpublic entity, historical volatility information is not available. An industry sector index of seven publicly traded fabless semiconductor firms was developed for calculating historical volatility for Picor. Historical prices for each of the companies in the index based on the market price of the shares on each day of trading over the expected term were used to determine the historical volatility. V*I Chip — As V*I Chip is a nonpublic entity, historical volatility information is not available. An industry sector index of twelve publicly traded fabless semiconductor firms was developed for calculating historical volatility for V*I Chip. Historical prices for each of the companies in the index based on the market price of the shares on each day of trading over the expected term were used to determine the historical volatility. Expected term: Vicor — The Company uses historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholes grant-date valuation. The Company believes that this historical data is currently the best estimate of the expected term of options, and that generally all groups of the Company’s employees exhibit similar exercise behavior. Picor and V*I Chip — Due to the lack of historical information, the “simplified” method as prescribed by the Security and Exchange Commission was used to determine the expected term on grant awards that meet the definition of “plain vanilla”. For options that did not meet the criteria of “plain vanilla”, the Company calculated the expected term based on its best estimate of what the expected term would be. Forfeiture rate: The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. The forfeiture analysis is re-evaluated quarterly and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that vest. Vicor — The Company currently expects that for Vicor options, based on an analysis of its historical forfeitures, that approximately 76% of its options will actually vest, and therefore has applied an annual forfeiture rate of 9.0% to all unvested options as of December 31, 2011. For 2010, the Company expected 71% of its options would actually vest and applied an annual forfeiture rate of 11.25%. Picor — The Company currently expects that for Picor options, based on an analysis of its historical forfeitures, that approximately 92% of its options will actually vest, and therefore has applied an annual forfeiture rate of 2.75% to all unvested options as of December 31, 2011. For 2010, the Company expected 94% of its options would actually vest and applied an annual forfeiture rate of 2.0%. V*I Chip — The Company currently expects that for V*I Chip options, based on an analysis of its historical forfeitures, that approximately 81% of its options will actually vest, and therefore has applied an annual forfeiture rate of 7.0% to all unvested options as of December 31, 2011. For 2010, the Company expected 83% of its options would actually vest and applied an annual forfeiture rate of 6.25%. Vicor Stock Options A summary of the activity under the Company’s stock option plans as of December 31, 2011 and changes during the year then ended, is presented below (in thousands except for share and weighted-average data):
|  | Options Outstanding |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value |
Outstanding on December 31, 2010 |  |  | 1,798,327 |  |  |  | 13.95 |  |  |  |  |  |  |  |  |
Granted |  |  | 207,876 |  |  |  | 14.12 |  |  |  |  |  |  |  |  |
Forfeited and expired |  |  | (209,690 | ) |  |  | 18.89 |  |  |  |  |  |  |  |  |
Exercised |  |  | (40,698 | ) |  |  | 10.97 |  |  |  |  |  |  |  |  |
Outstanding on December 31, 2011 |  |  | 1,755,815 |  |  |  | 13.45 |  |  |  | 7.75 |  |  | $ | 76 |
Exercisable on December 31, 2011 |  |  | 232,078 |  |  |  | 12.00 |  |  |  | 2.85 |  |  | $ | 65 |
Vested or expected to vest as of December 31, 2011 (1) |  |  | 1,040,362 |  |  |  | 13.27 |  |  |  | 7.11 |  |  | $ | 74 |
(1) | In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.
As of December 31, 2010 and 2009, the Company had shares exercisable of 359,264 and 575,482 respectively, for which the weighted average exercise prices were $15.89 and $19.12, respectively. During the years ended December 31, 2011, 2010, and 2009 under all plans, the total intrinsic value of Vicor options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $217,000, $723,000 and $1,000, respectively. The total amount of cash received by the Company from options exercised in 2011 was $447,000. The total grant-date fair value of stock options that vested during the years ended December 31, 2011, 2010 and 2009 was approximately $411,000, $422,000, and $432,000, respectively. As of December 31, 2011, there was $881,000 of total unrecognized compensation cost related to unvested non-performance share-based awards for Vicor. That cost is expected to be recognized over a weighted-average period of 7.34 years for all Vicor awards. The expense will be recognized as follows: $457,000 in 2012, $241,000 in 2013, $116,000 in 2014, $56,000 in 2015, and $11,000 in 2016. In addition, as of December 31, 2011, there was $7,790,000 of unrecognized compensation cost related to performance-based options, for which expensing has not commenced. The weighted-average fair value of Vicor options granted was $5.79, $4.78 and $2.69 in 2011, 2010 and 2009, respectively. The weighted-average contractual life for Vicor options outstanding as of December 31, 2011 is 7.7 years. Picor Stock Options A summary of the activity under the 2001 Picor Plan as of December 31, 2011 and changes during the year then ended, is presented below (in thousands except for share and weighted-average data):
|  | Options Outstanding |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value |
Outstanding on December 31, 2010 |  |  | 10,001,763 |  |  |  | 0.59 |  |  |  |  |  |  |  |  |
Granted |  |  | 895,000 |  |  |  | 0.62 |  |  |  |  |  |  |  |  |
Forfeited and expired |  |  | (104,780 | ) |  |  | 0.69 |  |  |  |  |  |  |  |  |
Exercised |  |  | (812,000 | ) |  |  | 0.25 |  |  |  |  |  |  |  |  |
Outstanding on December 31, 2011 |  |  | 9,979,983 |  |  |  | 0.62 |  |  |  | 6.76 |  |  | $ | 1,023 |
Exercisable on December 31, 2011 |  |  | 4,684,585 |  |  |  | 0.64 |  |  |  | 4.30 |  |  | $ | 556 |
Vested or expected to vest as of December 31, 2011 (1) |  |  | 9,706,872 |  |  |  | 0.62 |  |  |  | 6.56 |  |  | $ | 998 |
(1) | In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.
As of December 31, 2010 and 2009, Picor had shares exercisable of 4,213,640 and 3,977,940, respectively, for which the weighted average exercise prices were $0.56 and $0.54, respectively. During the year ended December 31, 2011, the total intrinsic value of Picor options exercised was $262,000. The total amount of cash received by the Company from options exercised in 2011 was $5,000. For years ended 2010 and 2009, Picor did not have any options exercised. The total grant-date fair value of stock options that vested during the years ended December 31, 2011, 2010 and 2009 was approximately $357,000, $68,000, and $189,000, respectively. As of December 31, 2011, there was $1,335,000 of total unrecognized compensation cost related to unvested share-based awards for Picor. That cost is expected to be recognized over a weighted-average period of 3.7 years for all Picor awards. The expense will be recognized as follows: $394,000 in 2012, $352,000 in 2013, $311,000 in 2014, $248,000 in 2015, and $30,000 in 2016. The weighted-average fair value of Picor options granted was $0.32 and $0.30 in 2011 and 2010, respectively. The weighted-average contractual life for Picor options outstanding as of December 31, 2011 is 6.6 years. V*I Chip Stock Options A summary of the activity under the 2007 V*I Chip Plan as of December 31, 2011 and changes during the year then ended, is presented below (in thousands except for share and weighted-average data):
|  | Options Outstanding |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value |
Outstanding on December 31, 2010 |  |  | 10,790,250 |  |  |  | 1.00 |  |  |  |  |  |  |  |  |
Granted |  |  | 122,250 |  |  |  | 1.04 |  |  |  |  |  |  |  |  |
Forfeited and expired |  |  | (397,750 | ) |  |  | 1.01 |  |  |  |  |  |  |  |  |
Exercised |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Outstanding on December 31, 2011 (2) |  |  | 10,514,750 |  |  |  | 1.00 |  |  |  | 6.48 |  |  | $ | — |
Exercisable on December 31, 2011 |  |  | 5,869,100 |  |  |  | 1.00 |  |  |  | 5.44 |  |  | $ | — |
Vested or expected to vest as of December 31, 2011 (1) |  |  | 9,733,939 |  |  |  | 1.00 |  |  |  | 6.29 |  |  | $ | — |
(1) | In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options.
(2) | Of the total V*I Chip options outstanding on December 31, 2010, 5,500,000 options have been granted to the Company’s Chief Executive Officer.
As of December 31, 2010 and 2009, V*I Chip had shares exercisable of 4,436,200 and 2,987,200, respectively, for which the weighted average exercise price was $1.00. For the years ended December 31, 2011, 2010 and 2009, V*I Chip did not have any options exercised. As of December 31, 2011, there was $755,000 of total unrecognized compensation cost related to unvested share-based awards for V*I Chip. That cost is expected to be recognized over a weighted-average period of 3.44 years for all V*I Chip awards. The expense will be recognized as follows: $256,000 in 2012, $180,000 in 2013, $159,000 in 2014, $157,000 in 2015 and $3,000 in 2016. The weighted-average fair value of V*I Chip options granted was $0.53 and $0.50 in 2011 and 2010, respectively. The weighted-average contractual life for V*I Chip options outstanding as of December 31, 2011 is 6.5 years. 401(k) Plan The Company sponsors a savings plan available to all domestic employees, which qualifies under Section 401(k) of the Internal Revenue Code. Employees may contribute to the plan from 1% to 20% of their pre-tax salary subject to statutory limitations. The Company matches employee contributions to the plan at a rate of 50% up to the first 3% of an employee’s compensation. The Company’s matching contributions currently vest at a rate of 20% per year based upon years of service. The Company’s contribution to the plan was approximately $810,000, $760,000 and $697,000 in 2011, 2010 and 2009, respectively. Stock Bonus Plan Under the Company’s 1985 Stock Bonus Plan, as amended, shares of Common Stock may be awarded to employees from time to time as determined by the Board of Directors. On December 31, 2011, 109,964 shares were available for further award. All shares awarded to employees under this plan have vested. No further awards are contemplated under this plan at the present time.

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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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