11. Stock Benefit Plans

Stock-Based Compensation

In fiscal years 2017, 2016 and 2015, the Company recorded stock-based compensation expense of $8.9 million, $11.0 million and $9.9 million. There were no excess tax benefits recognized in fiscal years 2017, 2016 and 2015 due to the Company’s full valuation allowance. There was no gross benefit of tax deductions recognized in fiscal years 2017, 2016 and 2015 due to the Company’s full valuation allowance.

Stock Incentive Plans

In November 2009, the Company’s board of directors adopted the 2010 Equity Incentive Plan (the “2010 Incentive Plan”) and the Company’s stockholders approved the 2010 Incentive Plan in January 2010. The 2010 Incentive Plan became effective upon the completion of the IPO of the Company’s common stock in February 2010. Awards granted after January 2008 but before the adoption of the 2010 Incentive Plan continue to be governed by the terms of the 2008 Equity Incentive Plan. All outstanding stock awards granted before January 2008 continue to be governed by the terms of the Company’s amended and restated 1999 Equity Incentive Plan.

The 2010 Incentive Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NQSOs”), restricted stock, restricted stock units (“RSUs”), stock appreciation rights, performance-based stock awards and other forms of equity compensation, as well as for the grant of performance cash awards. The Company may issue ISOs only to its employees. NQSOs and all other awards may be granted to employees, including officers, nonemployee directors and consultants.

Prior to fiscal year 2016, the Company granted restricted stock units with a service condition (“service-based RSUs”). Beginning in fiscal year 2016, the Company also began granting to employees RSUs with a service and market condition (“market-based RSUs”) that requires that the Company’s stock price achieve a specified price above the grant date stock price before it can be eligible for service vesting conditions. To date, the Company has issued ISOs, NQSOs, RSUs and performance-based stock awards under the 2010 Incentive Plan. ISOs and NQSOs are generally granted to employees with an exercise price equal to the market price of the Company’s common stock at the date of grant. Stock options granted to employees generally have a contractual term of seven years and vest over four years of continuous service, with 25 percent of the stock options vesting on the one-year anniversary of the date of grant and the remaining 75 percent vesting in equal monthly installments over the three year period thereafter. RSUs granted to employees prior to fiscal year 2013 generally vest over five years of continuous service, with 15 percent of the RSUs vesting on the one-year anniversary of the date of grant, 60 percent vesting in equal quarterly installments over the following three years and the remaining 25 percent vesting in equal quarterly installments over the last year of the vesting period. RSUs granted to employees starting in fiscal year 2013 generally vest over four years of continuous service, with 25 percent of the RSUs vesting on the one-year anniversary of the date of grant and 6.25% vesting quarterly thereafter for the next 12 quarters.

An aggregate of 15,920,578 shares of the Company’s common stock were reserved for issuance under the 2010 Incentive Plan as of June 30, 2017, and this amount will be increased by any outstanding stock awards that expire or terminate for any reason prior to their exercise or settlement. The number of shares of the Company’s common stock reserved for issuance is increased annually through July 1, 2019 by up to five percent of the total number of shares of the Company’s common stock outstanding on the last day of the preceding fiscal year. The maximum number of shares that may be issued under the 2010 Incentive Plan is 30,000,000. There were 13,825,928 shares available for issuance under the 2010 Incentive Plan as of June 30, 2017.

In November 2009, the Company’s board of directors adopted the 2010 Non-Employee Directors’ Stock Award Plan (the “Directors’ Plan”) and the stockholders approved the Directors’ Plan in January 2010. The Directors’ Plan became effective upon the completion of the Company’s IPO. The Directors’ Plan provides for the automatic grant of NQSOs and RSUs to non-employee directors and also provides for the discretionary grant of NQSOs and RSUs. Stock options granted to new non-employee directors vest in equal monthly installments over four years and annual stock option grants to existing directors vest in equal monthly installments over one year. Prior to fiscal year 2015, the annual service-based RSU grants vested quarterly over a period of four years and the initial service-based RSU grants vested quarterly over a period of one year. Beginning in fiscal year 2015, initial service-based RSU grants vest daily over a period of four years and annual service-based RSU grants vest daily over a period of one year.

An aggregate of 3,359,964 shares of the Company’s common stock were reserved for issuance under the Directors’ Plan as of June 30, 2017. This amount is increased annually, by the sum of 200,000 shares and the aggregate number of shares of the Company’s common stock subject to awards granted under the Directors’ Plan during the immediately preceding fiscal year. There were 1,498,539 shares available for issuance under the Directors’ Plan as of June 30, 2017.

Valuation Assumptions

The Company estimates the fair value of stock options at the date of grant using the Black-Scholes option-pricing model. Options are granted with an exercise price equal to the fair value of the common stock at the date of grant. The Company calculates the weighted-average expected life of options using the simplified method pursuant to the accounting guidance for share-based payments as its historical exercise experience does not provide a reasonable basis upon which to estimate expected term. The Company estimates the expected volatility of its common stock based on its historical volatility over the expected term of the stock option and market-based RSU. The Company has no history or expectation of paying dividends on its common stock. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of the stock option and market-based RSU.

The weighted-average Black-Scholes model assumptions and the weighted-average grant date fair value of stock options in fiscal years 2017, 2016 and 2015 were as follows:

	Fiscal Year Ended June 30,
	2017			2016			2015
Expected term (in years)		4.5			3.9			4.6
Expected volatility		45	%		43	%		46	%
Expected dividend yield		—			—			—
Risk-free interest rate		1.3	%		1.0	%		1.6	%
Grant date fair value	$	1.41		$	1.83		$	1.87

The Company estimates the fair value of market-based RSUs at the date of the grant using the Monte Carlo simulation model. The weighted-average Monte Carlo simulation model assumptions in fiscal years 2017, 2016 and 2015 were as follows:

	Fiscal Year Ended June 30,
	2017			2016			2015
Expected term (in years)		4.0			4.0			—
Expected volatility		45	%		47	%		—
Expected dividend yield		—			—			—
Risk-free interest rate		1.1	%		1.3	%		—
Grant date fair value	$	3.01		$	5.04			—

The fair value of service-based RSUs is determined based on the closing price of the Company’s common stock on the grant date. Compensation expense is amortized net of estimated forfeitures on a straight-line basis over the requisite service period of the stock-based compensation awards.

Stock Option Award Activity

The following table summarizes the stock option award activity under the plans in fiscal years 2017 and 2016:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
				Exercise		Contractual Life		Value
	Shares			Price		(In years)		(In thousands)
Outstanding at June 30, 2015		5,878,441		$	10.07	2.88		$	951
Granted		297,586			5.41
Exercised		(4,531	)		5.79
Forfeited		(143,863	)		7.84
Expired		(1,720,385	)		10.18
Outstanding at June 30, 2016		4,307,248		$	9.78		2.67	$	15
Granted		1,767,018			3.62
Exercised		—			—
Forfeited		(137,925	)		4.31
Expired		(1,714,762	)		12.15
Outstanding at June 30, 2017		4,221,579		$	6.50		4.17	$	996
Vested and expected-to-vest at June 30, 2017 ⁽¹⁾		4,019,351		$	6.65		4.07	$	891
Vested and exercisable at June 30, 2017		2,482,868		$	8.40		2.85	$	118

⁽¹⁾	The expected-to-vest options are the result of applying the pre-vesting forfeiture assumption to total outstanding options.

The following table summarizes outstanding and exercisable stock options by range of exercise price as of June 30, 2017:

	Options Outstanding							Options Exercisable
				Weighted
				Average		Weighted				Weighted
				Remaining		Average				Average
Range or Exercise Prices		Number of Shares		Contractual Term		Exercise Price		Number of Shares		Exercise Price
$2.70 - $3.59			508,618		6.37	$	3.48		87,784	$	3.05
$3.63 - $3.63			1,149,000		6.08	$	3.63		—		—
$3.67 - $5.47			422,499		4.20	$	4.46		339,320	$	4.45
$5.50 - $5.94			458,435		4.32	$	5.82		397,299	$	5.83
$5.96 - $9.24			425,627		2.58	$	7.76		411,507	$	7.77
$9.44 - $9.44			25,000		3.22	$	9.44		23,437	$	9.44
$9.55 - $9.55			425,500		3.07	$	9.55		416,621	$	9.55
$9.64 - $11.26			276,500		1.71	$	10.25		276,500	$	10.25
$11.67 - $11.67			423,700		1.09	$	11.67		423,700	$	11.67
$12.43 - $15.60			106,700		1.98	$	14.82		106,700	$	14.82
$2.70 - $15.60			4,221,579		4.17	$	6.50		2,482,868	$	8.40

The following table summarizes the total intrinsic value, the cash received and the actual tax benefit of all options exercised in fiscal years 2017, 2016 and 2015:

	Fiscal Year Ended June 30,
	2017		2016		2015
Intrinsic value	$	—	$	1	$	131
Cash received		—		26		975
Tax benefit		—		—		—

As of June 30, 2017, there was $1.8 million of total unrecognized compensation expense related to unvested stock options which are expected to be recognized over a weighted-average period of 3.05 years.

Service-Based Restricted Stock Unit Activity

The following table summarizes the service-based RSU activity under the plans in fiscal years 2017 and 2016:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
				Grant Date		Contractual Life		Value
	Shares			Fair Value		(In years)		(In thousands)
Outstanding at June 30, 2015		3,732,630		$	7.06		1.32	$	24,064
Granted		98,999			5.99
Vested		(1,481,325	)		6.09
Forfeited		(438,395	)		6.12
Outstanding at June 30, 2016		1,911,909		$	5.79		1.33	$	6,691
Granted		1,904,506			3.55
Vested		(907,288	)		6.10
Forfeited		(359,464	)		4.90
Outstanding at June 30, 2017		2,549,663		$	4.12		1.11	$	10,632

At the time of vesting, a portion of service-based RSUs are relinquished and cancelled by the Company to provide for federal and state tax withholding obligations resulting from the service-based RSU release. As of June 30, 2017, there was $7.2 million of total unrecognized compensation expense related to service-based RSUs which are expected to be recognized over a weighted-average period of 2.45 years.

Market-Based Restricted Stock Unit Activity

The following table summarizes the market-based RSU activity under the 2010 Incentive Plan in fiscal years 2017 and 2016:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
				Grant Date		Contractual Life		Value
	Shares			Fair Value		(In years)		(In thousands)
Outstanding at June 30, 2015		—		$	—		—	$	—
Granted		1,069,162			5.03
Vested		—			—
Forfeited		(63,560	)		5.11
Outstanding at June 30, 2016		1,005,602		$	5.03		1.36	$	3,570
Granted		312,660		$	3.01
Vested		—			—
Forfeited		(224,973	)		4.20
Outstanding at June 30, 2017		1,093,289		$	4.57		1.22	$	4,559

As of June 30, 2017, there was $1.0 million of total unrecognized compensation expense related to market-based RSUs which are expected to be recognized over a weighted average period of 1.22 years.