Note 9 – Stock Compensation Plans

In June 2009, our stockholders approved the VASCO Data Security International, Inc. 2009 Equity Incentive Plan (the “2009 Equity Plan”). The 2009 Equity Plan permits the issuance of awards in a variety of forms, including (1) shares of our common stock, (2) nonqualified and incentive stock options for the purchase of our common stock, (3) stock appreciation rights, (4) deferred stock, (5) other stock-based awards (including restricted shares, performance shares, performance units and other stock unit awards), and (6) cash incentive awards.

Upon approval of the 2009 Equity Plan, our 1997 Stock Compensation Plan, as amended and restated (the “1997 Compensation Plan”) was suspended. No additional awards will be issued under the 1997 Compensation Plan, however, all outstanding awards under the 1997 Compensation Plan were unaffected by the approval of the 2009 Equity Plan. The 1997 Compensation Plan permitted the award of stock compensation in various forms.

The 2009 Equity Plan and the 1997 Compensation Plan were designed and intended to provide performance incentives to employees and non-employee directors, consultants and other key persons of the company. Both plans are administered by the Compensation Committee as appointed by the Board of Directors and are intended to be non-qualified plans.

As of December 31, 2013, the number of shares allowed to be issued under the 2009 Equity Plan was 6,618 shares of the company’s common stock, representing 16.7% of the issued and outstanding shares of the company as of such date.

The following table summarizes stock compensation expense recorded under the two plans.


	2013		2012		2011
Compensation expense included in income:
Stock Option	$	—	$	—	$	—
Restricted stock		2,472		2,804		3,140
Other Long-term Stock Incentives		115		922		2,977

Total expense	$	2,587	$	3,726	$	6,117

Stock Options

We have not granted stock options since 2005. There is no stock option expense for the three years ended December 31, 2013. Options granted have terms of six to ten years and vesting periods of one to five years. The company may issue new shares or treasury shares for option exercises. The following table summarizes option activity for the year ended December 31, 2013. All options outstanding at December 31, 2013, 2012, and 2011 were fully vested.


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2013		299		$	2.49		1.00	$	1,695
Exercised		(277	)		2.48				1,429
Expired		(1	)		2.53

Outstanding at December 31, 2013		21			2.55		0.05		109

At December 31, 2013:
Fully vested, exercisable options		21		$	2.55		0.05	$	109

Exercise of options to purchase 277 shares resulted in the issuance of 163 shares, net of shares withheld in satisfaction of exercise price and mandatory minimum tax withholdings.

The intrinsic value of options exercised and the fair value of shares vested over the last three years were:


	2013		2012		2011
Intrinsic value of options exercised	$	1,429	$	3,146	$	1,094
Fair value of shares vested		0		0		0

Time-Based Restricted Stock

Time-based restricted stock awards were granted to executive officers, employees and non-employee directors. Awards to non-employee directors vest on the first anniversary date of the grant. Awards to executive officers and employees vest annually over three or four year periods. Shares are subject to forfeiture if the service period requirement is not met. Compensation expense equal to the market value of the stock on the grant date is recorded on a straight-line basis over the vesting period as required by ASC 718-10. Compensation expense was $1,871, $1,849, and $1,415 for 2013, 2012, and 2011. The following table summarizes the time-based restricted stock activity for the year ended December 31, 2013:


	Shares			Weighted average remaining term (years)		Aggregate intrinsic value
Outstanding at January 1, 2013		544			2.21	$	4,436
Shares vested		(240	)				1,909
Shares awarded and issued		120					1,001

Outstanding at December 31, 2013		424			1.85	$	3,277

The unamortized future compensation expense for time-based restricted stock awards was $1,691 at December 31, 2013.

Performance-Based Restricted Stock

Performance-based restricted stock awards granted to executive officers and employees were subject to achievement of one-year performance targets established by the Board of Directors. Earned shares vest annually over three or four years. Shares are subject to forfeiture if the service period requirement is not met.

The number of shares earned from awards granted in 2013, 2012, and 2011 were 0, 0, and 276, respectively. Compensation expense, equal to the market value of the stock on the grant date, is recorded on a straight-line basis over the vesting period at the performance level deemed probable, as required by ASC 718-10. Compensation expense in 2013, 2012, and 2011 was $600, $956, and $1,725. Unamortized future compensation expense for performance-based restricted stock was $592 at December 31, 2013.

The following table summarizes activity related to unvested performance restricted stock shares during 2013:


	Total Unvested Shares			Weighted average remaining term (years)		Aggregate intrinsic value
Outstanding at January 1, 2013		521			1.37	$	4,255
Shares vested		(290	)				2,532
Shares forfeited		(102	)

Outstanding at December 31, 2013		129			1.07	$	997

Other Long-term Stock Incentive Awards

During 2012 and 2010, other long-term stock incentive awards were granted to key employees, other than named executive officers subject to achievement of performance targets established by the Board of Directors. Awards are designated in U.S. Dollars however, at the option of the Company, may be paid in our common stock. Compensation expense equal to the award level deemed probable is recorded on a straight-line basis over the vesting period as required by ASC 718-10.

For awards granted in 2012, the one-year performance target was not met. Awards granted in 2010 vested at the end of the three-year performance period. At December 31, 2012, $0 was accrued for the 2012 awards and $2,424 was accrued for the 2010 awards. The 2010 awards were paid in cash during 2013. Accordingly, unamortized future compensation expense for the long-term incentive awards was $0 at December 31, 2013.

No long-term stock incentive awards were granted in 2013.