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These excerpts taken from the ALXA 10-K filed Mar 17, 2008. Employee
Equity Incentive Awards Issued on or Subsequent to
January 1, 2006
On January 1, 2006, we adopted the fair value recognition
provisions of Statement of Financial Accounting Standard
No. 123R, Share-Based Payment, or SFAS 123R. As
required, we adopted SFAS 123R using the prospective
transition method. Under this transition method, beginning
January 1, 2006, compensation cost recognized includes:
(a) compensation cost for share-based payments granted
prior to, but not yet vested as of December 31, 2005
related to (i) employees, based on the intrinsic value in
accordance with the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees, or APB 25, and (ii) non-employees based on
the options fair value in accordance with the provisions of
SFAS 123, and (b) compensation cost for all
share-based payments granted or modified subsequent to
December 31, 2005, based on the grant-date fair value
estimated in accordance with the provisions of SFAS 123R.
We currently use the Black-Scholes option pricing model to
determine the fair value of stock options and purchase rights
issued under the employee stock purchase plan. The determination
of the fair value of share-based payment awards on the date of
grant using an option-pricing model is affected by our stock
price as well as assumptions regarding a number of complex and
subjective variables. These variables include our expected stock
price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free
interest rates and expected dividends.
The estimated fair value of restricted stock unit awards is
calculated based on the market price of our common stock on the
date of grant, reduced by the present value of dividends
expected to be paid on our common stock prior to vesting of the
restricted stock unit. Our current estimate assumes no dividends
will be paid prior to the vesting of the restricted stock unit.
Through 2007, we estimated the expected term of options using
the “simplified” method, as illustrated in
SAB 107. Beginning in 2008, we will estimate the expected
term of our options based on historical option activity. As we
have been operating as a public company for a period of time
that is significantly shorter than our estimated expected option
term, we are unable to use actual price volatility data.
Therefore, we estimate the volatility of our common stock based
on volatility of similar entities. We base the risk-free
interest rate that we use in the option pricing model on
U.S. Treasury zero-coupon issues with remaining terms
similar to the expected term on the options. We do not
anticipate paying any cash dividends in the foreseeable future
and therefore use an expected dividend yield of zero in the
option pricing model.
We are required to estimate forfeitures at the time of grant and
revise those estimates in subsequent periods if actual
forfeitures differ from those estimates. We use historical data
to estimate pre-vesting option forfeitures and record
share-based compensation expense only for those awards that are
expected to vest. All share based payment awards are amortized
on a straight-line basis over the requisite service periods of
the awards, which are generally the vesting periods.
If factors change and we employ different assumptions for
estimating share-based compensation expense in future periods or
if we decide to use a different valuation model, the expenses in
future periods may differ significantly from what we have
recorded in the current period and could materially affect our
operating loss, net loss and net loss per share.
See Note 2 to the consolidated financial statements for
further information regarding the SFAS 123R disclosures.
Employee Equity Incentive Awards Issued on or Subsequent to January 1, 2006 On January 1, 2006, we adopted the fair value recognition provisions of Statement of Financial Accounting Standard No. 123R, Share-Based Payment, or SFAS 123R. As required, we adopted SFAS 123R using the prospective transition method. Under this transition method, beginning January 1, 2006, compensation cost recognized includes: (a) compensation cost for share-based payments granted prior to, but not yet vested as of December 31, 2005 related to (i) employees, based on the intrinsic value in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, and (ii) non-employees based on the options fair value in accordance with the provisions of SFAS 123, and (b) compensation cost for all share-based payments granted or modified subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. We currently use the Black-Scholes option pricing model to determine the fair value of stock options and purchase rights issued under the employee stock purchase plan. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The estimated fair value of restricted stock unit awards is calculated based on the market price of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting of the restricted stock unit. Our current estimate assumes no dividends will be paid prior to the vesting of the restricted stock unit. Through 2007, we estimated the expected term of options using the “simplified” method, as illustrated in SAB 107. Beginning in 2008, we will estimate the expected term of our options based on historical option activity. As we have been operating as a public company for a period of time that is significantly shorter than our estimated expected option term, we are unable to use actual price volatility data. Therefore, we estimate the volatility of our common stock based on volatility of similar entities. We base the risk-free interest rate that we use in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in the option pricing model. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. All share based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. If factors change and we employ different assumptions for estimating share-based compensation expense in future periods or if we decide to use a different valuation model, the expenses in future periods may differ significantly from what we have recorded in the current period and could materially affect our operating loss, net loss and net loss per share. See Note 2 to the consolidated financial statements for further information regarding the SFAS 123R disclosures. This excerpt taken from the ALXA 10-K filed Apr 10, 2007. Employee
Equity Incentive Awards Issued on or Subsequent to
January 1, 2006
On January 1, 2006, we adopted the fair value recognition
provisions of Statement of Financial Accounting Standard
No. 123R, Share-Based Payment, or SFAS 123R. As
required, we adopted SFAS 123R using the prospective
transition method. Under this transition method, beginning
January 1, 2006, compensation cost recognized includes:
(a) compensation cost for share-based payments granted
prior to, but not yet vested as of December 31, 2005
related to (i) employees, based on the intrinsic value in
accordance with the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees, or APB 25, and (ii) non-employees based
on the options fair value in accordance with the provisions of
SFAS 123, and (b) compensation cost for all
share-based payments granted or modified subsequent to
December 31, 2005, based on the grant-date fair value
estimated in accordance with the provisions of SFAS 123R.
We currently use the Black-Scholes option pricing model to
determine the fair value of stock options and purchase rights
issued under the employee stock purchase plan. The determination
of the fair value of share-based payment awards on the date of
grant using an option-pricing model is affected by our stock
price as well as assumptions regarding a number of complex and
subjective variables. These variables include our expected stock
price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free
interest rates and expected dividends.
The estimated fair value of restricted stock unit awards is
calculated based on the market price of our common stock on the
date of grant, reduced by the present value of dividends
expected to be paid on our common stock prior to vesting of the
restricted stock unit. Our current estimate assumes no dividends
will be paid prior to the vesting of the restricted stock unit.
We estimate the expected term of options using the
“simplified” method, as illustrated in SAB 107.
As we have been operating as a public company for a period of
time that is significantly shorter than our estimated expected
option term, we are unable to use actual price volatility data.
Therefore, we estimate the volatility of our common stock based
on volatility of similar entities. We base the risk-free
interest rate that we use in the option pricing model on
U.S. Treasury zero-coupon issues with remaining terms
similar to the expected term on the options. We do not
anticipate paying any cash dividends in the foreseeable future
and therefore use an expected dividend yield of zero in the
option pricing model.
We are required to estimate forfeitures at the time of grant and
revise those estimates in subsequent periods if actual
forfeitures differ from those estimates. We use historical data
to estimate pre-vesting option forfeitures and record
share-based compensation expense only for those awards that are
expected to vest. All share based payment awards are amortized
on a straight-line basis over the requisite service periods of
the awards, which are generally the vesting periods.
Table of Contents
If factors change and we employ different assumptions for
estimating share-based compensation expense in future periods or
if we decide to use a different valuation model, the expenses in
future periods may differ significantly from what we have
recorded in the current period and could materially affect our
operating loss, net loss and net loss per share.
See Note 2 to the consolidated financial statements for
further information regarding the SFAS 123R disclosures.
This excerpt taken from the ALXA 10-K filed Mar 29, 2007. Employee
Equity Incentive Awards Issued on or Subsequent to
January 1, 2006
On January 1, 2006, we adopted the fair value recognition
provisions of Statement of Financial Accounting Standard
No. 123R, Share-Based Payment, or SFAS 123R. As
required, we adopted SFAS 123R using the prospective
transition method. Under this transition method, beginning
January 1, 2006, compensation cost recognized includes:
(a) compensation cost for share-based payments granted
prior to, but not yet vested as of December 31, 2005
related to (i) employees, based on the intrinsic value in
accordance with the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees, or APB 25, and (ii) non-employees based
on the options fair value in accordance with the provisions of
SFAS 123, and (b) compensation cost for all
share-based payments granted or modified subsequent to
December 31, 2005, based on the grant-date fair value
estimated in accordance with the provisions of SFAS 123R.
We currently use the Black-Scholes option pricing model to
determine the fair value of stock options and purchase rights
issued under the employee stock purchase plan. The determination
of the fair value of share-based payment awards on the date of
grant using an option-pricing model is affected by our stock
price as well as assumptions regarding a number of complex and
subjective variables. These variables include our expected stock
price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free
interest rates and expected dividends.
The estimated fair value of restricted stock unit awards is
calculated based on the market price of our common stock on the
date of grant, reduced by the present value of dividends
expected to be paid on our common stock prior to vesting of the
restricted stock unit. Our current estimate assumes no dividends
will be paid prior to the vesting of the restricted stock unit.
We estimate the expected term of options using the
“simplified” method, as illustrated in SAB 107.
As we have been operating as a public company for a period of
time that is significantly shorter than our estimated expected
option term, we are unable to use actual price volatility data.
Therefore, we estimate the volatility of our common stock based
on volatility of similar entities. We base the risk-free
interest rate that we use in the option pricing model on
U.S. Treasury zero-coupon issues with remaining terms
similar to the expected term on the options. We do not
anticipate paying any cash dividends in the foreseeable future
and therefore use an expected dividend yield of zero in the
option pricing model.
We are required to estimate forfeitures at the time of grant and
revise those estimates in subsequent periods if actual
forfeitures differ from those estimates. We use historical data
to estimate pre-vesting option forfeitures and record
share-based compensation expense only for those awards that are
expected to vest. All share based payment awards are amortized
on a straight-line basis over the requisite service periods of
the awards, which are generally the vesting periods.
Table of Contents
If factors change and we employ different assumptions for
estimating share-based compensation expense in future periods or
if we decide to use a different valuation model, the expenses in
future periods may differ significantly from what we have
recorded in the current period and could materially affect our
operating loss, net loss and net loss per share.
See Note 2 to the consolidated financial statements for
further information regarding the SFAS 123R disclosures.
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