BBND » Topics » Stock-Based Compensation

These excerpts taken from the BBND 10-K filed Mar 10, 2009.
Stock-Based Compensation
 
We grant options to purchase our common stock to our employees, directors and to non-employees under our equity incentive plan. Eligible employees can also purchase shares of our common stock under our employee stock purchase plan at the lower of: (i) 85% of the fair market value on the first day of a six-month offering period; or (ii) 85% of the fair market value on the last date of the six-month offering period.
 
Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123R), using the prospective transition method, which requires us to apply the provisions of SFAS 123R to new awards granted, and to awards modified, repurchased or cancelled, after the effective date. Under this transition method, stock-based compensation expense recognized beginning January 1, 2006 is based on a combination of the following: (a) the grant-date fair value of stock option awards and employee stock purchase plan shares granted or modified after January 1, 2006; and (b) the amortization of deferred stock-based compensation related to stock option awards granted prior to January 1, 2006, which was calculated using the intrinsic value method as previously permitted under APB 25.
 
Under SFAS 123R, we estimated the fair value of stock options granted using a Black-Scholes option-pricing formula and a single option award approach. This model utilizes the estimated fair value of common stock and requires that, at the date of grant, we use the expected term of the option, the expected volatility of the price of our common stock, risk free interest rates and expected dividend yield of our common stock. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Options typically vest with respect to 25% of the shares one year after the options’ vesting commencement date and the remainder ratably on a monthly basis over the following three years. Employee stock purchase plan shares vest over six months, and include two purchase dates per year. Actual results may differ substantially from these estimates. In valuing share-based awards under SFAS 123R, significant judgment is required in determining the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to exercising. Expected volatility of the stock is based on our peer group in the industry in which we do business because we do not have sufficient historical volatility data for our own stock. The expected term of options granted represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method permitted by the SEC Staff Accounting Bulletin No. 110. In the future, as we gain historical data for volatility in our own stock and the actual term employees hold our options, expected volatility and expected term may change which could substantially change the grant-date fair value of future awards of stock options and ultimately the expense we record.
 
As of December 31, 2008, total unrecognized compensation costs related to stock-based awards granted under SFAS 123R to employees and directors were approximately $32.6 million, net of estimated forfeitures. These costs, adjusted for changes in estimated forfeiture rates from time to time, will be amortized over the next four years. Stock-based compensation expense for awards granted to employees and directors for the years ended December 31, 2008, 2007 and 2006 was approximately $11.7 million, $10.4 million and $1.4 million, respectively.
 
Prior to January 1, 2006, we accounted for employee stock options using the intrinsic value method in accordance with Accounting Principles Board, Opinion No. 25, Accounting for Stock Issued to Employees, (APB 25), and Financial Accounting Standards Board Interpretation (FIN) 44, Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB No. 25, and had adopted the disclosure only provisions of


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Table of Contents

SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123) and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure using the minimum value method. In accordance with APB 25, stock-based compensation expense, which is a non-cash charge, resulted from stock option grants at exercise prices that, for financial reporting purposes, were deemed to be below the estimated fair value of the underlying common stock on the date of grant. During the years ended December 31, 2008, 2007 and 2006, we amortized $0.2 million, $0.9 million, and $1.1 million of deferred compensation expense, net of reversals, respectively. As of December 31, 2008 we had no remaining balance that will be amortized in future periods, net of reversals.
 
We account for stock compensation arrangements with non-employees in accordance with SFAS 123 and Emerging Issues Task Force (EITF), No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, using a fair value approach. For stock options granted to non-employees, the fair value of the stock options is estimated using a Black-Scholes valuation model. In 2007 we granted 31,250 options and 1,875 restricted shares to non-employees and recognized stock based compensation expense of $0.3 million in 2007 associated with these awards. We did not grant any awards to non-employees for the years ended December 31, 2008 and 2006.
 
Stock-Based
Compensation



 



We grant options to purchase our common stock to our employees,
directors and to non-employees under our equity incentive plan.
Eligible employees can also purchase shares of our common stock
under our employee stock purchase plan at the lower of:
(i) 85% of the fair market value on the first day of a
six-month offering period; or (ii) 85% of the fair market
value on the last date of the six-month offering period.


 



Effective January 1, 2006, we adopted the fair value
recognition provisions of SFAS No. 123(R),
Share-Based Payment (SFAS 123R), using the
prospective transition method, which requires us to apply the
provisions of SFAS 123R to new awards granted, and to
awards modified, repurchased or cancelled, after the effective
date. Under this transition method, stock-based compensation
expense recognized beginning January 1, 2006 is based on a
combination of the following: (a) the grant-date fair value
of stock option awards and employee stock purchase plan shares
granted or modified after January 1, 2006; and (b) the
amortization of deferred stock-based compensation related to
stock option awards granted prior to January 1, 2006, which
was calculated using the intrinsic value method as previously
permitted under APB 25.


 



Under SFAS 123R, we estimated the fair value of stock
options granted using a Black-Scholes option-pricing formula and
a single option award approach. This model utilizes the
estimated fair value of common stock and requires that, at the
date of grant, we use the expected term of the option, the
expected volatility of the price of our common stock, risk free
interest rates and expected dividend yield of our common stock.
This fair value is then amortized on a straight-line basis over
the requisite service periods of the awards, which is generally
the vesting period. Options typically vest with respect to 25%
of the shares one year after the options’ vesting
commencement date and the remainder ratably on a monthly basis
over the following three years. Employee stock purchase plan
shares vest over six months, and include two purchase dates per
year. Actual results may differ substantially from these
estimates. In valuing share-based awards under SFAS 123R,
significant judgment is required in determining the expected
volatility of our common stock and the expected term individuals
will hold their share-based awards prior to exercising. Expected
volatility of the stock is based on our peer group in the
industry in which we do business because we do not have
sufficient historical volatility data for our own stock. The
expected term of options granted represents the period of time
that options granted are expected to be outstanding and was
calculated using the simplified method permitted by the SEC
Staff Accounting Bulletin No. 110. In the future, as
we gain historical data for volatility in our own stock and the
actual term employees hold our options, expected volatility and
expected term may change which could substantially change the
grant-date fair value of future awards of stock options and
ultimately the expense we record.


 



As of December 31, 2008, total unrecognized compensation
costs related to stock-based awards granted under SFAS 123R
to employees and directors were approximately
$32.6 million, net of estimated forfeitures. These costs,
adjusted for changes in estimated forfeiture rates from time to
time, will be amortized over the next four years. Stock-based
compensation expense for awards granted to employees and
directors for the years ended December 31, 2008, 2007 and
2006 was approximately $11.7 million, $10.4 million
and $1.4 million, respectively.


 



Prior to January 1, 2006, we accounted for employee stock
options using the intrinsic value method in accordance with
Accounting Principles Board, Opinion No. 25, Accounting
for Stock Issued to Employees,
(APB 25), and Financial
Accounting Standards Board Interpretation (FIN) 44,
Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25,
and had
adopted the disclosure only provisions of





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Table of Contents






SFAS No. 123, Accounting for Stock-Based
Compensation
(SFAS 123) and
SFAS No. 148, Accounting for Stock-Based
Compensation — Transition and Disclosure
using the
minimum value method. In accordance with APB 25, stock-based
compensation expense, which is a non-cash charge, resulted from
stock option grants at exercise prices that, for financial
reporting purposes, were deemed to be below the estimated fair
value of the underlying common stock on the date of grant.
During the years ended December 31, 2008, 2007 and 2006, we
amortized $0.2 million, $0.9 million, and
$1.1 million of deferred compensation expense, net of
reversals, respectively. As of December 31, 2008 we had no
remaining balance that will be amortized in future periods, net
of reversals.


 



We account for stock compensation arrangements with
non-employees in accordance with SFAS 123 and Emerging
Issues Task Force (EITF),
No. 96-18,
Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services,
using a fair value approach. For stock
options granted to non-employees, the fair value of the stock
options is estimated using a Black-Scholes valuation model. In
2007 we granted 31,250 options and 1,875 restricted shares to
non-employees and recognized stock based compensation expense of
$0.3 million in 2007 associated with these awards. We did
not grant any awards to non-employees for the years ended
December 31, 2008 and 2006.


 




Stock-based Compensation
 
Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123R). Under SFAS 123R, stock-based awards, including stock options, are measured at fair value as of the grant date and recognized to expense over the employee’s requisite service period (generally the vesting period), which the Company has elected to amortize on a straight-line basis. The Company adopted the provisions of SFAS 123R using the prospective transition method. Under this transition method, non-vested stock-based awards outstanding as of January 1, 2006 continued to be accounted for under the intrinsic value method.
 
Prior to January 1, 2006, the Company accounted for employee stock options using the intrinsic value method in accordance with Accounting Principles Board (APB), Opinion No. 25, Accounting for Stock Issued to Employees, and Financial Accounting Standards Board Interpretation (FIN) 44, Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB No. 25, and had adopted the disclosure only provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, using the minimum value method.


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Table of Contents

 
BIGBAND NETWORKS, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
As of December 31, 2008, the Company currently grants equity from two share-based compensation plans, which are described in Note 8. The Company allocated stock-based compensation expense as follows (in thousands):
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Cost of net revenues
  $ 1,733     $ 1,534     $ 336  
Research and development
    3,901       3,837       1,035  
Sales and marketing
    2,566       4,184       637  
General and administrative
    3,675       2,061       542  
                         
Total operating expenses
  $ 11,875     $ 11,616     $ 2,550  
                         
 
Stock-based
Compensation



 



Effective January 1, 2006, the Company adopted the fair
value recognition provisions of SFAS No. 123(R),
Share-Based Payment (SFAS 123R). Under
SFAS 123R, stock-based awards, including stock options, are
measured at fair value as of the grant date and recognized to
expense over the employee’s requisite service period
(generally the vesting period), which the Company has elected to
amortize on a straight-line basis. The Company adopted the
provisions of SFAS 123R using the prospective transition
method. Under this transition method, non-vested stock-based
awards outstanding as of January 1, 2006 continued to be
accounted for under the intrinsic value method.


 



Prior to January 1, 2006, the Company accounted for
employee stock options using the intrinsic value method in
accordance with Accounting Principles Board (APB), Opinion
No. 25, Accounting for Stock Issued to Employees,
and Financial Accounting Standards Board Interpretation (FIN)
44, Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25,
and had
adopted the disclosure only provisions of
SFAS No. 123, Accounting for Stock-Based
Compensation,
and SFAS No. 148, Accounting for
Stock-Based Compensation — Transition and Disclosure,
using the minimum value method.





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Table of Contents





 




BIGBAND
NETWORKS, INC.




 




NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)


 



As of December 31, 2008, the Company currently grants
equity from two share-based compensation plans, which are
described in Note 8. The Company allocated stock-based
compensation expense as follows (in thousands):


 


















































































































































                         

 

 

Years Ended December 31,

 

 

 

2008

 

 

2007

 

 

2006

 
 


Cost of net revenues


 

$

1,733

 

 

$

1,534

 

 

$

336

 


Research and development


 

 

3,901

 

 

 

3,837

 

 

 

1,035

 


Sales and marketing


 

 

2,566

 

 

 

4,184

 

 

 

637

 


General and administrative


 

 

3,675

 

 

 

2,061

 

 

 

542

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total operating expenses


 

$

11,875

 

 

$

11,616

 

 

$

2,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 






 




Stock-Based Compensation
 
Beginning on January 1, 2006, and upon the adoption of SFAS 123R, the fair value of each new option awarded and Employee Stock Purchase Plan shares are estimated on the grant date using the Black-Scholes valuation model using the assumptions noted as follows:
 
             
    Years Ended December 31,
    2008   2007   2006
 
Stock Options
           
Expected volatility
  63-71%   75-91%   91-98%
Expected term
  6 years   6 years   6 years
Risk-free interest
  2.40-3.31%   3.89-4.75%   4.57-4.96%
Expected dividends
  0.0%   0.0%   0.0%
Stock Purchase Plan
           
Expected volatility
  59-102%   55-90%  
Expected term
  0.5 years   0.5-0.6 years  
Risk-free interest
  0.74-1.87%   3.71-5.12%  
Expected dividends
  0.0%   0.0%   0.0%
 
The Company’s computation of expected volatility is derived from historical volatilities of comparable companies within the communications equipment industry. The risk-free interest factor is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant’s expected term. The expected term is calculated using the simplified method provided in the Securities Exchange Commission’s Staff Accounting Bulletins Nos. 107 and 110, which takes into consideration the grant’s contractual life and the vesting periods. The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. Estimates are evaluated each reporting period and adjusted, if necessary, by recognizing the cumulative effect of the change in estimate on compensation costs recognized in prior year periods. During the years ended December 31, 2008, 2007 and 2006, the Company recorded stock-based compensation under the fair value requirements of SFAS 123R of approximately $11.7 million, $10.4 million and $1.4 million, respectively.
 
As of December 31, 2008, total unrecognized stock compensation expense relating to unvested stock options and RSUs, adjusted for estimated forfeitures, was $29.4 million and $3.2 million, respectively. These amounts are expected to be recognized over a weighted-average period of 2.8 years for employee stock options and 2.1 years for RSUs.
 
Stock-Based
Compensation



 



Beginning on January 1, 2006, and upon the adoption of
SFAS 123R, the fair value of each new option awarded and
Employee Stock Purchase Plan shares are estimated on the grant
date using the Black-Scholes valuation model using the
assumptions noted as follows:


 

























































































































             

 

 

Years Ended December 31,

 

 

2008

 

2007

 

2006
 


Stock Options


 

 

 

 

 

 


Expected volatility


 

63-71%

 

75-91%

 

91-98%


Expected term


 

6 years

 

6 years

 

6 years


Risk-free interest


 

2.40-3.31%

 

3.89-4.75%

 

4.57-4.96%


Expected dividends


 

0.0%

 

0.0%

 

0.0%


Stock Purchase Plan


 

 

 

 

 

 


Expected volatility


 

59-102%

 

55-90%

 




Expected term


 

0.5 years

 

0.5-0.6 years

 




Risk-free interest


 

0.74-1.87%

 

3.71-5.12%

 




Expected dividends


 

0.0%

 

0.0%

 

0.0%






 



The Company’s computation of expected volatility is derived
from historical volatilities of comparable companies within the
communications equipment industry. The risk-free interest factor
is based on the U.S. Treasury yield curve in effect at the
time of grant for zero coupon U.S. Treasury notes with
maturities approximately equal to each grant’s expected
term. The expected term is calculated using the simplified
method provided in the Securities Exchange Commission’s
Staff Accounting Bulletins Nos. 107 and 110, which
takes into consideration the grant’s contractual life and
the vesting periods. The Company estimates its forfeiture rate
based on an analysis of its actual forfeitures and will continue
to evaluate the adequacy of the forfeiture rate based on actual
forfeiture experience, analysis of employee turnover behavior,
and other factors. Estimates are evaluated each reporting period
and adjusted, if necessary, by recognizing the cumulative effect
of the change in estimate on compensation costs recognized in
prior year periods. During the years ended December 31,
2008, 2007 and 2006, the Company recorded stock-based
compensation under the fair value requirements of SFAS 123R
of approximately $11.7 million, $10.4 million and
$1.4 million, respectively.


 



As of December 31, 2008, total unrecognized stock
compensation expense relating to unvested stock options and
RSUs, adjusted for estimated forfeitures, was $29.4 million
and $3.2 million, respectively. These amounts are expected
to be recognized over a weighted-average period of
2.8 years for employee stock options and 2.1 years for
RSUs.


 




This excerpt taken from the BBND 10-Q filed Nov 12, 2008.

Stock-based Compensation

The Company applies the fair value recognition and measurement provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123R). Under SFAS 123R, stock-based awards, including stock options, are recorded at fair value as of the grant date and recognized as an expense over the employee’s requisite service period (generally the vesting period), which the Company has elected to amortize on a straight-line basis. The Company adopted the provisions of SFAS 123R on January 1, 2006 using the prospective transition method. Under this transition method, non-vested stock-based awards outstanding as of January 1, 2006 continued to be accounted for under the intrinsic value method.

This excerpt taken from the BBND 10-Q filed Aug 14, 2008.

Stock-based Compensation

The Company applies the fair value recognition and measurement provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123R). Under SFAS 123R, stock-based awards, including stock options, are recorded at fair value as of the grant date and recognized as an expense over the employee’s requisite service period (generally the vesting period), which the Company has elected to amortize on a straight-line basis. The Company adopted the provisions of SFAS 123R using the prospective transition method. Under this transition method, non-vested stock-based awards outstanding as of January 1, 2006 continued to be accounted for under the intrinsic value method.

This excerpt taken from the BBND 10-Q filed May 15, 2008.

Stock-based Compensation

The Company applies the fair value recognition and measurement provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123R). Under SFAS 123R, stock-based awards, including stock options, are recorded at fair value as of the grant date and recognized as an expense over the employee’s requisite service period (generally the vesting period), which the Company has elected to amortize on a straight-line basis. The Company adopted the provisions of SFAS 123R using the prospective transition method. Under this transition method, non-vested stock-based awards outstanding as of January 1, 2006 continued to be accounted for under the intrinsic value method.

These excerpts taken from the BBND 10-K filed Mar 12, 2008.

Stock-Based Compensation

Beginning on January 1, 2006, and upon the adoption of SFAS 123R, the fair value of each new option awarded is estimated on the grant date using the Black-Scholes valuation model using the assumptions noted in the following table:

 

    

Years ended December 31,

    

        2007        

  

        2006        

Stock Options

     

Expected volatility

   75-91%    91-98%

Expected term

   6 years    6 years

Risk-free interest

   3.89-4.75%    4.57-4.96%

Expected dividends

     

Stock Purchase Plan

     

Expected volatility

   55-90%   

Expected term

   0.5-0.6 years   

Risk-free interest

   3.71-5.12%   

Expected dividends

     

The Company’s computation of expected volatility is derived from historical volatilities of comparable companies within the communications equipment industry. The risk-free interest factor is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant’s expected term. The expected term is calculated using the simplified method provided in the Securities Exchange Commission’s Staff Accounting Bulletin No. 107, which takes into consideration the grant’s contractual life and the vesting periods. The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. Estimates are evaluated each reporting period and adjusted, if necessary, by recognizing the cumulative effect of the change in estimate on compensation costs recognized in prior year periods. Forfeiture rate adjustments have not been significant to date. During the years ended December 31, 2007 and 2006, the Company recorded stock-based compensation under the fair value requirements of SFAS 123R of approximately $10.4 million and $1.4 million, respectively.

As of December 31, 2007, pursuant to SFAS 123R, there was $38.2 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.98 years.

Stock-Based Compensation

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Beginning on January 1, 2006, and upon the adoption of SFAS 123R, the fair value of each new option awarded is estimated on the grant date using the
Black-Scholes valuation model using the assumptions noted in the following table:

 




















































































   

Years ended December 31,

   

SIZE="1">        2007        

  

SIZE="1">        2006        

Stock Options

    

Expected volatility

  75-91%  91-98%

Expected term

  6 years  6 years

Risk-free interest

  3.89-4.75%  4.57-4.96%

Expected dividends

    

Stock Purchase Plan

    

Expected volatility

  55-90%  

Expected term

  0.5-0.6 years  

Risk-free interest

  3.71-5.12%  

Expected dividends

    

The Company’s computation of expected volatility is derived from historical volatilities of
comparable companies within the communications equipment industry. The risk-free interest factor is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each
grant’s expected term. The expected term is calculated using the simplified method provided in the Securities Exchange Commission’s Staff Accounting Bulletin No. 107, which takes into consideration the grant’s contractual life
and the vesting periods. The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover
behavior, and other factors. Estimates are evaluated each reporting period and adjusted, if necessary, by recognizing the cumulative effect of the change in estimate on compensation costs recognized in prior year periods. Forfeiture rate adjustments
have not been significant to date. During the years ended December 31, 2007 and 2006, the Company recorded stock-based compensation under the fair value requirements of SFAS 123R of approximately $10.4 million and $1.4 million, respectively.

As of December 31, 2007, pursuant to SFAS 123R, there was $38.2 million of total unrecognized compensation costs related to
non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.98 years.

FACE="Times New Roman" SIZE="2">Restricted Stock Units

The 2007 Plan provides for grants of restricted stock units (RSUs) that
generally vest over four years from the date of grant. The RSUs are classified as equity awards because the RSUs are paid only in shares upon vesting. RSU awards are measured at the fair value at the date of grant. In 2007, the Company recorded
stock-based compensation expense of $0.8 million.

The following table summarizes the Company’s restricted stock unit activity:

 




































































































































   Restricted
Stock Units
  Weighted
Average
Grant-Date
Fair Value
  Weighted Average
Remaining
Contractual

Life
  Aggregate
Intrinsic
Value

Outstanding, December 31, 2006

  —      —    

Granted

  406  $15.14  —    $—  

Cancelled

  (50)   —    
         

Outstanding, December 31, 2007

  356  $14.61  2.23  $1,832
         

Vested and expected to vest

  324    2.20  $1,666
         

 


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Table of Contents


This excerpt taken from the BBND 10-Q filed Nov 14, 2007.

Stock-based Compensation

We account for stock-based compensation pursuant to the provisions of the Financial Accounting Standards Board, or FASB, SFAS 123R, Share-Based Payments, or SFAS 123R. Under SFAS 123R, stock-based compensation costs for employees is measured at the grant date, based on the estimated fair value of the award at that date, and is recognized as expense over the employee’s requisite service period, which is generally over the vesting period, on a straight-line basis.

In valuing share-based awards under SFAS 123R, significant judgment is required in determining the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to exercising. Expected volatility of our stock is based on our peer group in the industry in which we do business because we do not have sufficient historical volatility data for our own stock. The expected term was calculated using the simplified method permitted by the SEC Staff Accounting Bulletin No. 107. In the future, as we gain historical data for volatility in our own stock and the actual term employees hold our options, expected volatility and expected term may change, which could substantially change the grant-date fair value of future awards of stock options and employee stock purchase plan shares ultimately the expense we record.

This excerpt taken from the BBND 10-Q filed Aug 10, 2007.

Stock-based Compensation

We account for stock-based compensation pursuant to the provisions of the Financial Accounting Standards Board, or FASB, SFAS 123R, Share-Based Payments, or SFAS 123R. Under SFAS 123R, stock-based compensation costs for employees is measured at the grant date, based on the estimated fair value of the award at that date, and is recognized as expense over the employee’s requisite service period, which is generally over the vesting period, on a straight-line basis.

In valuing share-based awards under SFAS 123R, significant judgment is required in determining the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to exercising. Expected volatility of our stock is based on our peer group in the industry in which we do business because we do not have sufficient historical volatility data for our own stock. The expected term of options granted was calculated using the simplified method permitted by the SEC Staff Accounting Bulletin No. 107. In the future, as we gain historical data for volatility in our own stock and the actual term employees hold our options, expected volatility and expected term may change, which could substantially change the grant-date fair value of future awards of stock options and ultimately the expense we record.

This excerpt taken from the BBND 10-Q filed May 9, 2007.

Stock-based Compensation

We account for stock-based compensation pursuant to the provisions of the Financial Accounting Standards Board, or FASB, SFAS 123R, Share-Based Payments, or SFAS 123R. Under SFAS 123R, stock-based compensation costs for employees is measured at the grant date, based on the estimated fair value of the award at that date, and is recognized as expense over the employee’s requisite service period, which is generally over the vesting period, on a straight-line basis.

In valuing share-based awards under SFAS 123R, significant judgment is required in determining the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to exercising. Expected volatility of our stock is based on our peer group in the industry in which we do business because we do not have sufficient historical volatility data for our own stock. The expected term of options granted was calculated using the simplified method permitted by the SEC Staff Accounting Bulletin No. 107. In the future, as we gain historical data for volatility in our own stock and the actual term employees hold our options, expected volatility and expected term may change, which could substantially change the grant-date fair value of future awards of stock options and ultimately the expense we record.

During the three months ended March 31, 2007, we granted options to employees to purchase a total of approximately 1.6 million shares of common stock at weighted average exercise price of $8.21 per share and an average fair value of $10.77 per share. During the three months ended March 31, 2007 and 2006, we recorded stock-based compensation of $2.4 million and $0.3 million, respectively.

 

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In March 2007, in accordance with SFAS 123R and EITF 96-18, we awarded one stock option grant for 31,250 shares with an exercise price of $7.34 per share to a non-employee. The award was fully vested on the grant date. With respect to this grant, we charged $0.3 million to sales and marketing expense during the three months ended March 31, 2007.

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