CEPH » Topics » Stock-based compensation

This excerpt taken from the CEPH 10-Q filed May 6, 2009.

12.   STOCK-BASED COMPENSATION

 

Total stock-based compensation expense recognized in the consolidated statement of operations is as follows:

 

 

 

Three months ended
March 31,

 

 

 

2009

 

2008

 

Stock option expense

 

$

6,230

 

$

6,050

 

Restricted stock unit expense

 

5,330

 

4,900

 

Total stock-based compensation**

 

$

11,560

 

$

10,950

 

Total stock-based compensation expense after-tax

 

$

7,514

 

$

6,873

 

 


**For the three months ended March 31, 2009, total stock-based compensation is allocated 4% to cost of sales, 38% to research and development and 58% to selling, general and administrative expenses based on the employees’ compensation allocation between these line items. For the three months ended March 31, 2008, total stock-based compensation expense was recognized equally between research and development and selling, general and administrative expenses based on the employees’ compensation allocation between these line items.

 

This excerpt taken from the CEPH 10-Q filed Aug 5, 2008.

3.  STOCK-BASED COMPENSATION

 

Total stock-based compensation expense recognized in the consolidated statement of operations is as follows:

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

Stock option expense

 

$

7,518

 

$

8,818

 

$

13,568

 

$

16,177

 

Restricted stock unit expense

 

3,426

 

4,110

 

8,326

 

8,450

 

Total stock-based compensation expense*

 

$

10,944

 

$

12,928

 

$

21,894

 

$

24,627

 

Total stock-based compensation expense after-tax

 

$

6,919

 

$

8,183

 

$

13,802

 

$

15,589

 

 


* For each period presented, total stock-based compensation expense was recognized equally between research and development and selling, general and administrative expenses based on the employees’ compensation allocation between these line items.

 

This excerpt taken from the CEPH 10-Q filed May 7, 2008.

3.  STOCK-BASED COMPENSATION

 

Total stock-based compensation expense recognized in the consolidated statement of operations is as follows:

 

 

 

Three months ended
March 31,

 

 

 

2008

 

2007

 

Stock option expense

 

$

6,050

 

$

7,359

 

Restricted stock unit expense

 

4,900

 

4,340

 

Total stock-based compensation*

 

$

10,950

 

$

11,699

 

Total stock-based compensation expense after-tax

 

$

6,873

 

$

7,405

 

 


* For each period presented, total stock-based compensation expense was recognized equally between research and development and selling, general and administrative expenses based on the employees’ compensation allocation between these line items.

 

These excerpts taken from the CEPH 10-K filed Feb 28, 2008.

Stock-Based Compensation

        Prior to the January 1, 2006 adoption of SFAS No. 123(R), "Share Based Payment" ("SFAS 123(R)"), we accounted for stock option plans and restricted stock unit plans in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Accordingly, no compensation expense has been recognized for stock options since all stock options granted had an exercise price equal to the market value of the underlying stock on the grant date. Restricted stock units have been recorded as compensation cost over the requisite vesting periods based on the market value on the date of grant. As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation ("SFAS 123"), stock-based compensation was presented as a pro forma disclosure in the notes to the consolidated financial statements. See Note 3 herein.

Stock-Based Compensation





        Prior to the January 1, 2006 adoption of SFAS No. 123(R), "Share Based Payment" ("SFAS 123(R)"), we accounted for stock option plans and
restricted stock unit plans in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Accordingly, no compensation expense has been recognized for stock options since all stock options
granted had an exercise price equal to the market value of the underlying stock on the grant date. Restricted stock units have been recorded as compensation cost over the requisite vesting periods
based on the market value on the date of grant. As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation ("SFAS 123"), stock-based compensation was presented as a pro forma
disclosure in the notes to the consolidated financial statements. See Note 3 herein.





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

2.  STOCK-BASED COMPENSATION

Total stock-based compensation expense recognized in the consolidated statement of operations for the three months ended March 31, 2007 was $11.7 million before income taxes or $7.4 million after-tax. For the three months ended March 31, 2007, stock-based compensation expense consisted of stock option and restricted stock unit expense of $7.4 million and $4.3 million, respectively. Total stock-based compensation expense recognized in the consolidated statement of operations for the three months ended March 31, 2006 was $9.9 million before income taxes or $6.3 million after-tax. For the three months ended March 31, 2006, stock-based compensation expense consisted of stock option and restricted stock unit expense of $7.6 million and $2.3 million, respectively. This expense was recognized equally between research and development and selling, general and administrative expenses based on the employees’ compensation allocation between these line items.

The fair value of each option grant at the grant date is calculated using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

Risk free interest rate

 

4.62

%

4.48

%

Expected term (years)

 

6.25

 

6.25

 

Expected volatility

 

38.7

%

54.20

%

Expected dividend yield

 

%

%

 

 

 

 

 

 

Estimated fair value per option granted

 

$

33.85

 

$

40.31

 

This excerpt taken from the CEPH 10-K filed Feb 28, 2007.

Stock-Based Compensation

Prior to the January 1, 2006 adoption of Financial Accounting Standards Board (“FASB”) Statement No. 123(R), “Share Based Payment” (“SFAS 123(R)”), we accounted for stock option plans and restricted stock unit plans in accordance with Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Accordingly, no compensation expense has been recognized for stock options since all stock options granted had an exercise price equal to the market value of the underlying stock on the grant date. Restricted stock units have been recorded as compensation cost over the requisite vesting periods based on the market value on the date of grant. As permitted by SFAS No. 123, “Accounting for Stock-Based Compensation (“SFAS 123”), stock-based compensation was presented as a pro forma disclosure in the notes to the consolidated financial statements. See also Note 3 of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

This excerpt taken from the CEPH 10-Q filed Nov 8, 2006.
Stock-based compensation— Effective January 1, 2006, we adopted the Financial Accounting Standards Board Statement No. 123(R), “Share Based Payment” (“SFAS 123(R)”) using the modified prospective method, in which compensation cost was recognized based on the requirements of SFAS 123(R) for (a) all share-based payments granted after the effective date and (b) for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. SFAS 123(R) requires the use of judgment and estimates in performing multiple calculations. We estimate the fair value using the Black-Scholes option-pricing model when assessing the fair value of options granted. The Black-Scholes option-pricing model requires several inputs, one of which is volatility. The fair value of options is most sensitive to the volatility input. Our estimate of volatility is based upon the historical volatility experienced in our stock price as well as the implied volatility from publicly traded options on our stock. To the extent volatility of our stock price or the option market on our stock increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-based compensation expense in future periods. For instance, an increase in estimated volatility of ten percentage points on all options would result in additional estimated annual pre-tax expense of approximately $4.1 million in 2006. In addition, we apply an expected forfeiture rate when amortizing stock-based compensation expense. Our estimate of the forfeiture rate is based primarily upon historical experience of employee turnover. To the extent we revise this estimate in the future or actual experience differs from this estimate, our stock-based compensation expense could be materially impacted. An estimated forfeiture rate of one percentage point lower would have resulted in an insignificant increase in stock-based compensation expense in 2006. Our expected term of options granted was derived from the average midpoint between vesting and the contractual term, as described in SEC’s Staff Accounting Bulletin No. 107, “Share-Based Payment.” In the future, as information regarding post vesting termination becomes more accessible, we may change our method of deriving the expected term. This change could impact our fair value of options granted in the future. We expect to refine our method of deriving expected term no later than January 1, 2008.

34




This excerpt taken from the CEPH 10-Q filed Aug 11, 2006.
Stock-based compensation— Effective January 1, 2006, we adopted the Financial Accounting Standards Board Statement No. 123(R), “Share Based Payment” (“SFAS 123(R)”) using the modified prospective method, in which compensation cost was recognized based on the requirements of SFAS 123(R) for (a) all share-based payments granted after the effective date and (b) for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. SFAS 123(R) requires the use of judgment and estimates in performing multiple calculations. We estimate the fair value using the Black-Scholes option-pricing model when assessing the fair value of options granted. The Black-Scholes option-pricing model requires several inputs, one of which is volatility. The fair value of options is most sensitive to the volatility input. Our estimate of volatility is based upon the historical volatility experienced in our stock price as well as the implied volatility from publicly traded options on our stock. To the extent volatility of our stock price or the option market on our stock increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-

 

36



 

based compensation expense in future periods. For instance, an increase in estimated volatility of ten percentage points on all options would result in additional estimated annual pre-tax expense of approximately $4.1 million in 2006. In addition, we apply an expected forfeiture rate when amortizing stock-based compensation expense. Our estimate of the forfeiture rate is based primarily upon historical experience of employee turnover. To the extent we revise this estimate in the future or actual experience differs from this estimate, our stock-based compensation expense could be materially impacted. An estimated forfeiture rate of one percentage point lower would have resulted in an insignificant increase in stock-based compensation expense in 2006. Our expected term of options granted was derived from the average midpoint between vesting and the contractual term, as described in SEC’s Staff Accounting Bulletin No. 107, “Share-Based Payment.” In the future, as information regarding post vesting termination becomes more accessible, we may change our method of deriving the expected term. This change could impact our fair value of options granted in the future. We expect to refine our method of deriving expected term no later than January 1, 2008.

 

37



 

This excerpt taken from the CEPH 10-Q filed May 10, 2006.
Stock-based compensation Effective January 1, 2006, we adopted the Financial Accounting Standards Board Statement No. 123(R), “Share Based Payment” (“SFAS 123(R)”) using the modified prospective method, in which compensation cost was recognized based on the requirements of SFAS 123(R) for (a) all share-based payments granted after the effective date and (b) for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. SFAS 123(R) requires the use of judgment and estimates in performing multiple calculations. We estimate the fair value using the Black-Scholes option-pricing model when assessing the fair value of options granted. The Black-Scholes option-pricing model requires several inputs, one of which is volatility. The fair value of options is most sensitive to the volatility input. Our estimate of volatility is based upon the historical volatility experienced in our stock price as well as the implied volatility from publicly traded options on our stock. To the extent volatility of our stock price or the option market on our stock increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-based compensation expense in future periods. For instance, an increase in estimated volatility of ten percentage points on all options would result in additional estimated annual pre-tax expense of approximately $3.2 million in 2006.  In addition, we apply an expected forfeiture rate when amortizing stock-based compensation expense. Our estimate of the forfeiture rate is based primarily upon historical experience of employee turnover. To the extent we revise this estimate in the future or actual experience differs from this estimate, our stock-based compensation expense could be materially impacted. An estimated forfeiture rate of one percentage point lower would have resulted in an increase of approximately $369,000 in stock-based compensation expense in 2006. Our expected term of options granted was derived from the average midpoint between vesting and the contractual term, as described in SEC’s Staff Accounting Bulletin No. 107, “
This excerpt taken from the CEPH 10-K filed Mar 13, 2006.

Stock-based Compensation

        We account for stock option plans and restricted stock award plans in accordance with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees." Accordingly, no compensation expense has been recognized for stock options since all options granted had an exercise price equal to the market value of the underlying stock on the grant date. Restricted stock awards are expensed. See Note 13 herein. The following table illustrates the effect on pro forma net

85



income (loss) and earnings (loss) per share if we had applied the fair value recognition provisions of SFAS 123, "Accounting for Stock-Based Compensation."

 
  Year ended December 31,
 
 
  2005
  2004
  2003
 
Net income (loss), as reported   $ (174,954 ) $ (73,813 ) $ 83,858  
Add: Stock-based employee compensation expense included in reported net income (loss), net of tax     6,826     3,187     896  
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax     (30,163 )   (40,035 )   (34,799 )
   
 
 
 
Pro forma net income (loss)   $ (198,291 ) $ (110,661 ) $ 49,955  
   
 
 
 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 
  Basic income (loss) per share, as reported   $ (3.01 ) $ (1.31 ) $ 1.49  
  Basic income (loss) per share, pro forma   $ (3.42 ) $ (1.96 ) $ 0.89  
 
Diluted income (loss) per share, as reported

 

$

(3.01

)

$

(1.31

)

$

1.42

 
  Diluted income (loss) per share, pro forma   $ (3.42 ) $ (1.96 ) $ 0.87  

        The fair value of each option grant at the grant date is calculated using the Black-Scholes option-pricing model. The following weighted average assumptions were used for grants in 2005, 2004 and 2003:

 
  2005
  2004
  2003
 
Risk free interest rate   4.41 % 3.87 % 3.44 %
Expected life (years)   6.5   6.5   6.0  
Expected volatility   50 % 66 % 67 %
Expected dividend yield   % % %
This excerpt taken from the CEPH 10-K filed Mar 15, 2005.

Stock-based Compensation

        We account for stock option plans and restricted stock award plans using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Compensation cost for stock options, if any, is measured as the excess of the quoted market price of the stock at the date of grant over the amount an employee must pay to acquire the stock. Restricted stock awards are recorded as compensation cost over the requisite vesting periods based on the market value on the date of grant. We have opted to disclose only the provisions of Statement of Financial Accounting Standards (SFAS) 123, "Accounting for Stock-Based Compensation," and SFAS 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—An Amendment to FASB Statement No. 123," as they pertain to financial statement recognition of compensation expense attributable to option grants. As such, no compensation cost has been recognized for our stock option plans. If we had elected to recognize compensation cost based on the

80



fair value of granted stock options as prescribed by SFAS 123 and SFAS 148, the pro forma income (loss) and income (loss) per share amounts would have been as follows:

 
  Year ended December 31,
 
 
  2004
  2003
  2002
 
Net income (loss), as reported   $ (73,813 ) $ 83,858   $ 171,528  
Add: Stock-based compensation expense included in net income, net of related tax effects     3,187     896     1,753  
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects     (40,035 )   (34,799 )   (36,413 )
   
 
 
 
Pro forma net income (loss)   $ (110,661 ) $ 49,955   $ 136,868  
   
 
 
 
Earnings (loss) per share:                    
  *Basic income (loss) per share, as reported   $ (1.31 ) $ 1.49   $ 3.08  
  *Basic income (loss) per share, pro forma   $ (1.96 ) $ 0.89   $ 2.46  
  *Diluted income (loss) per share, as reported   $ (1.31 ) $ 1.42   $ 2.77  
  *Diluted income (loss) per share, pro forma   $ (1.96 ) $ 0.87   $ 2.25  

*
Includes effect from application of EITF 03-6 for years ended December 31, 2004, 2003 and 2002 and EITF 04-8 for the years ended December 31, 2004 and 2003.
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