Quarterly report pursuant to Section 13 or 15(d)

Stock Incentive Plan

 v2.3.0.11
Stock Incentive Plan
 6 Months Ended
Jun. 30, 2011
Stock Incentive Plan [Abstract]  
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Text Block]
STOCK INCENTIVE PLAN
In 2000, the Company’s Board of Directors approved the Company’s 2000 Stock Incentive Plan (the “2000 Plan”) and authorized the Company to reserve 12,000,000 shares of its then authorized common stock, par value $0.0001 per share ("Common Stock") for issuance under the 2000 Plan. From 2001 to 2009, the Company’s Board of Directors authorized the Company to reserve an additional 16,500,000 shares of Common Stock for issuance under the 2000 Plan, bringing the total number of shares of Common Stock reserved under the 2000 Plan to 28,500,000. The 2000 Plan provided for the issuance of restricted stock grants, incentive stock options and nonqualified stock options. The Company will grant no further stock options or restricted stock awards under the 2000 Plan.
The Company’s 2010 Stock Incentive Plan (the “2010 Plan"), which became effective upon the closing of the Company’s initial public offering, was adopted by the Company’s Board of Directors in May 2010 and approved by its stockholders in June 2010. The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. Upon its effectiveness, 10,000,000 shares of the Company’s Class A common stock were reserved for issuance under the 2010 Plan. As of December 31, 2010, no stock options had been granted under the 2010 Plan. During the six months ended June 30, 2011, the Company granted options to purchase 88,688 shares of Class A common stock under the 2010 Plan. The options were granted at a weighted average exercise price of $15.289 per share.
Stock Option Grants 
The Company has granted stock options to certain employees and directors, including its principal and controlling shareholder, under the 2000 Plan. The Company will grant no further stock options or restricted stock awards under the 2000 Plan. The Company has also granted stock options to certain employees and directors under the 2010 Plan. At June 30, 2011, 9,911,312 shares were available for grant under the 2010 Plan. The following table summarizes the collective activity under the 2000 Plan and the 2010 Plan:
 
 
Number of Options
 
Weighted-Average Exercise Price
Outstanding at December 31, 2010
 
8,274,000

 
$
4.177

Granted (1)
 
88,688

 
15.289

Exercised
 
(1,770,312
)
 
(2.265
)
Forfeited
 
(139,034
)
 
(8.547
)
Outstanding at June 30, 2011
 
6,453,342

 
$
4.761

Options exercisable at June 30, 2011
 
4,774,204

 
$
3.626

Expected to vest at June 30, 2011
 
1,330,585

 
$
8.002

Options exercisable at December 31, 2010
 
6,066,750

 
$
2.956

 
(1) Grants are related to the 2010 Plan.
The weighted-average remaining contractual life of all options expected to vest at June 30, 2011 was 4.21 years. The total intrinsic value of options exercised during the six months ended June 30, 2011 was $13,118,967.
The following table summarizes information about stock options outstanding at June 30, 2011: 
 
 
 
Outstanding Options
 
Exercisable Options
Related Plan
Exercise Price
 
Number Outstanding
 
Weighted-Average Remaining Contractual Life
 
Weighted-Average Exercise Price
 
Number Exercisable
 
Weighted-Average Exercise Price
2000 Plan
$
0.750

 
100,000

 
0.56

 
$
0.750

 
100,000

 
$
0.750

2000 Plan
0.875

 
563,577

 
1.05

 
0.875

 
563,577

 
0.875

2000 Plan
1.500

 
20,000

 
1.58

 
1.500

 
20,000

 
1.500

2000 Plan
1.750

 
243,500

 
2.04

 
1.750

 
243,500

 
1.750

2000 Plan
1.875

 
112,500

 
2.29

 
1.875

 
112,500

 
1.875

2000 Plan
2.750

 
867,239

 
3.05

 
2.750

 
861,239

 
2.750

2000 Plan
3.000

 
50,500

 
3.58

 
3.000

 
50,500

 
3.000

2000 Plan
3.250

 
1,000,230

 
1.98

 
3.250

 
975,880

 
3.250

2000 Plan
3.410

 
1,011,050

 
2.04

 
3.410

 
835,250

 
3.410

2000 Plan
4.220

 
593,092

 
2.70

 
4.220

 
329,092

 
4.220

2000 Plan
6.055

 
1,030,300

 
4.47

 
6.055

 
394,800

 
6.055

2000 Plan
13.045

 
772,666

 
5.18
 
13.045

 
287,866

 
13.045

2010 Plan
14.810

 
60,000

 
6.41

 
14.810

 
—

 
14.810

2010 Plan
16.290
 
28,688

 
6.08

 
16.290

 
—

 
16.290

 
 
 
6,453,342

 
 

 
 

 
4,774,204

 
 

 
During the six months ended June 30, 2011, a total of 1,770,312 shares were issued upon the exercise of options under the 2000 Plan at an average price of $2.265 per share. Cash received from option exercise under all stock-based payment arrangements for the six months ended June 30, 2011 was $4,009,398.
Under the 2000 Plan and the 2010 Plan, all options expire if not exercised within ten years after the grant date. The options generally vest over five years at a rate of 20% after the first year, and at a rate of five percent every three months beginning one year after the grant date. If the employee ceases to be employed by the Company for any reason before vested options have been exercised, the employee has 90 days to exercise vested options or they are forfeited. 
The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company will recognize the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award. 
The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The following table sets forth the significant assumptions used in the model during 2010 and 2011:
 
 
 
Year Ended December 31,
 
Six Months Ended June 30,
 
 
2010
 
2011
Future dividends
 
$ -
 
$ -
Risk-free interest rate
 
2.59%-3.11%
 
2.23%-2.58%
Expected volatility
 
57%-59%
 
42%-44%
Expected life
 
6.5 years
 
6.5 years
 
The Company will continue to use judgment in evaluating the expected term, volatility and forfeiture rate related to the stock-based compensation on a prospective basis, and incorporating these factors into the Black-Scholes pricing model. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant. In addition, any changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period that the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the accompanying condensed consolidated financial statements. If a revised forfeiture rate is lower than the previously estimated rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the accompanying condensed consolidated financial statements. These expenses will affect the direct expenses, salaries and benefits and project development costs expenses. 
The weighted-average fair value of stock options granted during the six months ended June 30, 2011, under the Black-Scholes option pricing model was $7.088 per share. For the three months ended June 30, 2010 and 2011, the Company recorded stock-based compensation expense of approximately $668,065 and $735,526, respectively, in connection with stock-based payment awards. For the six months ended June 30, 2010 and 2011, the Company recorded stock-based compensation expense of approximately $1,107,151 and $1,594,576, respectively, in connection with stock-based payment awards. The compensation expense is allocated between direct expenses, salaries and benefits and project development costs in the accompanying consolidated statements of income and comprehensive income based on the salaries and work assignments of the employees holding the options. As of June 30, 2011, there was approximately $8,732,690 of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 3.59 years.